What happens when your business fails to generate an e-invoice?

When the Government of India first implemented e-invoicing in October 2020, they were very lenient towards businesses that were not prepared to adopt e-invoicing.
They even issued extensions in timelines to help companies adapt and integrate e-invoicing in their systems.

These extensions were an issue because adopting an e-invoicing system takes time. It needs organizations to upgrade their systems, adopt suitable technology, integrate technology suites, and train their staff on e-invoicing authentication.

However, once the extension period was over, the Government enforced that businesses who did not adhere would face the applicable penalties. So, what happens if your business cannot adhere to e-invoicing?

As per sub-rules 4, 5, and 6 of rule 48 of GST laws, firms (eligible to adopt e-invoicing) need to report all their B2B transactions to the invoice registration portal.Therefore, any invoice that the invoice registration portal has not authenticated will be considered invalid. Additionally, companies won’t be able to claim ITC while filing GST returns.

This can also attract penalties. For example, an organization that fails to adhere to GST laws and does not authenticate a business-to-business transaction invoice will need to pay 100% of the tax liability or a sum of ₹10,000, whichever is higher as a penalty.

If an invoice has incorrect details and is still sent to the invoice registration portal, it can attract an even higher penalty of ₹25,000 per invoice.

If the goods are transported without a valid invoice, the vehicle (and goods) can be detained and even confiscated by revenue authorities at various revenue checkpoints. In addition, the firm will be liable to pay any additional penalties that road authorities might impose.

If an organization doesn’t have a valid e-invoice, it will not be allowed to generate an e-way bill.

In addition, traveling without an accurate e-Way Bill will lead to additional penalties.
Organizations that fail to comply with GST laws and continue accumulating e-invoicing violations might lose their GST registration too.