Blocking of e-Way Bill system-Consequences of Non-compliance with GST
e-Way Bills under GST for Goods transportation
The Government of India mandated the e way bill generation System from April 2018. e-Way Bill was made a mandatory document to be carried while inter & intra-state movement of Goods worth Rs. 50,000 or more.
The vehicles at any point could be intercepted & if the transporter fails to present the e-Way Bill, then the goods are subject to seized & in some cases even confiscated. A penalty shall be levied on the owner of the Goods of at least Rs. 10,000 or the amount of tax sought to be evaded, whichever is higher.
Anyone of the three parties, the Consigner, the Consignee & the Transporter can generate the e-Way Bill, given that they must be registered on the GST Portal. However, commonly the Supplier generates the e-Way Bill before the movement starts.
e-Way Bill is an essential document for Business as the non-compliance would have adverse effects on the smooth flow for Businesses. Businesses could face losses in the form of Penalties & Seizures & it would also affect the transportation of goods.
What is Blocking of e-Way Bill Generation
The Government has come up with a rule that brings significant changes to the e-Way Bill System. As per the new Rule implemented from December 2019, there will be a blocking/barring of the e-Way Bill generation system for the defaulter taxpayers.
According to the new rule, if any taxpayers have not filed their GSTR-3B for more than two consecutive tax periods, they shall be barred from the e-Way Bill System & would not be able to generate any further e-Way Bills.
However, e-Way Bills generated before blocking shall be considered valid & can be used to deliver the in-transit goods.
How will the e-Way Bill Generation Blocking work?
Here is an illustration to better understand how the Blocking of e-Way Bill generation will work.
Illustration- Mr. Shukla has not filed their GSTR-3B for the months of November & December, then their e-Way Bill Generation shall be blocked on the e-Way Bill Portal from January. They shall not be able to make any more outward or inward supply of goods
This is a crucial change for Business but shall ensure maximum compliance by eliminating the defaulting taxpayers. Anyhow the new change is more severe for the defaulter taxpayers.
The blocked GSTINs can neither be supplier nor Buyers, meaning the Businesses shall come to a momentary halt. Hence making it essential for businesses to comply with the GST system at all costs.
Goods being transmitted without an e-Way Bill are likely to be penalized, seized & confiscated attracting losses for the Business, one way or another.
This is a Government initiative towards taming the Tax Frauds & identifying the defaulting Taxpayers. As a result of the implementation of this rule, Taxpayers are forced to file their GST Returns.
What to do if your e-Way Bill Generation is Blocked?
There are a few ways to unblock your blocked e-Way Bill generation system. Here is what you can do to unblock your GSTIN from the e-Way Bill System-
- By Filing your pending GSTR-3B- The taxpayer can get their e-Way Bill generation unblocked by filing their GSTR-3B & reducing the pending number to less than 2 consecutive tax periods. Post filing the GSTIN shall be unblocked automatically. But if the taxpayer wishes to unblock their System immediately, they can Update their Unblock status by logging into the GST Portal.
- Through a Jurisdictional Official- The taxpayer in special cases, can get their Barring lifted temporarily by raising a request stating a genuine & valid reason to a Jurisdictional Tax official. The official can unblock the system, post-authentication of the reason.
- Through GST Helpdesk- The taxpayer can reach out to the GST Helpdesk as well to get their GSTIN unblocked from the e-Way Bill System.
How this new Rule works out for Businesses
Since the enforcement of the e-Way Bill law, much importance has been given to it, by the GSTIN. Not carrying an e-Way Bill is considered non-compliance with a provision of the GST Regime & levies penalties & seizure of goods.
This clears one thing that Businesses must keep up with the e-Way Bill System & must generate e-Way Bills whenever required. And blocking of their GSTIN from the e-Way Bill System can have severe consequences.
This will force the Taxpayers to regularly file their GST returns, else they would face the effect as friction in transmitting their goods both inward & outward.
Hence Businesses will become more compliant with GST & the GSTN would be able to identify & spot the defaulter taxpayers. This will also help the Government in spotting the fraudulent GSTINs since the fraud companies would not file their GSTR-3Bs, as they may not have any real or valid transactions.
However, genuine Businesses may find this a problem, who could not file their GSTR-3Bs due to some issues. For this, the Government has provided relief, the Taxpayer can raise a request to unblock their GTINs on a temporary basis.
Conclusion
The Government is concerned about the revenue leakage problem now more than ever. They are introducing new Rules & adopting new policies regularly to combat the tax evasion problem & to identify the defaulter taxpayers.
This is high time for Taxpayers to comply better with the GST system to avoid penalties, extra added tax liabilities, & any other trouble such us blocking of their GSTIN in the e-Way Bill System.
Timely filing of GST Returns was always suggested by the GSTN but now it has been made mandatory, due to the rise in cases of Fraudulent Companies, Fake Invoices & Bogus e-Way Bills.
This should not be a problem for prompt & punctual Businesses whatsoever. The intent is only to make the defaulter taxpayers more complaint & identify the Bogus Companies & Tax evaders.
Companies shall automatically become more compliant because if they don’t file their GSTRs on time, they would not be able to import/export goods, or it may get delayed & ultimately the Business would come to a standstill. This could be a lesson for the latecomers.
This would immensely help the Government with tax evasion as well since the Fraud taxpayers will not file their GST returns even despite the rule because they won’t have anything solid to file in their Returns. Their transportation would stop & they would have to shut down their bogus firm.
Businesses must take this new Rule under utter consideration & file their GST Returns timely, however for an exceptional situation or in case of a genuine reason, the Government shows leniency.
But to maintain the smoothness in Business workflow Taxpayers should avoid any delays.
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