Rule 138e of CGST states that if an individual who happens to be a composition dealer, fails to file GST returns for two consecutive tax periods, e-Way bill cannot be generated for making supply to him.
In accordance with the powers conferred by section 164, the Government of India, with a notification published in the Gazette of India has extended the date of blocking and unblocking of e-way bills if the taxpayer has made a default in filing of GST returns, for 2 consecutive tax periods.
What is the E-way Bill?
E-way bill is an important electronic document generated on the e-way bill portal. It is required to be carried by the custodian of the goods while the goods are in transit. To generate an e-way bill, it is mandatory for the dealer to register online on the e-way portal.
Need of e-way bill:
As per section 138 of CGST Act, it is necessary to generate the e-way bill in certain cases like:
- Where there is a movement of goods and the aggregate value of goods is more than Rs. 50000,
- And whenever goods are to be transported from one state to another.
Date of implementation of amendment
Earlier, the date for implementation of rule 138e was 21st August 2019 but now it has been extended to 21st November 2019.
Analysis of rule 138e
As a result of the above notification, the following assessees will not be able to generate an e-way bill in respect of a registered person, whether as a supplier or a recipient:
- Any assessee, who is a composition dealer, has failed to furnish GSTR-4 for 2 consecutive tax periods.
- Assessees, other than composition dealer, who have not filed their returns GSTR-3B/GSTR-1 for a consecutive period of two months.
- If e-way bills are required in any case and not issued, it will be considered as contravention of rules. The defaulter in such case will be liable to a penalty of Rs.10,000/- or tax sought to be evaded, whichever is greater.
However, the above provisions shall be subjected to the following conditions:
- The commissioner has the authority to allow/disallow an assessee to generate e- way bill. This is possible when the assessee has made a request, in writing, to the commissioner and the commissioner is satisfied that a genuine and valid cause was there due to which the assessee has failed to furnish the returns.
- The assessee must be given an opportunity of being heard before making any decision regarding blocking or unblocking of e-way bills.
Effects of implementation of rule 138e
Implementation of section 138e is necessary as till now, businesses of taxpayers are not impacted by non-filing or late filing of returns. Whereas, after the implementation of section 138e from 21st of November, non-filing or late filing of returns will have an effect of the businesses of taxpayers as they will not be able to furnish information in Part A of FORM GST EWB-01 and generate e-way bills required for transportation of goods. Linking GST returns to the generation of the e-way bill will also help to prevent evasion of tax.