GST: Representation on advisory issued regarding the timeline for reporting invoices to Invoice Registration Portal

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GST: Representation on advisory issued regarding the timeline for reporting invoices to Invoice Registration Portal

Tejasvi

@tejasvi

April 28, 2023

Public Policy

305

As you may be aware, an advisory has been issued on the Goods Service Tax portal on April 12, 2023 which states that taxpayers with aggregate turnover more than INR 100 crores will not be allowed to report invoices, credit notes and debit notes, older than 7 days on the e-Invoice Registration Portal (IRP). This restriction is proposed to be implemented with effect from May 1, 2023.

Until now, there was no time limit for e-invoice generation. Taxpayers had the option to generate e-invoices in real-time or even after a few days or weeks in batches. Moreover, we understand that there is no restriction on the time limit for raising e-invoices under the GST law. In fact, the GST portal had earlier issued an advisory clarifying that the e-invoice will be auto populated in GSTR-1 as per the document date, and not as per the date on which the e-invoice was reported on IRP and the Invoice Reference Number (IRN) was generated. This provided flexibility to taxpayers to generate e-invoices prior to filing monthly return and consider them in GSTR-1 of such monthly return.

However, the new time limit proposed would result in following challenges for taxpayers:

Technology related issues: Failure to generate e-invoice due to technical issues with GPS/ ASP systems, technical glitch on IRP portal leading to failure to generate e-invoice such as transient errors, internal accounting system/ ERP errors whereby the invoice is not pushed to ASP/ GSP for IRN generation, etc. As a result, some records will not be pushed to IRP or even when pushed, will result in non-generation of e-invoice. Moreover, the errors will be known and will be rectified by generating e-invoices only while performing reconciliation, which can be beyond 15-30 days in some cases due to the volume of data.

Operational issues

During finalisation of the financial statements at the year end, many companies undertake true-up/ true-down for the inter-company supplies effected. These are accounted for as of March end, so that financial statements accurately reflect the company's financial position and performance. This requires companies to raise a tax invoice/ credit note/ debit note with March 31 as the date and thereafter generate e-invoice. Company’s duly report such documents in the monthly GSTR-1 and remit interest, wherever applicable. Hence, companies will face difficulties in making such adjustments.
GST law has a deeming fiction to treat inter-branch supplies as taxable. The book closure of the companies usually takes place between 5th to 9th day of the following month, and tax invoice is raised with date of the previous month to report the same in GST returns and pay taxes. With this restriction, companies will have to report the invoice in the subsequent month and bear the interest burden.
There is also a possibility that, at the time of issuance of invoice to the customer, the supplier issues a B2C invoice in the absence of a GSTIN. Later, the invoice needs to be amended by adding the GST registration number provided by the customer. Due to the restriction proposed, the supplier will be unable to report the B2B tax invoice.
Rule 55(4) of Central Goods and Services Tax Rules, 2017 (CGST Rules) permits supply of goods based on a delivery challan and invoice can be raised after delivery of goods. In such a scenario, a company can issue delivery challan on Day 1 whereas an invoice could be raised at a later date with the date of the delivery challan itself.

Given the above challenges, we have made a representation to GST Policy Wing and GSTN requesting them to withdraw the proposal to restrict the generation of e-invoices beyond 7 days from invoice date. Alternatively, government could consider the timeline provided to avail input tax credit under S. 16(4) of CGST Act, timeline for issuance of credit notes under S. 34(2) of CGST Act and rectification of error/ omission of outward supplies under proviso to S. 37(3) of CGST Act.

We have also requested the government to defer implementation of the advisory and implement the same w.e.f from October 1, 2023. This will provide time to the industry to effectively comply with these requirements.

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Tejasvi

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