HOW E-INVOICE & E-WAY BILL IS GENERATED IN RETAIL TRADE?

What is Retail Trade?

Retail trading is a business activity that involves the sale of finished goods and products to consumers. Traders involved in a retail business, buy the required goods from wholesalers who, in turn, collect from the factories. They can also buy the products directly from the manufacturers, thus, acting as a link between manufacturers or wholesalers and customers.

Any large retail trader (goods) falling within the turnover range of Rs. 50-500 crore (or more) would have to comply with the following:

• Real time E-invoice instead of tax invoice (B2B, SEZ)
• Real time E-invoice – credit note/debit note (B2B, SEZ)
• E-way bill compliance against movement of goods
• Delivery Challan for certain movements
• Tax invoice (B2C)
• Bill of Supply (B2C & B2B)
• B2C – Dynamic QR code for 500 cr + entities
• GST returns – 1, 3B, 9 & 9C
• ITC reconciliation– GSTR 2A/2B Vs Books 

E-Invoicing in Retail Trade:

e-invoicing system software patches are provided to the accounting software, wherein, invoices are raised based on purchase/service order upon accounting. Although, in the retail trade industry, where invoice has to be presented to customers immediately upon purchase, compliance with e-invoicing must take place immediately and, in an error-free manner. Presently, e-invoicing is applicable only to B2B transactions, to give government control over the same and check fake invoicing and undue input tax credit claims. 

Billing softwares generally do not have an e-invoicing patch which makes it difficult. Some traders are manually raising the e-invoice after giving the normal tax invoice under Rule 46. E-invoices are being raised at a later point in time. Such e-invoice is generally not shared to the B2B customer. Also, sometimes, e-invoices are not raised at all leading to complete non-compliance. The reason this issue arises is that billing software being used maybe legacy or indigenous software wherein, the internal IT/software team of the entity may not have the technical ability to automate e-invoicing through their present systems.

There are vendors who providing customisation of present billing systems wherein the patch would be in-built. Alternatively, separate e-invoicing tools are available which would mediate between the billing software and the government portal and provide the e-invoice (IRN & QR).

In addition to the above, the software must be able to distinguish between the following:

• B2C & B2B transactions – E-invoice for B2B only (incl. SEZ)
• Exempt & taxable transactions – E-invoice mandatory for taxable supply only
• Exempt + taxable supply to B2B not possible.
• Separate invoicing required
• Minimum 6-digit HSN availability – E-invoice with 6 or > digits only

What are the Complainces?

i. IRN & QR code must be generated and displayed in the e-invoice

ii. Supply to SEZ – invoice to have additional declarations as per Rule 46

iii. E-invoice to be raised as per time of supply provisions (Section 10 of IGST Act)

iv. E-invoice copy to be maintained in records for minimum 6 years from GSTR 9 due date of FY as per Rule 56.

What are the Consequences of being Non-Complaint?

1. 10,000 or tax evaded, whichever is higher
2. Customer’s input tax credit can be questioned and denied – leading to non-payment and loss in trust and reputation.

• Check vendors if listed in this dynamic list of GSTINs performing e-invoicing shared by the govt. – https://einvoice1.gst.gov.in/Others/GSTINsGeneratingIRN
• Obtain written declaration from vendors on applicability to avoid future disputes.

E-WAY BILL IN RETAIL TRADE:

EWB is required against movement of goods is required for movement of goods where consignment value is > Rs. 50,000.

Consignment value is taxable value + taxes but does not include value of exempt supplies.

Documents to be carried during movement would be – Invoice or delivery challan as applicable and valid EWB in physical form or EWB in electronic form mapped to RFID of conveyance.

Exemptions from raising E-way bill (mostly applicable for retail trade):

i. Exempted supplies

ii. Used personal and household effects

iii. Movement through non-motorized conveyance

iv. Other specific exemptions under Rule 138(14) as applicable

What are the Consequences  of being non-compliant?

• Penalty, detention, seizure, confiscation, auction & sale.
• 1 lakh to get back conveyance (not goods)
• Where owner of the goods comes forward for payment of applicable tax and penalty: Taxable goods –Penalty equal to 200% of tax payable
• Where owner does not come forward for payment of applicable tax and penalty: Taxable goods-Penalty equal to higher of 50% of value of goods or 200% of the tax payable on such goods
• Exempted goods –Lowest of 2% of the value of goods or Rs. 25,000/-
• 25% of pre-deposit under Section 107 of CGST Act, 2017, for the purpose of appeal, in case of E way bill orders along with bank guarantee to release goods & conveyance.