As per a recent advisory released by the GSTN, no e-way bill is required to be generated where principal supply is service and no goods are involved.
The e-way bill system has evolved a lot since its inception. It started with an intention to curb tax frauds and keep track of the supply of goods. However, the e-way bill generation is no more happening in silos. With RFID, VAHAN and Fastag being integrated with e-way bill number, the entire process has become an integrated business function. With multiple aspects getting involved, the government is also constantly bringing in changes to ease the processes for taxpayers.
The CBIC released an advisory on 16th September 2021, related to the generation of e-way bill for taxpayers where the main supply i.e. the principal supply is classified as a service.
Taxpayers, traders and transporters were facing a lot of issues while generating e-way bills for movement of those goods where their principle supply is classifiable as a service since there is no provision for generating e-way bills by entering SAC (Service Accounting Code-Chapter 99) alone on the E-way Bill Portal.
The advisory states the following:
In cases where the principal supply is purely a supply of service and does not involve any movement of goods, the e-way bill is not required to be generated.
However, in cases where along with the principal (main) supply of service, movement of some goods is also involved, an e-way bill may be generated. Such situations may arise in cases of supply of services like printing services, works contract services, catering services, pandal or shamiana services, etc. In such cases, the e-way bill may be generated by entering the details of the HSN code of the goods, along with the SAC (Service Accounting Code) of the services involved.
Only SAC code starting from 99 is not allowed for E-way bill generation. It is important to have one HSN code.
Author’s Note: What principal supply rule says in GST; if there is a bundle of activities in a supply, whatever is the main service among them will be treated as the principal supply and for all other activities, the tax rate and HSN should be the same as principal supply.
If principal supply is service then all other activities also become service and tax rate and HSN will also be applicable to that of principal supply. With this advisory, it has been clarified that for other activities if there is the movement of goods, one can use that particular product’s HSN code for E-way bill generation instead of the principal supply of service.
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IRIS is an established GST Suvidha Provider (GSP) and was one of the first GSPs to complete the integration with NIC’s E-way Bill System. IRIS has been in the financial compliance space for over 2 decades and has worked with regulators and filing entities alike. We have supported MCA filings for over 700 entities including companies of groups such as Tata, Reliance, TVS, Godrej, L&T etc. Our E-way Bill solution, branded as IRIS Topaz, is an end-to-end solution for the entire E-way Bill cycle. IRIS Topaz can be accessed through the web, desktop utility, and APIs.