E-way bill in GST was introduced on 1st April 2018. This was done to ensure the proper and accounted movement of goods within the country.
In this article, we will get to understand everything about blocking of E-way bills by the GST department and, we will also understand how to unblock the E-way bills. Let’s start by understating the basics of E-way bills and then we will move forward.
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Basics of E-way bill
E-way bill is an electronic document generated at the E-way bill portal evidencing the movement of goods from one place to another. It is to be generated for every movement of goods having consignment value more than Rs.50,000/-
An E-way bill can be generated at the official website of the GST Department/Government at www.Ewaybill.gov.in.
So the basic question with arises here is that why is an E-Way bill required, what is the use of it, and why add more compliance procedures to GST law, even when the returns are filed monthly?
Well, the main reason behind this concept is to ensure that goods being transported comply with the GST laws and, it is also an effective tool to track the movement of goods and to prevent tax evasion. For example, there are cases of issuance of invoice even when where there are no actual movement goods, but in records, it is shown that the goods have been transported, this is a case of issuance of fake invoices, where only the input tax credit relating to goods is transferred and not the goods. To curb these kinds of issues prevailing in the present scenario it was necessary to introduce the E-way bill system in GST Law and make E-way bill provisions are becoming more stringent day by day.
Few things to note:
- There no requirement for an E-way bill for services rendered.
- There is no mechanism like an E-way bill to have control over the non-filing of GST Returns by Service providers apart from late fees.
- Blocking of E-Way bill does not have any impact on the E-way bills which were generated before blocking, i.e. which are in transit.
- No E-way bill required having consignment value less than 50,000/-
- It is mandatory to quote vehicle numbers while generating E-way bills.
- No E-way bill required for the movement of goods through a non-motorized vehicle like Hand carts.
Blocking of E-way bill
Since we have understood from the basics of the E-way bill, now we will understand about blocking of E-way bill by the GST Department. GST was implemented in July 2017, but the provision of blocking of E-way bill was implemented from 1st December 2019. Blocking of E-way bill generation means disabling taxpayers from generating E-Way bills, which means a taxpayer cannot generate new E-way bills. However, this provision was kept silent until 1st December 2020.
When can E-way bill generation be blocked?
For a composition taxpayer paying under section-10-Generation of E-Way bill can be blocked by the GST department when any two consecutive quarterly returns in CMP-08, are not furnished by the taxpayer.
For A Regular taxpayer i.e, other than composition taxpayer– Generation of E-Way bill can be blocked when any two consecutive monthly returns in GSTR-3B, are not furnished by the taxpayer.
For a transporter– The generation of E-Way bill shall be blocked, by the GST department when any two consecutive monthly returns, in GSTR-3B, are not filed by the transporter. For Example, if the businessman has not filed monthly returns for September and October then the E-way bill shall be blocked from November onwards
What happens when the E-Way bill is blocked?
Once the E-Way bill is blocked by the GST department, the businessman cannot generate any new E-way bills. And once he is unable to generate E-way bills, he cannot dispatch any goods. Ultimately, the businessman cannot sell goods once the E-way bill is blocked. Further, if the businessman dispatches such goods without an E-way bill then it may lead to confiscation of both the Vehicle and the Goods and a penalty may be levied up to one hundred percent of the tax involved. Hence, it can be a very serious matter if goods are sent without a proper E-way bill.
Furthermore, it is also important to note here is that irrespective of whether the businessman is a supplier or receiver, the E-way bill shall be blocked for not filing two consecutive GST returns. Hence it also a mechanism to track non-filing of GST returns, which ultimately kills two birds with one stone i.e, tracking non-filing of returns and also tracking the issuance of fake invoices.
Well, here one obvious question would arise, what happens to the already generated E-Way bill which is in transit- Blocking the E-way bill does not have any impact on the E-way bills already generated. So no worries at least here, but you can’t generate new E-way bills.
When will the GST Department start blocking E-way Bills?
♣ Update: The above provision of blocking of E-way bill would be applicable to all taxpayers irrespective of their turnover from 1st December 2020. The government will check on 1st December 2020 whether or not you have filed your due GST Returns. If 2 consecutive GST Returns are not filed on this date, then your E-way bill generation facility will be blocked.
How to unblock E-way bill?
The first and foremost step is to file all the pending GST returns (GSTR-3B for regular taxpayers and CMP-08 for Composition taxpayer). For example, if the GST return for the month of October and November is pending and the E-way bill is blocked in December then GST returns for both the months has to be filed, along with the late fees as applicable. Once the pending GST Returns have been filed, the taxpayer has to file an electronic Form EWB-05. This form will go to the GST Officer for approval. Once the returns have been filed and the application has been made and approved, the E-way bill will be unblocked.
E-way bills are a very effective manner to curb fake invoicing. When you see E-way bills and Fast tags in conjunction, India could be well within controlling Black money transactions as no movement of Goods would be allowed without E-way bills. Also, these kinds of compliances will definitely reduce the avenues of tax evasion and also increase the GST revenue collection. Taxpayers need to be very particular in filing GST Returns as the department will start blocking the generation of new E-way bills from 1st January 2021 for all taxpayers. This would surely halt the business of Taxpayers.