Blocking of E-way Bills if GST Returns not filed

The GST advisory released on 4th August 2021 states that the blocking of the E-way Bill generation (EWB) facility will resume after 15th August 2021 as per Rule 138 E (a) and (b) of the CGST Rules, 2017. Thus, after 15th August onwards, the system will check the status of returns filed in Form GSTR-3B or the statements filed in Form GST CMP-08, and block the generation of EWB in cases of:

• Non-filing of two or more returns in Form GSTR-3B (Monthly/Quarterly frequency as applicable) for the tax periods up to June 2021 and
• Non-filing of two or more statements in Form GST CMP-08 for the quarters up to April to June 2021.

So if you are purchasing goods and the onus of generating an e-way bill is on the vendor, then up-to-date filing GSTR 3B or CMP-08 is necessary for an uninterrupted supply of goods.

Invoice is valid only if it has IRN, if e-invoicing is applicable

As the e-invoicing mandate stands today, all businesses having turnover above ₹50 cr need to get their invoices registered with the Government and obtain a unique Invoice Reference Number (IRN). It is important to be aware of your vendor’s e-invoice applicability. E-invoicing may not be applicable to all your vendors but if it is applicable for some of them then it is mandatory that they send and generate e-invoices only.

IRN generation is necessary for an invoice to be considered valid for companies that come under the current threshold. If they don’t generate IRN then the invoice will be invalid and won’t get reflected thus affecting your ITC claim.

Have a look at the vendor compliance checklist:

WHAT compliances should you track?

Thus, every action or non-action by your vendor matters and affects you. The vendors need to file their GSTR 1 and GSTR 3B on time. This is important so that the government can auto-populate the data for you in your GSTR 2A and 2B. And it is also important because non-filing of returns can block E-way bill generation-this can affect your supply chain. Also, your vendors need to prepare invoices or e-invoices if they fall under the mandate correctly without faltering at any step.

Here is a checklist of all GST related compliances which you need to track for your ITC maximisation:

What you need to take care of after receiving invoices or e-invoices from your vendors is to verify the correctness in every aspect. You need to check if all the invoices as per the purchase register are present in the GSTR 2A/2B. If not, you need to communicate with the vendors and remove the discrepancy. Invoices that are ITC eligible, as per GSTR 2B need to be marked for future reference. Verify your ITC amount with the government i.e. you need to compare your data with the auto-computed data.

ITC claim is a monthly affair and hence the tracking of your vendor’s GST filing needs to be done monthly. However, given the nature of business, GST registration type and some other factors, you may conduct monitoring sessions at various levels and at different time intervals.

WHEN should you check the compliance status of vendors?

With every change in the rules, the ITC claim is getting intertwined with the way your vendor is complying. After understanding what needs to be tracked, the next question is when and how often should vendor compliance be monitored.

GST Returns are filed monthly or quarterly. Hence monitoring with respect to return filing status needs to be in line with filing due dates. Further on the happening of certain events such as non-filing, or erroneous reporting, the GSTIN status could change. There could be changes in other registration details too, while these may not impact ITC claim directly, but could have an impact on operations. For example, a change in address could mean a change in delivery route and hence may impact the cost.

Monitoring of vendor compliance should be done at various stages of the procure-to-pay cycle. Hence, some checks can be one-time or periodic based on the GST filing pattern of the vendor, while some checks need to be done regularly, month after month.

Here are some recommendations for consideration for defining the vendor monitoring process:

• Before dealing with any new vendor, you can check if the vendor is good to deal with by reading their GST filing history. You can use IRIS Peridot to check any GSTINs filing history easily.
• Get all the invoices verified after you receive them. IRIS Peridot can be handy here as well. However, an automated process should be in a place where the volume of invoices is high
• Have a set process to remind your vendors regarding the upcoming GST due dates based on their filing pattern. This will help them to avoid missing due dates and penalties.
• In the payment process, introduce a GST compliance checklist to check if returns are filed or not and whether what has been filed matches with the purchase register (based on reconciliation results).

A technology solution that can help you with vendor compliance

Manually keeping a track of every single vendor’s compliance history and track record is next to impossible. You will need the help of a technology solution that can do all the hard work for you within minutes saving loads of time, energy and effort.

The upcoming vendor compliance management module of IRIS GST shall help you to – –

• Collaborate with your vendors by creating a vendor ecosystem if you and your vendor are on the same technology platform
• Provides you with the right data hassle-free – You get compliance filing history, reconciliation results, missing invoice data, non-compliant vendor list etc. in real-time!
• Enables you to track invoices and e-invoices;
• Alerts and Notification in case of e-invoice cancellations, non-generation of EWB by your vendors, vendor registration changes etc.

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IRIS Sapphire – GST Reconciliation, from the house of IRIS GST – India’s leading GSP, has been built considering the requirements of various industries such as manufacturing, pharmaceuticals, automobiles etc. and has market-tested logic to reconcile the buyer-supplier data across various parameters to reduce manual effort.

With IRIS Sapphire’s smart reconciliation – you can easily identify invoice mismatches between GSTR-2A and your purchase books and take necessary actions to maximize your ITC claim!