Discussion Topic: E-Way Bill Applicability in Case of Invoice Splitting and Deferred Movement of Goods

[Fahiyaz Ahmmed]

A retailer issues two tax invoices of Rs. 40,000 (1 January) and Rs. 35,000 (5 January) even though the actual sale and movement of goods take place on 10 January. The goods remain at the retailer’s premises until 10 January, when the buyer purchases them, arranges transportation, and moves the entire consignment together in one vehicle.

The issue for discussion is whether an e-way bill is mandatory when multiple invoices (each below Rs. 50,000) are transported together and the aggregate consignment value exceeds Rs. 50,000. Further, whether invoice splitting prior to actual supply can be considered valid under Rule 138 of the CGST Rules, and who is responsible to generate the e-way bill when the buyer causes the movement of goods.

ACTUAL FACT- A retailer intentionally issues two tax invoices of Rs. 40,000 and Rs. 35,000 to keep each invoice value below Rs. 50,000 and thereby avoid generation of an e-way bill, though the goods are transported together in a single consignment. If the GST department detects this as a deliberate attempt to bypass e-way bill provisions, what penalty is leviable on the retailer?

[Sadanand Bulbule]

Section 9 of the CGST Act authorises levy of GST only on taxable supplies made in reality, and not on mere paper-engineered invoices. In the absence of proof of actual supply, real movement of goods or real provision of services, no tax can be charged under Section 9, since GST is a levy on substance of the transaction and not on form or book entries.

So follow the statute in letter & spirit.

[Shilpi Jain]

If caught by the officer on road, surely penalty would be levied. So better to not split or even if split let the EWB be issued.

AI Summary

E-way bill required when split invoices transported together exceed threshold; deliberate invoice splitting to evade is non-compliant. E-way bill obligation depends on the substantive movement and aggregate consignment value; when goods transported together exceed the threshold, an e-way bill is required even if individual invoices are below the threshold. Deliberate invoice splitting to avoid the e-way requirement constitutes circumvention, raising questions of invoicing validity and compliance responsibility for generating the e-way bill. GST attaches to the substance of supply, and tax or penalties may follow where authorities find paper-engineered transactions intended to evade e-way bill rules.