Authored by VipinThree systems, one data trail: the e-invoice (IRP), the e-way bill system and the GST return system now talk to each other. Department analytics compare all three automatically. Errors in one surface as notices in another.
1. Statutory Overview and Legislative Intent
e-Invoicing
Rule 48(4) of the CGST Rules requires notified classes of registered persons to prepare invoices by uploading specified particulars to the Invoice Registration Portal (IRP) and obtaining an Invoice Reference Number (IRN). Under Rule 48(5), an invoice issued without following this procedure is not a valid invoice. The intent is to capture B2B transactions at source, reduce fake invoicing, and pre-fill returns.
e-Way bills
Section 68 of the CGST Act and Rules 138 to 138E require a person in charge of a conveyance carrying goods beyond a specified value to carry prescribed documents and an electronic way bill. The system tracks movement of goods and supports verification on the road.
Reverse charge mechanism (RCM)
Ordinarily the supplier pays tax. Under Section 9(3) of the CGST Act (and Section 5(3) of the IGST Act), the Government notifies goods and services on which the recipient pays tax. Under Section 9(4), specified registered recipients pay tax on supplies from unregistered persons. RCM shifts the liability where suppliers are numerous, unorganised or outside the tax net.
Departmental notices
Section 61 (scrutiny of returns), Section 65 (departmental audit), Section 66 (special audit), Section 67 (inspection and search), and the demand provisions in Sections 73, 74 and, for FY 2024-25 onwards, Section 74A, together with Rule 142 for show cause notices and orders.
2. Applicability and Threshold Matrix
e-Invoicing
| Item | Position |
|---|---|
| Who must issue e-invoices | Registered persons whose aggregate turnover in any financial year from 2017-18 onwards exceeded Rs. 5 crore (from 1 August 2023, Notification No. 10/2023-Central Tax) |
| Documents covered | B2B tax invoices, credit notes and debit notes; supplies to SEZ units and developers; exports; deemed exports |
| Not covered | B2C invoices (dynamic QR code required for entities with aggregate turnover above Rs. 500 crore), and specified sectors such as SEZ units, insurance companies, banking companies and financial institutions including NBFCs, goods transport agencies supplying transport of goods by road, passenger transport services, and admission to cinema exhibitions, as notified |
| 30-day reporting limit | Taxpayers with aggregate turnover of Rs. 10 crore or more cannot report invoices and credit or debit notes to the IRP if the document date is more than 30 days old (applicable from 1 April 2025 under the GSTN advisory; earlier this applied to turnover of Rs. 100 crore and above) |
| Cancellation | Within 24 hours on the IRP; partial cancellation is not allowed. After 24 hours, issue a credit note or amend in GSTR-1 |
e-Way bills
| Item | Position |
|---|---|
| Consignment value threshold | Rs. 50,000 per consignment for inter-State movement; States notify their own intra-State limits (some at Rs. 1 lakh or for specified goods) |
| Mandatory regardless of value | Inter-State movement of goods by a principal to a job worker, and inter-State movement of handicraft goods by exempted dealers |
| Who generates | Registered supplier or recipient (Part A); transporter updates vehicle details (Part B). Unregistered transporters enrol on the portal |
| Part B exemption | Movement within the same State up to 50 km between the place of business and the transporter's place (Part A still required) |
| Validity (Rule 138(10)) | Normal cargo: 1 day for up to 200 km, plus 1 day for every further 200 km or part. Over-dimensional cargo: 1 day for up to 20 km, plus 1 day for every further 20 km or part. The day ends at midnight of the following day |
| Extension | Within 8 hours before or after expiry, if goods cannot be transported within validity due to exceptional circumstances |
| Document age and validity caps | From 1 January 2025, e-way bills cannot be generated for documents older than 180 days, and the total validity including extensions is capped at 360 days from original generation |
| Blocking (Rule 138E) | Generation is blocked for a GSTIN that has not filed GSTR-3B for two consecutive tax periods (two quarters for QRMP), or CMP-08 for two consecutive quarters for composition taxpayers |
Notified reverse charge supplies (most common for businesses)
| Supply | Supplier | Recipient who pays tax |
|---|---|---|
| Goods Transport Agency (GTA) services | GTA not opting to pay tax under forward charge | Factory, society, co-operative society, registered person, body corporate, partnership firm or casual taxable person located in the taxable territory |
| Legal services | Individual advocate including senior advocate, or firm of advocates | Any business entity located in the taxable territory (exempted where turnover is below the threshold in the exemption notification) |
| Services by a director (sitting fees and remuneration other than as employee) | Director of a company or body corporate | The company or body corporate |
| Security services (supply of security personnel) | Any person other than a body corporate | Registered person (excluding persons registered only for TDS, and composition taxpayers) |
| Sponsorship services | Any person | Body corporate or partnership firm |
| Services by an insurance agent | Insurance agent | Insurance company |
| Services by a recovery agent | Recovery agent | Banking company, financial institution or NBFC |
| Renting of residential dwelling | Any person | Registered person |
| Renting of immovable property other than residential dwelling (from 10 October 2024) | Unregistered person | Registered person (composition taxpayers excluded from 16 January 2025) |
| Services by Government or local authority (other than excluded services) | Central Government, State Government, UT or local authority | Business entity |
| Import of services | Person located outside India | Recipient in India (IGST under Section 5(3)) |
| Metal scrap (goods, from 10 October 2024) | Unregistered person | Registered person |
3. Step-by-Step Compliance and Filing Workflow
A. Generating an e-invoice
- Raise the invoice in your ERP or billing software with all mandatory fields of the e-invoice schema (INV-01): supplier and recipient GSTINs, document type, number and date, item details with HSN, taxable value, tax rates, and place of supply.
- Convert to JSON and upload to an IRP (through the portal, offline utility, API, or a GST Suvidha Provider). Turnover above the notified limit requires two-factor authentication.
- The IRP validates the data, checks for duplicates, computes a hash to generate the IRN, digitally signs the invoice and returns the signed JSON with a QR code.
- Print the QR code on the invoice. The data flows to GSTR-1 and, if transport details are given, to Part A of the e-way bill.
- Report within 30 days of the document date if your turnover is Rs. 10 crore or more.
B. Generating an e-way bill
- Log in to ewaybillgst.gov.in (or use the API). Choose Generate New, enter transaction type, document details, item details with HSN and value, and transporter ID or vehicle number.
- For e-invoiced documents, generate the e-way bill directly from the IRN.
- Hand the e-way bill number to the transporter. Update Part B for change of vehicle or transhipment.
- The recipient can reject within 72 hours of generation (or before delivery if earlier); otherwise acceptance is deemed.
C. Discharging reverse charge
- Identify RCM transactions at the purchase entry stage through vendor and expense master tagging (advocate, director, GTA, security, rent from unregistered person, import of services).
- Determine time of supply: for goods, the earliest of receipt of goods, payment, or 31 days from the supplier's invoice (Section 12(3)); for services, the earlier of payment or 60 days from the supplier's invoice (Section 13(3)).
- Where the supplier is unregistered, issue a self-invoice under Section 31(3)(f) within 30 days of receipt of supply (Rule 47A, from 1 November 2024), and a payment voucher at the time of payment.
- Report RCM liability in GSTR-3B Table 3.1(d) and pay it in cash only (Section 49(4) prohibits use of ITC for RCM liability).
- Claim ITC on the RCM tax paid in Table 4A(2) (imports of services) or 4A(3) (other RCM), subject to Section 16 and 17. Keep the RCM liability and ITC statement on the portal aligned.
D. Responding to ASMT-10 (scrutiny of returns)
- Read the discrepancy carefully. Common items: GSTR-1 versus GSTR-3B liability, GSTR-2B versus GSTR-3B ITC, e-way bill values versus returns, and ITC from cancelled suppliers.
- Prepare a reconciliation with supporting documents (invoices, credit notes, amendments in later periods, GSTR-9 data).
- Reply in Form ASMT-11 on the portal within 30 days of the notice, or within the period allowed by the officer. Where the discrepancy is accepted, pay tax and interest through DRC-03 and mention it in the reply.
- If the officer accepts the explanation, he issues ASMT-12 closing the proceeding. If not, he may initiate audit, special audit, inspection or demand proceedings.
E. Responding to a show cause notice (DRC-01)
- Check for a prior intimation in DRC-01A under Rule 142(1A). It gives an opportunity to pay or object before the notice is issued.
- On receiving the notice and its summary in DRC-01, check the jurisdiction, limitation (is the notice within the time limit?), the computation, and whether the right section (73, 74 or 74A) has been invoked.
- File the reply in DRC-06 within the time stated (usually 30 days), with documents and legal submissions. Request a personal hearing; under Section 75(4), it must be granted where requested or where an adverse decision is contemplated. Not more than three adjournments are allowed under Section 75(5).
- The order is issued in DRC-07. If aggrieved, appeal under Section 107 within three months, with the pre-deposit.
4. Statutory Due Dates and Frequency Table
| Event | Provision | Time limit |
|---|---|---|
| Reporting e-invoice to IRP (turnover of Rs. 10 crore or more) | Rule 48(4); GSTN advisory | Within 30 days of document date |
| Cancellation of IRN | Rule 48 | Within 24 hours of generation |
| Cancellation of e-way bill | Rule 138(9) | Within 24 hours, if goods not transported or not as per details |
| Rejection by recipient | Rule 138(12) | Within 72 hours or delivery, whichever is earlier |
| RCM self-invoice from unregistered supplier | Section 31(3)(f); Rule 47A | Within 30 days of receipt of supply |
| RCM payment | Section 9(3); GSTR-3B | With the GSTR-3B for the tax period in which time of supply falls |
| Reply to ASMT-10 | Rule 99 | 30 days, or as extended |
| SCN under Section 73 (up to FY 2023-24) | Section 73(2), 73(10) | Order within 3 years from the due date of the annual return; SCN at least 3 months before |
| SCN under Section 74 (up to FY 2023-24) | Section 74(2), 74(10) | Order within 5 years from the due date of the annual return; SCN at least 6 months before |
| SCN under Section 74A (FY 2024-25 onwards) | Section 74A(2), 74A(10) | SCN within 42 months from the due date of the annual return; order within 12 months of SCN, extendable by up to 6 months |
| First appeal | Section 107 | 3 months from communication of order, plus 1 month condonable |
| Appeal to GST Appellate Tribunal | Section 112 | 3 months from the appellate order (with transitional timelines for older orders as notified when GSTAT became operational in 2025) |
5. Interest, Late Fees and Penal Consequences
| Default | Provision | Consequence |
|---|---|---|
| Invoice issued without IRN where e-invoicing applies | Rule 48(5); Section 122(1)(ii) | Invoice is invalid; recipient cannot claim ITC; penalty of Rs. 10,000 or tax due, whichever is higher; general penalty of up to Rs. 25,000 under Section 125 |
| Goods moved without e-way bill or with wrong particulars | Section 129 | Detention of goods and conveyance. Release on payment of penalty equal to 200% of tax where the owner comes forward; where the owner does not, the higher of 50% of the value of goods or 200% of tax. For exempt goods, 2% of value or Rs. 25,000, whichever is lower (owner) |
| Minor discrepancies in e-way bill (spelling, PIN code, one digit errors) | Section 125; CBIC Circular No. 64/38/2018-GST | Penalty of Rs. 500 under each Act; goods not detained for such errors |
| Non-payment of goods detained | Section 130 | Confiscation of goods and conveyance after notice |
| RCM not paid | Section 50(1); Section 73, 74 or 74A | Interest at 18% per annum; tax demand with penalty as per the applicable section |
| Demand under Section 73 (non-fraud, up to FY 2023-24) | Section 73 | No penalty if paid with interest before SCN or within 30 days of SCN; otherwise 10% of tax or Rs. 10,000, whichever is higher |
| Demand under Section 74 (fraud, up to FY 2023-24) | Section 74 | 15% before SCN, 25% within 30 days of SCN, 50% within 30 days of order, otherwise 100% of tax |
| Appeal pre-deposit | Sections 107(6) and 112(8) | 10% of disputed tax for the first appeal (capped at Rs. 20 crore each for CGST and SGST), and a further 10% for the Tribunal (capped at Rs. 20 crore each). For appeals against penalty-only orders, 10% of the penalty, as introduced by the Finance Act, 2025 |
6. Practical Audit Pitfalls and Best Practices
- Check e-invoice applicability every April. The test is aggregate turnover in any preceding financial year from 2017-18. Once crossed, the obligation continues even if turnover later falls.
- Configure the 30-day block in your ERP. Prevent invoices from being backdated or held, and run a daily exception report of documents nearing 30 days.
- Train dispatch staff on e-way bills. Most detentions arise from expired validity, a missing Part B, or a vehicle change not updated. Keep the transporter's contact in the dispatch file.
- Build an RCM register. Map every vendor master to forward charge or RCM. Directors' sitting fees, legal fees and rent paid to unregistered landlords are the most frequent misses in audits.
- Pay RCM in cash, then take credit. Using ITC to pay RCM liability leads to a demand even though the net effect is revenue neutral.
- Treat every notice as a deadline. Notices appear under "View Additional Notices and Orders" on the portal, not only by email. Check it weekly.
- Argue limitation first. Many demands are time-barred or invoke Section 74 without evidence of fraud. A reasoned objection on jurisdiction and limitation can dispose of the case.
- Keep a litigation tracker with notice dates, reply dates, hearing dates, pre-deposits and appeal deadlines.
7. Statutory References and Official Sources
- Central Goods and Services Tax Act, 2017: Sections 9(3), 9(4), 12, 13, 31, 49(4), 50, 61, 65, 66, 67, 68, 73, 74, 74A, 75, 107, 112, 122, 125, 129 and 130.
- Integrated Goods and Services Tax Act, 2017: Section 5(3).
- Central Goods and Services Tax Rules, 2017: Rules 47A, 48(4), 48(5), 99, 138 to 138E and 142.
- Notification No. 13/2020-Central Tax dated 21 March 2020, as amended, including Notification No. 10/2023-Central Tax dated 10 May 2023 (e-invoicing above Rs. 5 crore).
- Notification No. 14/2020-Central Tax (dynamic QR code for B2C).
- Notification No. 13/2017-Central Tax (Rate) dated 28 June 2017, as amended (RCM on services), including amendments effective 10 October 2024 and 16 January 2025.
- Notification No. 4/2017-Central Tax (Rate), as amended (RCM on goods).
- Notification No. 10/2017-Integrated Tax (Rate) (RCM on import of services).
- CBIC Circular No. 64/38/2018-GST dated 14 September 2018 (minor e-way bill discrepancies).
- GSTN advisories on the 30-day IRP reporting limit and on e-way bill document age and validity limits.
- Finance (No. 2) Act, 2024 (Section 74A and changes to pre-deposit); Finance Act, 2025 (pre-deposit for penalty-only appeals).
- Official portals: gst.gov.in; einvoice1.gst.gov.in; ewaybillgst.gov.in; cbic-gst.gov.in.