Volume 1

9326962521

ACCOUNTS AND RECORDS; E-WAY BILL

The section numbers referred to in the Chapter pertain to CGST Act, unless otherwise
specified.

1. INTRODUCTION
Assessment in GST is mainly focused on self-assessment by the taxpayers themselves. Every
taxpayer is required to self-assess the taxes payable and furnish a return for each tax period
i.e. the period for which return is required to be filed.

The compliance verification is done by the Department through scrutiny of returns and/or
investigation. This requires certain obligations to be cast on the taxpayer for keeping and
maintaining accounts and records. Such accounts and records may be used by the department
for compliance verification.

Chapter VIII – Accounts and Records [Sections 35 and 36] of the CGST Act and Chapter VII
– Accounts and Records [Rules 56 to 58] of the CGST Rules, 2017, enumerates the accounts
and records required to be maintained by a taxpayer and the period for which such accounts and
records are required to be preserved.
Further, E-way Bill provisions discussed in this Chapter are contained in section 68 read with
rules 138, 138A, 138B, 138C 138D and 138E [Chapter XVI] of the CGST Rules, 2017. State
GST laws also prescribe identical provisions.

Provisions relating to Accounts and Records; E-way Bill under CGST Act have also been made
applicable to IGST Act vide section 20 of the IGST Act.

- Arpita Tulsyan 1 www.arpitatulsyan.com

 Volume 1
9326962521

2. RELEVANT DEFINITIONS
- Commissioner: means the Commissioner of central tax and includes the Principal
Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax
appointed under the Integrated Goods and Services Tax Act. [Section 2(24)]

- Manufacture: means processing of raw material or inputs in any manner that results in
emergence of a new product having a distinct name, character and use and the term
"manufacturer" shall be construed accordingly. [Section 2(72)]

- Place of business: includes [Section 2(85)]:

a place from where the business is ordinarily carried on, and includes a warehouse, a
godown or any other place where a taxable person stores his goods, supplies or receives
goods or services or both; or

a place where a taxable person maintains his books of account; or

a place where a taxable person is engaged in business through an agent, by whatever

name called.

- Taxable person: means a person who is registered or liable to be registered under section 22
or section 24 [Section 2(107)].

- Principal place of business: means the place of business specified as the principal place of
business in the certificate of registration [Section 2(89)].

- Proper officer: in relation to any function to be performed under this Act, means the
Commissioner or the officer of the central tax who is assigned that function by the
Commissioner in the Board [Section 2(91)].

- Registered person: means a person who is registered under section 25, but does not include
a person having a Unique Identity Number [Section 2(94)].

- Arpita Tulsyan 2 www.arpitatulsyan.com

 Volume 1
9326962521

3. ACCOUNTS AND OTHER RECORDS [SECTION 35]

(Refer Q1, Q2, Q3, Q4, Q5, Q12, Q13)
The provisions relating to accounts and records required to be maintained under GST are
contained in sections 35 and 36 read along with Chapter VII – Accounts and Records of CGST
Rules, 2017. Relevant provisions of CGST Rules, 2017 have been incorporated at relevant
places.

(I) Who is required to maintain books of accounts and at which place? (Section 35(1))
Every registered person shall keep and maintain, books of accounts at his principal place of
business (PPoB) and books of account relating to additional place of business (APoB) [as
mentioned in the certificate of registration].
Where more than one place of business is specified in the certificate of registration, the
accounts relating to each place of business shall be kept at such places of business.
Unless proved otherwise, if any documents, registers, or any books of account belonging to a
registered person are found at any premises other than those mentioned in the certificate of
registration, they shall be presumed to be maintained by the said registered person.

Supply of goods through an auction like tea, rubber, coffee

In terms of above provision, the books of accounts relating to each and every place of business
are required to be maintained in that place itself. However, in case where goods like tea, rubber,
coffee, etc. are supplied through an auction, difficulties were being faced by the principal and
auctioneer in maintaining books of accounts at each and every APoB related to stock of said
goods.

Consequently, it has been clarified that in such cases, the principal and the auctioneer may
declare the warehouses, where such goods are stored, as their APoB. The buyer is also
required to disclose such warehouse as his APoB if he wants to store the goods purchased
through auction in such warehouses. For the purpose of supply of tea through a private treaty,
the principal and an auctioneer may also comply with the said provisions.

Further, the principal and the auctioneer for the purpose of auction of tea, coffee, rubber etc.,
or the principal and the auctioneer for the purpose of supply of tea through a private treaty, may
maintain the books of accounts relating to APoB at their PPoB instead of such APoB. Such
principal and auctioneer shall intimate their jurisdictional proper officer in writing about the
maintenance of books of accounts relating to APoB at their PPoB.

- Arpita Tulsyan 3 www.arpitatulsyan.com

 Volume 1
9326962521

ITC availment: It is further clarified that the principal and the auctioneer for the purpose of
auction of tea, coffee, rubber etc., or the principal and the auctioneer for the purpose of supply
of tea through a private treaty, shall be eligible to avail ITC subject to the fulfilment of other
provisions of the CGST Act read with the rules made thereunder [Circular No. 23/23/2017
GST dated 21.12.2017 and Circular No. 47/21/2018 GST dated 08.06.2018].

(II) Which accounts and records are required to be maintained?

A true and correct account of following is to be maintained:
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid
(f) such other particulars as may be prescribed

The Commissioner may notify a class of taxable persons to maintain additional accounts or
documents for such purpose as may be specified therein.
Where the Commissioner considers that any class of taxable persons is not in a position to keep
and maintain accounts in accordance with the provisions of this section, he may, for reasons to
be recorded in writing, permit such class of taxable persons to maintain accounts in such manner
as may be prescribed.

The additional records to be maintained by specified persons are as under:-

(i) Registered person
In addition to the particulars mentioned in section 35(1), the rules also provide that the
registered person is required to maintain a true and correct account of:
- the goods/services imported/exported,
- supplies attracting payment of tax on reverse charge along with relevant documents, including
invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment
vouchers and refund vouchers.
- separate account of advances received, paid and adjustments made thereto.
- particulars of:
• names and complete addresses of suppliers from whom he has received the goods or
services chargeable to tax under the Act;
• names and complete addresses of the persons to whom he has supplied goods or
services, where required under the provisions of this Chapter.

- Arpita Tulsyan 4 www.arpitatulsyan.com

 Volume 1
9326962521

- particulars of the complete address of the premises where goods are stored by him, including
goods stored during transit along with the particulars of the stock stored therein.

However, if any taxable goods are found to be stored at any place(s) other than those so declared
without the cover of any valid documents, the proper officer shall determine the amount of tax
payable on such goods as if such goods have been supplied by the registered person.

A supplier is required to maintain following records relating to stock of goods and tax details.
However, a supplier who has opted for composition scheme is not required to maintain such
records:
(a) Stock of goods: Accounts of stock in respect of goods received and supplied by him, and such
accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen,
destroyed, written off or disposed of by way of gift or free sample and the balance of stock
including raw materials, finished goods, scrap and wastage thereof.
(b) Details of tax: Account, containing the details of tax payable (including tax payable under
reverse charge), tax collected and paid, input tax, input tax credit claimed, together with a
register of tax invoice, credit notes, debit notes, delivery challan issued or received during any
tax period.

(ii) Agent:
Every agent shall maintain accounts depicting the-
(a) particulars of authorisation received by him from each principal to receive or supply
goods/services on behalf of such principal separately;
(b) particulars including description, value and quantity (wherever applicable) of goods /services
received on behalf of every principal;
(c) particulars including description, value and quantity (wherever applicable) of goods/services
supplied on behalf of every principal;
(d) details of accounts furnished to every principal; and
(e) tax paid on receipts or on supply of goods/services effected on behalf of every principal.

(iii) Manufacturer
Apart from other records, every registered person manufacturing goods has to maintain
monthly production accounts showing quantitative details of raw materials/services used in the
manufacture and quantitative details of the goods so manufactured including the waste and by
products thereof.

- Arpita Tulsyan 5 www.arpitatulsyan.com

 Volume 1
9326962521

(iv) Service Provider

Every registered person supplying services has to additionally maintain the accounts showing
quantitative details of goods used in the provision of services, details of input services utilized
and the services supplied.

(v) Person executing works contract

Every registered person executing works contract shall keep separate accounts for works
contract showing -
- the names and addresses of the persons on whose behalf the works contract is executed;
- description, value and quantity (wherever applicable) of goods or services received for the
execution of works contract;
- description, value and quantity (wherever applicable) of goods/services utilized in the
execution of works contract;
- the details of payment received in respect of each works contract; and
- the names and addresses of suppliers from whom he received goods/services.

(vi) Custodian/clearing and forwarding agent

Any person having custody over the goods in the capacity of a carrier or a clearing and
forwarding agent for delivery or dispatch thereof to a recipient on behalf of any registered
person shall maintain true and correct records in respect of such goods handled by him on behalf
of such registered person and shall produce the details thereof as and when required by the
proper officer.

(vii) Owner/operator of a warehouse/ godown and transporter

Every owner or operator of warehouse or godown or any other place used for storage of goods
and every transporter, irrespective of whether he is a registered person or not, shall maintain
records of the consigner, consignee and other relevant details of the goods in such manner as
may be prescribed.

Enrolment, if not already registered in GST: If such persons are not already registered, they
shall obtain a unique enrollment number by applying electronically [Form GST ENR-01] at the
GST Common Portal.
The person enrolled as aforesaid in any other State or Union territory shall be deemed to be
enrolled in the State or Union territory. Such person may also amend the details furnished in
the prescribed form. Such person, once obtained unique enrollment number, shall not be eligible
to use any of the GSTIN.

- Arpita Tulsyan 6 www.arpitatulsyan.com

 Volume 1
9326962521

- Transporter: Any person engaged in the business of transporting goods shall maintain records
of goods transported, delivered and goods stored in transit by him along with GSTIN of the
registered consignor and consignee for each of his branches.

- Owner/operator of a warehouse/ godown:

Every owner or operator of a warehouse or godown shall maintain books of accounts with
respect to the period for which particular goods remain in the warehouse, including the
particulars relating to dispatch, movement, receipt, and disposal of such goods.

The owner or the operator of the godown shall store the goods in such manner that they can
be identified item-wise and ownerwise and shall facilitate any physical verification or inspection
by the proper officer on demand.

(III) How the accounts and records will be maintained?

- Records may be maintained manually. Each volume of books of account maintained manually by
the registered person shall be serially numbered.

- Records may be maintained in electronic form

• Books of account include any electronic form of data stored on any electronic device.
• The registered person may keep and maintain such accounts and other particulars in
electronic form stored on any electronic device and record so maintained shall be
authenticated by means of a digital signature.
• Proper electronic back-up of records shall be maintained and preserved in such manner
that, in the event of destruction of such records due to accidents or natural causes, the
information can be restored within a reasonable period of time.
• The registered person maintaining electronic records shall produce, on demand, the
relevant records or documents, duly authenticated by him, in hard copy or in any
electronically readable format.
• Where the accounts and records are stored electronically by any registered person, he
shall, on demand, provide the details of such files, passwords of such files and explanation
for codes used, where necessary, for access and any other information which is required
for such access along with a sample copy in print form of the information stored in such
files.

- Arpita Tulsyan 7 www.arpitatulsyan.com

 Volume 1
9326962521

- No entry to be erased/overwritten
• Any entry in registers, accounts and documents shall not be erased, effaced or
overwritten.
• All incorrect entries, otherwise than those of clerical nature, shall be scored out under
attestation and there after correct entry shall be recorded.
• Where the registers and other documents are maintained electronically, a log of every
entry edited or deleted shall be maintained.

- Accounts maintained by the registered person together with all the invoices, bills of supply,
credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and
outward supply shall be preserved for the period as provided in section 36 [discussed later] and
shall, where such accounts and documents are maintained manually, be kept at every related
place of business mentioned in the certificate of registration and shall be accessible at every
related place of business where such accounts and documents are maintained digitally.

- Every registered person shall, on demand, produce the books of accounts which he is required
to maintain under any law for the time being in force.

(IV) What are the consequences of failure to maintain the accounts?

Where the registered person fails to account for the goods and/or services in accordance with
the provisions of section 35(1), the proper officer shall determine the amount of tax payable on
the goods or services or both that are not accounted for, as if such goods or services or both
had been supplied by such person and the provisions of section 73/section 74, as the case may
be, shall, mutatis mutandis, apply for determination of such tax.

4. PERIOD OF RETENTION OF ACCOUNTS [SECTION 36] (Refer Q11)

Every registered person required to keep and maintain books of account or other records in
accordance with the provisions of section 35(1) shall retain them until the expiry of 72 months
from the due date of furnishing of annual return for the year pertaining to such accounts and
records.
However, a registered person, who is a party to an appeal or revision or any other proceedings
before any Appellate Authority or Revisional Authority or Appellate Tribunal or Court,
whether filed by him or by the Commissioner, or is under investigation for an offence under
Chapter XIX, shall retain the books of account and other records pertaining to the subject
matter of such appeal or revision or proceedings or investigation for a period of one year after
final disposal of such appeal or revision or proceedings or investigation, or for the period
specified above, whichever is later.

- Arpita Tulsyan 8 www.arpitatulsyan.com

 Volume 1
9326962521

5. ELECTRONIC WAY BILL [SECTION 68 READ WITH RELEVANT

CGST RULES, 2017]
Under GST regime, for quick and easy movement of goods across India without any hindrance,
all the check posts across the country are abolished. However, in order to monitor the
movement of goods for controlling any tax evasion, e-way bill system has been introduced.

Under this system, a taxpayer - prior to movement of goods via a conveyance - would inform
each transaction’s details to the tax department, obtain an acknowledgement number for having
thus informed, and then use this acknowledgement number as a valid document accompanying
the conveyance carrying goods.

The idea is that the taxpayer be made to upload the details of each transaction to a common
portal through the internet, and once uploaded, the common portal would automatically generate
a document which can be tracked and verified easily by any stakeholder.

Statutory requirement:
Section 68 stipulates that the Government may require the person in charge of a conveyance
carrying any consignment of goods of value exceeding such amount as may be specified to carry
with him such documents and such devices as may be prescribed.
Rule 138 prescribes e-way bill as the document to be carried for the consignment of goods in
certain prescribed cases.

What is e-way bill?

A waybill is a receipt or a document issued by a carrier giving details and instructions relating to
the shipment of a consignment of goods and the details include name of consignor, consignee,
the point of origin of the consignment, its destination, and route.

Electronic Way Bill (E-Way Bill) is a compliance mechanism wherein by way of a digital
interface the person causing the movement of goods uploads the relevant information prior to
the commencement of movement of goods and generates e-way bill on the GST portal. In other
words, E-way bill is an electronic document generated on the GST portal evidencing movement
of goods.

- Arpita Tulsyan 9 www.arpitatulsyan.com

 Volume 1
9326962521

What are the benefits of e-way bill?

Following are the benefits of e-way bill mechanism:
(i) Physical interface to pave way for digital interface resulting in elimination of state boundary
check-posts.
(ii) It will facilitate faster movement of goods
(iii) It will improve the turnaround time of trucks and help the logistics industry by increasing the
average distances travelled, reducing the travel time as well as costs.

E-way Bill is generated electronically in Form GST EWB 01 on the common portal
(www.ewaybillgst.gov.in).
E-way Bill can be generated through various modes like Web (Online), Android App, SMS, using
Bulk Upload Tool and API (Application Program Interface) based site to site integration etc.

Registration requirement of the person generating the e-way bill:

The facility of generation, cancellation, updation and assignment of e-way bill is available to the
supplier, recipient and the transporter, as the case may be. The pre-requisite for generation of
e-way bill is that the person who generates e-way bill should be a registered person on GST
portal and he should register on the e-way bill portal using his GSTIN.

Unregistered transporters:
If the transporter is generating the e-way bill, but he is not registered person under GST law,
it is mandatory for him to get enrolled on e-waybill portal before generation of the e-way bill to
get 15-digit Unique Transporter Id called TRANSIN.

TRANSIN or Transporter id is a unique number generated by e-way bill system for

unregistered transporter, once he enrolls on the system. It is similar to GSTIN format and is
based on State code, PAN and check sum digit. This TRANSIN or Transporter id can be shared
by transporter with his clients, who may enter this number while generating e-way bills for
assigning goods to him for transportation.

Common enrolment process for registered transporters having GSTIN in multiple states with
same PAN: There may be a transporter who is registered and has registration in more than one
State/UT; then, he would have more than one GSTIN as well. A transporter who is registered
in more than one State/UT having the same PAN, may apply for a Unique Common Enrolment
Number by submitting the details in prescribed form using any one of his GSTINs.
Upon validation of the details furnished, a unique common enrolment number shall be generated
and communicated to the said transporter. Once a transporter has obtained a unique common

- Arpita Tulsyan 10 www.arpitatulsyan.com

 Volume 1
9326962521

enrolment number, he shall not be eligible to use any of the GSTIN for the purposes of e-way
bills under Chapter XVI of these rules.

This way the transporters who are GST registered can generate a Common Enrolment number
which will allow him to use one registration number for generating the e-way bills and updating
Part-B of e-way bill throughout the country. Only registered transporters, which are having
GSTIN in multiple states with same PAN number, can register in common enrolment process.

E-way Bill provisions [as contained in rules 138, 138A, 138B, 138C, 138D and
138E – Chapter XVI of the CGST Rules, 2017] are elaborated as under:
(Refer Q15, Q16, Q19, Q23, Q27)
(1) When is e-way bill required to be generated? [Rule 138(1)]
Whenever there is a movement of goods of consignment value exceeding Rs. 50,000:
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person,
the registered person who causes such movement of goods shall furnish the information relating
to the said goods as specified in Part A of Form GST EWB-01 before commencement of such
movement.

It is important to note that “information is to be furnished prior to the commencement of

movement of goods” and “is to be issued whether the movement is in relation to a supply or for
reasons other than supply”.

Who causes movement of goods?

If supplier is registered and undertakes to transport the goods, movement of goods is caused by
the supplier. If recipient arranges transport, movement is caused by him. If goods are supplied
by an unregistered supplier to a registered recipient, movement shall said to be caused by such
recipient, if the recipient is known at the time of commencement of the movement of goods.
Meaning of consignment value of goods: (Refer Q7, Q10, Q22)
Consignment value of goods shall be the value:
- determined in accordance with the provisions of section 15,
- declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in
respect of the said consignment and
- also includes the Central tax, State or Union territory tax, integrated tax and cess charged,
if any, in the document and

- Arpita Tulsyan 11 www.arpitatulsyan.com

 Volume 1
9326962521

- shall exclude the value of exempt supply of goods where the invoice is issued in respect of
both exempt and taxable supply of goods.
In case of movement of goods for reasons other than supply, the movement is occasioned by
means of a delivery challan which has to necessarily contain the value of goods. The value
given in the delivery challan should be adopted in the e-way bill.

Example: Bhanupratap Shoe Manufacturers, registered in Punjab, sold shoes to a retail seller
in Gujarat, at a value of Rs. 48,000 (excluding GST leviable @ 18%) and wants to send the
consignment of such shoes to Gujarat. The consignment value will be Rs. 56,640 [Rs. 48,000
× 118%]. Since the movement of goods is in relation to supply of goods and the consignment
value exceeds Rs. 50,000, e-way bill is mandatorily required to be issued in the given case.
Example: Sindhi Textiles of Ludhiana, registered in Punjab, sends cloth to a job worker in
Jalandhar, Punjab on a delivery challan. The value of cloth mentioned in the delivery challan is
Rs. 48,000. Since the movement of goods is for reasons other than supply, the value given in
the delivery challan is adopted for the purposes of the e-way bill. Such value does not exceed
Rs. 50,000. Consequently, e-way bill is not required to be issued in this case.

Special situations where e-way bill needs to be issued even if the value of the
consignment is less than Rs. 50,000:
(i) Inter-State transfer of goods by principal to job-worker Where goods are sent by a principal
located in one State or Union territory to a job worker located in any other State or Union
territory, the e-way bill shall be generated either by the principal or the job worker, if registered,
irrespective of the value of the consignment.

(ii) Inter-State transfer of handicraft goods by a person exempted from obtaining registration
Where handicraft goods are transported from one State or Union territory to another State
or Union territory by a person who has been exempted from the requirement of obtaining
registration [under Section 24(i) & (ii)], the e-way bill shall be generated by the said person
irrespective of the value of the consignment.

E-way Bill in case of ‘Bill To Ship To’ Model

In a “Bill To Ship To” model of supply, there are three persons involved in a transaction, namely:
‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’.
‘B’ is the person who is sending goods directly to ‘C’ on behalf of ‘A’.
‘C’ is the recipient of goods.

- Arpita Tulsyan 12 www.arpitatulsyan.com

 Volume 1
9326962521

In this complete scenario. two supplies are involved and accordingly two tax invoices are
required to be issued:
Invoice -1: which would be issued by ‘B’ to ‘A’.
Invoice -2: which would be issued by ‘A’ to ‘C’.

It is clarified that as per the CGST Rules, 2017, for the movement of goods which is taking
place from “B” to “C” on behalf of “A”, either A or B can generate the e-way bill but it may be
noted that only one e-Way Bill is required to be generated.

(2) Information to be furnished in e-way bill:

An e-way bill Form GST EWB-01 contains two parts:

(I) Part A [comprising of details of GSTIN of supplier & recipient, place of delivery (indicating
PIN Code also), document (Tax invoice, Bill of Supply, Delivery Challan or Bill of Entry) number
and date, value of goods, HSN code, and reasons for transportation, etc.]: to be furnished by
the registered person** who is causing movement of goods of consignment value exceeding Rs.
50,000/- and
(II) Part B (transport details) [Transporter document number (Goods Receipt Number or
Railway Receipt Number or Airway Bill Number or Bill of Lading Number) and Vehicle number,
in case of transport by road]: to be furnished by the person who is transporting the goods.

**However, information in Part-A may be furnished:

- by the transporter, on an authorization received from such registered person or
- by the e-commerce operator or courier agency, where the goods to be transported are
supplied through such an e-commerce operator or a courier agency, on an authorization
received from the consignor.
Once the consignor/consignee enters all the details in Part-A of e-way bill, a Part-A slip is
generated which contains a temporary number. This slip can be shared with the transporter or
used by the supplier himself later to enter the details in Part-B of e-way bill and generate the
e-way bill.

- Arpita Tulsyan 13 www.arpitatulsyan.com

 Volume 1
9326962521

This will be useful, when supplier has prepared invoice relating to his business transaction, but
doesn’t have the transportation details. Thus, he can enter invoice details in Part A of e-way
bill and keep it ready for entering details of mode of transportation in Part B of e-way bill.

Once the goods are ready for movement from the business premises and transportation details
are known, the user can enter the Part-B details and generate the e-way bill for movement of
goods. E-way Bill can be generated only after entering the details of Part-B.

(3) Who is mandatorily required to generate e-way bill? (Refer Q14)

E-way bill is to be generated by the consignor or consignee himself if the transportation is being
done in own/hired conveyance or by railways by air or by vessel. If the goods are handed over
to a transporter for transportation by road, e-way bill is to be generated by the transporter.
Where neither the consignor nor consignee generates the e-way bill and the value of goods is
more than Rs. 50,000, it shall be the responsibility of the transporter to generate it. This has
been explained in detail below:

- Where the goods are transported by a registered person whether as consignor or recipient
as the consignee (whether in his own conveyance or a hired one or a public conveyance, by road),
the said person shall have to generate the e-way bill (by furnishing information in part B on the
common portal)

- Where the e-way bill is not generated by the registered person and the goods are handed
over to the transporter, for transportation of goods by road, the registered person shall furnish
the information relating to the transporter in Part B on the common portal and the e-way bill
shall be generated by the transporter on the said portal on the basis of the information furnished
by the registered person in Part A.

- Where the goods are transported by railways or by air or by vessel, the e-way bill shall be
generated by the registered person, being the supplier or the recipient, who shall, either before
or after the commencement of movement, furnish, information in part B [viz transport document
number (Goods Receipt Number or Railway Receipt Number or Airway Bill Number or Bill of
Lading Number)] on the common portal.

- Arpita Tulsyan 14 www.arpitatulsyan.com

 Volume 1
9326962521

Other important points:

- Where the goods are transported by railways: there is no requirement to carry e-way bill
along with the goods, but railways has to carry invoice or delivery challan or bill of supply as the
case may be along with goods. Further, e-way bill generated for the movement is required to be
produced at the time of delivery of the goods. Railways shall not deliver goods unless the e-way
bill required under rules is produced at the time of delivery.
- The registered person or, the transporter may, at his option, generate and carry the e-way
bill even if the value of the consignment is less than Rs. 50,000.
- Where the movement is caused by an unregistered person either in his own conveyance or a
hired one or through a transporter, he or the transporter may, at their option, generate the e-
way bill.
- Where the goods are supplied by an unregistered supplier to a recipient who is registered,
the movement shall be said to be caused by such recipient if the recipient is known at the time
of commencement of the movement of goods.

(4) When is it not mandatory to furnish the details of conveyance in Part-B?

(Refer Q21)
E-way bill is valid for movement of goods by road only when the information in Part-B is
furnished.
Exceptions:
Details of conveyance may not be furnished in Part-B of the e-way bill where the goods are
transported for a distance of upto 50 km within the State/Union territory:
- from the place of business of the consignor to the place of business of the transporter for
further transportation or
- from the place of business of the transporter finally to the place of business of the consignee.

(5) Unique e-way bill number (EBN)

Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall
be made available to the supplier, the recipient and the transporter on the common portal.

(6) Transfer of goods from one conveyance to another (Refer Q20)

Where the goods are transferred from one conveyance to another, the consignor or the
recipient, who has provided information in Part A, or the transporter shall, before such transfer
and further movement of goods, update the details of conveyance in Part B of the e-way bill on
the common portal.
Consignment of goods may be required to be transferred from the original conveyance to due to
unforeseen exigencies like break down of the vehicle. In such case, the transporter transferring

- Arpita Tulsyan 15 www.arpitatulsyan.com

 Volume 1
9326962521

goods from one conveyance to another in the course of transit shall, before such transfer and
further movement of goods, update the details of the conveyance.

In some cases, consignments are transported by the transporter through transshipment using
multiple vehicles (same mode of transportation) for carrying the same consignment before it is
delivered to the recipient at the place of destination. Hence for each movement from one place
to another, the transporter needs to update the vehicle number in which he is transporting that
consignment in part B of the e-way bill.

The user can update Part-B (Vehicle details) as many times as he wants for movement of goods
to the destination. However, the updating should be done within the validity period.

There can also be a case where one e-way bill can go through multiple modes of transportation
before reaching destination. As per the mode of transportation, the EWB can be updated with
new mode of transportation by using the option of ‘Update Vehicle Number’.

Example: Babbal Associates is moving the goods from Cochin to Chandigarh through road, ship,
air and road again. First, Babbal Associates generates the EWB by entering first stage of
movement (by road) from its place to shipyard and enters the vehicle number. Next, it will submit
the goods to shipyard and update the mode of transportation as ship and transport document
number on the e-way bill system.
After reaching Mumbai, Babbal Associates or concerned transporter updates movement as
road from shipyard to airport with vehicle number. Thereafter, Babbal Associates or
transporter updates using ‘update vehicle number’ option on the portal, the Airway Bill number.
Again, after reaching Delhi, Babbal Associates updates movement through road with vehicle
number. This way, the e-way bill will be updated with multiple modes of transportation.

Assigning the e-way bill number to another transporter

The consignor/recipient, who has furnished the information in Part A, or the transporter, may
assign the e-way bill number to another registered/enrolled transporter for updating the
information in Part B for further movement of the consignment. However, once the details of
the conveyance have been updated by the transporter in Part B, the consignor or recipient, as
the case may be, who has furnished the information in Part A shall not be allowed to assign the
e-way bill number to another transporter.

Example: A consignor is required to move goods from City X to City Z. He appoints Transporter
A for movement of his goods. Transporter A moves the goods from City X to City Y. For

- Arpita Tulsyan 16 www.arpitatulsyan.com

 Volume 1
9326962521

completing the movement of goods i.e., from City Y to City Z, Transporter A now hands over
the goods to Transporter B. Thereafter, the goods are moved to the destination i.e. from City
Y to City Z by Transporter B. In such a scenario, only one e-way bill would be required. Part A
can be filled by the consignor and then the e-way bill will be assigned by the consignor to
Transporter A. Transporter A will fill the vehicle details, etc. in Part B and will move the goods
from City X to City Y. On reaching City Y, Transporter A will assign the said e-way bill to the
Transporter B. Thereafter, Transporter B will be able to update the details of Part B.
Transporter B will fill the details of his vehicle and move the goods from City Y to City Z

(7) Consolidated E-way bill (Refer Q18, Q23)

After e-way bill has been generated, where multiple consignments are intended to be
transported in one conveyance, the transporter may indicate the serial number of e-way bills
generated in respect of each such consignment electronically on the common portal and a
consolidated e-way bill in Form GST EWB-02 may be generated by him on the said common
portal prior to the movement of goods.
Consolidated e-way bill is a document containing the multiple e-way bills for multiple
consignments being carried in one conveyance (goods vehicle). That is, the transporter carrying
multiple consignments of various consignors and consignees in a single vehicle can generate and
carry a single document - consolidated e-way bill instead of carrying separate document for
each consignment in a conveyance.
Consolidated EWB is like a trip sheet and it contains details of different e-way bills in respect
of various consignments being transported in one vehicle and these e-way bills will have
different validity periods. Hence, Consolidated EWB does not have any independent validity
period. Further, individual consignment specified in the Consolidated EWB should reach the
destination as per the validity period of the individual EWB.

Further, where the consignor/consignee has not generated the e-way bill in Form GST EWB-
01 and the aggregate of the consignment value of goods carried in the conveyance is more than
Rs. 50,000, the transporter, except in case of transportation of goods by railways, air and
vessel, shall, in respect of inter-State supply, generate the e-way bill in Form GST EWB-01
on the basis of invoice or bill of supply or delivery challan, as the case may be, and may also
generate a consolidated e-way bill in Form GST EWB-02 on the common portal prior to the
movement of goods.
The generation of Form GST EWB-02 is optional and not mandatory.
However, where the goods to be transported are supplied through an ecommerce operator or
a courier agency, the information in Part A of Form GST EWB-01 may be furnished by such
e-commerce operator or courier agency. This proviso is not yet effective.

- Arpita Tulsyan 17 www.arpitatulsyan.com

 Volume 1
9326962521

(8) Information submitted for e-way bill can be used for filing GST Returns
The information furnished in Part A of the e-way bill shall be made available to the registered
supplier on the common portal who may utilize the same for furnishing the details in Form
GSTR-1.
However, when the information has been furnished by an unregistered supplier/unregistered
recipient, he shall be informed electronically, if the mobile number or the e-mail is available.

(9) Cancellation of e-way bill (Refer Q8, Q24)

Where an e-way bill has been generated, but goods are either not transported or are not
transported as per the details furnished in the e-way bill, the e-way bill may be cancelled
electronically on the common portal within 24 hours of generation of the e-way bill.
However, an e-way bill cannot be cancelled if it has been verified in transit in accordance with
the provisions of Rule 138B.
Further, unique EWB number generated is valid for a period of 15 days for updation of Part B.

(10) Validity period of e-way bill/consolidated e-way bill [Rule 138(10)]

(Refer Q17, Q26)
The validity of e-way bill depends on the distance to be travelled by the goods. For a distance
of less than 200 km the e-way bill will be valid for a day from the relevant date. For every 200
km thereafter, the validity will be additional one day from the relevant date.
S. Distance within country Validity period from relevant date*
No.
1. Upto 200 km One day in cases other than Over Dimensional Cargo or
multimodal shipment in which at least one leg involves
transport by ship
2. For every 200 km or One additional day in cases other than Over Dimensional
part thereof thereafter Cargo or multimodal shipment in which at least one leg
involves transport by ship
3. Upto 20 km One day in case of Over Dimensional Cargo or multimodal
shipment in which at least one leg involves transport by ship
4. For every 20 km or One additional day in case of Over Dimensional Cargo or
part thereof thereafter multimodal shipment in which at least one leg involves
transport by ship
*Relevant date means the date on which the e-way bill has been generated and the period of
validity shall be counted from the time at which the e-way bill has been generated and each day
shall be counted as the period expiring at midnight of the day immediately following the date of
generation of e-way bill.

- Arpita Tulsyan 18 www.arpitatulsyan.com

 Volume 1
9326962521

**Over dimensional cargo means a cargo carried as a single indivisible unit and which exceeds
the dimensional limits prescribed in rule 93 of the Central Motor Vehicle Rules, 1989, made
under the Motor Vehicles Act, 1988.

This can be explained by following examples –

(i) Suppose an e-way bill is generated at 00:04 hrs. on 14th March. Then first day would end
on 12:00 midnight of 15 -16 March. Second day will end on 12:00 midnight of 16 -17 March and
so on.
(ii) Suppose an e-way bill is generated at 23:58 hrs. on 14th March. Then first day would end
on 12:00 midnight of 15 -16 March. Second day will end on 12:00 midnight of 16 -17 March and
so on.
The validity of the e-way bill starts when first entry is made in Part-B i.e. vehicle entry is made
first time in case of road transportation or first transport document number entry in case of
rail/air/ship transportation, whichever is the first entry. It may be noted that validity is not re-
calculated for subsequent entries in Part-B.

Example: A consignor hands over his goods for transportation on Friday to transporter.
However, the assigned transporter starts the movement of goods on Monday. The validity
period of e-way bill starts only after the details in Part B are updated by the transporter for
the first time.
In the given situation, consignor can fill the details in Part A on Friday and handover his goods
to the transporter. When the transporter is ready to move the goods, he can fill Part B i.e. the
assigned transporter can fill the details in Part B on Monday and the validity period of the e-
way bill will start from Monday [CBIC Press Release].

Example: A registered person has to transport goods from its warehouse to its depot located
at a distance of 500 km in a normal cargo. . In the given case, if e-way bill is generated, it will be
valid for 3 days.

Extension of validity period

If validity of the e-way bill expires, the goods are not supposed to be moved. In general, the
validity of the e-way bill cannot be extended However, the validity of the e-way bill can be
extended in following cases:

Extension by Commissioner for certain categories of goods:

Commissioner may, on the recommendations of the Council, by notification, extend the validity
period of an e-way bill for certain categories of goods as may be specified therein.

- Arpita Tulsyan 19 www.arpitatulsyan.com

 Volume 1
9326962521

Extension by transporter in exceptional circumstances:

Under circumstances of an exceptional nature, including trans-shipment, the goods cannot be
transported within the validity period of the e-way bill, the transporter may extend the validity
period after updating the details in Part B, if required.
Thus, the transporter, who is carrying the consignment as per the e-way bill system at the time
of expiry of validity period, can extend the validity period. Such transporter can extend the
validity of the e-way bill, if the consignment is not being reached the destination within the
validity period due to exceptional circumstance like natural calamity, law and order issues,
transshipment delay, accident of conveyance, etc. He needs to explain this reason in details while
extending the validity period. The validity of the e-way bill may be extended within 8 hours from
the time of its expiry.

(11) Acceptance of e-way bill (Refer Q23)

The details of the e-way bill generated shall be made available to the -
(a) supplier, if registered, where the information in Part A has been furnished by the
recipient/transporter; or
(b) recipient, if registered, where the information in Part A has been furnished by the
supplier/transporter,
on the common portal, and the supplier/recipient, as the case may be, shall communicate his
acceptance or rejection of the consignment covered by the e-way bill.

In case, the person to whom the information in Part-A is made available, does not communicate
his acceptance or rejection within the specified time, it shall be deemed that he has accepted the
said details. The time-limit specified for this purpose is:
(i) 72 hours of the details being made available to him on the common portal
or
(ii) the time of delivery of goods, whichever is earlier.

(12) E-way bill generated in one State is valid in another State (Refer Q24)
The e-way bill generated under this rule or under rule 138 of the Goods and Services Tax Rules
of any State or Union territory shall be valid in every State and Union territory.

- Arpita Tulsyan 20 www.arpitatulsyan.com

 Volume 1
9326962521

Points to remember:
1. E-way bill is not valid for movement of goods without vehicle number on it.
2. If there is a mistake, incorrect or wrong entry in the e-way bill, then it cannot be edited or
corrected. Only option is cancellation of e-way bill within 24 hours of generation and generate
a new one with correct details.
3. E- Way Bill may be updated with vehicle number any number of times.
4. The latest vehicle number should be available on e-way bill and should match with the vehicle
carrying it in case checked by the department.
5. If multiple invoices are issued by the supplier to recipient, that is, for movement of goods of
more than one invoice of same consignor and consignee, multiple e-way bills have to be
generated. That is, for each invoice, one e-way bill has to be generated, irrespective of the fact
whether same or different consignors or consignees are involved. Multiple invoices cannot be
clubbed to generate one e-way bill. However, after generating all these e-way bills, one
Consolidated e-way bill can be prepared for transportation purpose, if goods are going in one
vehicle.

(13) Situations where e-way bill is not required to be generated (Refer Q9)
Notwithstanding anything explained above, no e-way bill is required to be generated in the
following cases:

(a) where the goods being transported are the ones given below:
S. Description of Goods
No.
1. Liquefied petroleum gas for supply to household and nondomestic exempted category
(NDEC) customers
2. Kerosene oil sold under PDS
3. Postal baggage transported by Department of Posts
4. Natural or cultured pearls and precious or semi-precious stones; precious metals and
metals clad with precious metal (Chapter 71)
5. Jewellery, goldsmiths’ and silversmiths’ wares and other articles (Chapter 71)
[excepting imitation Jewellery (7117)]
6. Currency
7. Used personal and household effects
8. Coral, unworked (0508) and worked coral (9601)]

(b) where the goods are being transported by a non-motorised conveyance

- Arpita Tulsyan 21 www.arpitatulsyan.com

 Volume 1
9326962521

(c) where the goods are being transported from the customs port, airport, air cargo complex and
land customs station to an inland container depot or a container freight station for clearance by
Customs

(d) in respect of movement of goods within such areas as are notified under of rule 138(14)(d) of
the State or Union territory GST Rules in that particular State or Union territory

(e) where the goods [other than de-oiled cake], being transported, are exempt from tax

(f) where the goods being transported are alcoholic liquor for human consumption, petroleum
crude, high speed diesel, motor spirit (commonly known as petrol), natural gas or aviation turbine
fuel

(g) where the supply of goods being transported is treated as no supply under Schedule III of the
CGST Act

(h) where the goods are being transported -

(i) under customs bond from an inland container depot or a container freight station to a customs
port, airport, air cargo complex and land customs station, or from one customs station or
customs port to another customs station or customs port, or
(ii) under customs supervision or under customs seal

(i) where the goods being transported are transit cargo from or to Nepal or Bhutan

(j) where the goods being transported are exempt from tax under Notification No. 7/2017 CT
(R) 28.06.2017 [Supply of goods by the CSD to the Unit Run Canteens or to the authorized
customers and supply of goods by the Unit Run Canteens to the authorized customers] and
Notification No. 26/2017 CT (R) 21.09.2017 [Supply of heavy water and nuclear fuels by
Department of Atomic Energy to Nuclear Power Corporation of India Ltd. (NPCIL)]

(k) any movement of goods caused by defence formation under Ministry of defence as a consignor
or consignee

(l) where the consignor of goods is the Central Government, Government of any State or a local
authority for transport of goods by rail

(m) where empty cargo containers are being transported

- Arpita Tulsyan 22 www.arpitatulsyan.com

 Volume 1
9326962521

(n) where the goods are being transported upto a distance of 20 km from the place of the
business of the consignor to a weighbridge for weighment or from the weighbridge back to the
place of the business of the said consignor subject to the condition that the movement of goods
is accompanied by a delivery challan issued in accordance with rule 55.

(o) where empty cylinders for packing of liquefied petroleum gas are being moved for reasons
other than supply

(14) Documents and devices to be carried by a person-in-charge of a conveyance

[Rule 138A] (Refer Q6)
The person-in-charge of a conveyance shall carry -
(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill in physical form or the e-way bill number in electronic form* or
mapped to a RFID** embedded on to the conveyance [except in case of movement of goods by
rail or by air or vessel] in such manner as may be notified by the Commissioner.

*Carrying e-way bill number in electronic form implies that person-in-charge of conveyance
can merely quote the e-way bill number to the proper tax officer. Tax officer will do all the
requisite verifications, based on that number.

**RFIDs are Radio Frequency Identification Device used for identification.

However, in case of imported goods, the person in charge of a conveyance shall also carry a
copy of the bill of entry filed by the importer of such goods and shall indicate the number and
date of the bill of entry in Part A of e-way bill.

Invoice Reference Number in lieu of tax invoice

In case, e-invoice is issued, the Quick Response (QR) code having an embedded Invoice
Reference Number (IRN) in it, may be produced electronically, for verification by the proper
officer in lieu of the physical copy of such tax invoice.
In such a case, the registered person will not have to upload the information in Part A of e-way
bill for generation of e-way bill and the same shall be auto populated by the common portal on
the basis of the information furnished in the prescribed form relating to e-invoice.
The Commissioner may, by notification, require a class of transporters to obtain a unique RFID
and get the said device embedded on to the conveyance and map the e-way bill to the RFID
prior to the movement of goods.

- Arpita Tulsyan 23 www.arpitatulsyan.com

 Volume 1
9326962521

Documents in lieu of e-way bill:

Where circumstances so warrant, the Commissioner may, by notification, require the person-
in-charge of the conveyance to carry the following documents instead of the e-way bill:
(a) tax invoice or bill of supply, or bill of entry; or
(b) a delivery challan, where the goods are transported for reasons other than by way of supply.

(15) Verification of documents and conveyances [Rule 138B]

The Commissioner or an officer empowered by him in this behalf may authorize the proper
officer to intercept any conveyance to verify the e-way bill in physical or electronic form for all
inter State and intra-State movement of goods.
The Commissioner shall get RFID readers installed at places where the verification of
movement of goods is required to be carried out and verification of movement of vehicles shall
be done through such device readers where the e-way bill has been mapped with the said device.

The physical verification of conveyances shall be carried out by the proper officer as authorised
by the Commissioner or an officer empowered by him in this behalf.
However, on receipt of specific information on evasion of tax, physical verification of a specific
conveyance can also be carried out by any other officer after obtaining necessary approval of
the Commissioner or an officer authorised by him in this behalf.

(16) Inspection and verification of goods [Rule 138C]

A summary report of every inspection of goods in transit shall be recorded online by the proper
officer in Part A of a prescribed form within 24 hours of inspection and the final report in Part
B of said form shall be recorded within 3 days of such inspection.

However, where the circumstances so warrant, the Commissioner, or any other officer
authorised by him, may, on sufficient cause being shown, extend the time for recording of the
final report in Part B of said form, for a further period not exceeding 3 days.
The period of 24 hours or, as the case may be, 3 days shall be counted from the midnight of the
date on which the vehicle was intercepted.

Where the physical verification of goods being transported on any conveyance has been done
during transit at one place within the State/Union territory or in any other State/Union
territory, no further physical verification of the said conveyance shall be carried out again in the
State/Union territory, unless a specific information relating to evasion of tax is made available
subsequently.

- Arpita Tulsyan 24 www.arpitatulsyan.com

 Volume 1
9326962521

The hard copies of the notices/orders issued by a tax authority may be shown as proof of
initiation of action by a tax authority by the transporter/registered person to another tax
authority as and when required.
Only such goods and/or conveyances should be detained/confiscated in respect of which there
is a violation of the provisions of the GST Acts or the rules made thereunder.

Example: Where a conveyance carrying 25 consignments is intercepted and the person-in-

charge of such conveyance produces valid e-way bills and/or other relevant documents in
respect of 20 consignments, but is unable to produce the same with respect to the remaining 5
consignments, detention/ confiscation can be made only with respect to the 5 consignments and
the conveyance in respect of which the violation of the Act or the rules made thereunder has
been established by the proper officer.

(17) Facility for uploading information regarding detention of vehicle [Rule 138D]
Where a vehicle has been intercepted and detained for a period exceeding 30 minutes, the
transporter may upload the said information in specified form on the common portal.

(18) Blocking of e-waybill generation facility [Rule 138E] (Refer Q25)

Blocking of e-waybill generation facility means disabling a taxpayer from generating the e-way
bill. Blocking of GSTIN for e-way bill generation would only be for the defaulting supplier
GSTIN and not for the defaulting Recipient or Transporter GSTIN. Suspended GSTIN cannot
generate e-way bill as supplier. However, the suspended GSTIN can get the e-way bill
generated as recipient or as transporter.
As per rule 138E, no person (including a consignor, consignee, transporter, an e-commerce
operator or a courier agency) shall be allowed to furnish the information in Part A of Form GST
EWB-01 in respect of any outward movement of goods of a registered person, who –
(i) being a person paying tax under composition scheme has not furnished the statement for
payment of self-assessed tax for 2 consecutive quarters, or
(ii) being a person paying tax under regular scheme has not furnished the returns for a
consecutive period of 2 tax periods, or
(iii) being a person paying tax under regular scheme has not furnished GSTR-1 (Statement of
outward supplies) for any 2 months or quarters, as the case may be.
(iv) being a person whose registration has been suspended under the provisions of rule 21A of
the CGST Rules.

However, Commissioner (jurisdictional commissioner) may, on receipt of an application from a

registered person in prescribed form, on sufficient cause being shown and for reasons to be

- Arpita Tulsyan 25 www.arpitatulsyan.com

 Volume 1
9326962521

recorded in writing, by order, in prescribed form allow furnishing of the said information in Part
A of Form GST EWB-01, subject to prescribed conditions and restrictions. An order rejecting
said request shall not be passed without giving the said person a reasonable opportunity of being
heard. The permission granted or rejected by the Commissioner of State tax or Commissioner
of Union territory tax shall be deemed to be granted or, as the case may be, rejected by the
Commissioner.

(19)
It may be noted that the expressions ‘transported by railways’, ‘transportation of goods by
railways’, ‘transport of goods by rail’ and ‘movement of goods by rail’ used in the provisions
discussed above does not include cases where leasing of parcel space by railways takes place.
Example: Mr. A, a registered person paying tax under regular scheme in Delhi, has not filed Form
GSTR-1 for last 2 months. Mr. B, Haryana, (a regular return filer) wants to generate an e-way
bill for goods to be supplied to Mr. A.
There will be no restriction in generating e-way Bill for Mr. B who is making outward movement
of goods, as he is a regular return filer.
Mr. A wants to generate an e-way bill in respect of an outward an outward supply of goods to
Mr. H. E-way bill generation is blocked in this case as it’s an outward movement of goods of Mr.
A who has not filed Form GSTR-1 for past 2 months.

Tax invoice or bill of supply to accompany transport of goods [Rule 55A]

Person-in-charge of the conveyance shall carry a copy of the tax invoice or the bill of supply
issued in accordance with the provisions of rules 46, 46A or 49 in a case where such person is
not required to carry an e-way bill under these rules.

- Arpita Tulsyan 26 www.arpitatulsyan.com

 Volume 1
9326962521

Consignee/ recipient taxpayer storing goods in the transporter’s godown

Generally, textile traders use transporters’ godown for storage of their goods due to their weak
financial conditions. The transporter takes delivery of the goods and temporarily stores them in
his warehouse for further transportation of the goods till the consignee/recipient taxpayer’s
premises. In this case, the recipient taxpayer has to declare the transporter’s godown as an
APoB.

The goods in movement including when they are stored in the transporter's godown (even if the
godown is located in the recipient taxpayer’s city/town) prior to delivery shall always be
accompanied by a valid e-way bill. The transportation under the e-way bill shall be deemed to
be concluded once the goods have reached the transporter’s godown (recipient taxpayer’s
APoB). Hence, e-way bill validity in such cases will not be required to be extended. Further,
whenever the goods move from the transporter’s godown to the recipient taxpayer’s any other
PoB, a valid eway bill shall be required.

Requirement of maintaining accounts and records:

1. Transporter, being a warehouse keeper, has to maintain accounts and records as specified in
section 35 read with rule 58. (already discussed)
2. Recipient taxpayer shall also maintain accounts and records as required under rules 56 and
57 [as discussed earlier]. Furthermore, as per rule 56(7), books of accounts in relation to goods
stored at the transporter’s godown (i.e., the recipient taxpayer’s APoB) by the recipient
taxpayer may be maintained by him at his PPoB. Thus, the facility of declaring APoB by the
recipient taxpayer is in no way putting any additional compliance requirement on the
transporters.

- Arpita Tulsyan 27 www.arpitatulsyan.com

 Volume 1
9326962521

PAYMENT OF TAX
The section numbers referred to in the Chapter pertain to the CGST Act, 2017 unless
otherwise specified.

1. INTRODUCTION (Refer Q1)

In the GST regime, for any intra-state supply, taxes to be paid are the Central GST (CGST),
going into the account of the Central Government and the State GST - SGST/UTGST, going
into the account of the concerned State Government/ Union Territory. For any inter-state
supply, tax to be paid is Integrated GST (IGST) which have components of both CGST and
SGST. In addition, certain categories of registered persons will be required to pay to the
Government, Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). In addition,
wherever applicable, interest, penalty, fees and any other payment will also be required to be
made.
The introduction of Electronic ledger(s) is a unique feature under the GST regime. Electronic
Ledgers or E-Ledgers are of two types.
First set is auto-populated upon the action taken by the taxpayer i.e.:
(i) Electronic Cash Ledger and (ii) Electronic Credit Ledger
Second set is “Electronic Liability register”
Chapter X of the CGST Act, 2017 prescribes the provisions relating to payment of tax
containing sections 49 to 53A.
Provisions of payment of tax including TDS under CGST Act, 2017 have also been made
applicable to IGST Act, 2017 vide section 20 of the IGST Act, 2017.

2. RELEVANT DEFINITIONS
- Authorised bank shall mean a bank or a branch of a bank authorised by the Government to
collect the tax or any other amount payable under this Act [Section 2(14)].

- Cess shall have same meaning as assigned to it in the Goods and Service Tax (Compensation
to States) Act [Section 2(22)].

- Electronic Cash ledger means the electronic cash ledger referred to in sub-section (1) of
Section 49 [Section 2(43)].

- Electronic Credit ledger means the electronic credit ledger referred to in sub-section (2) of
section 49 [Section 2(46)].

- Arpita Tulsyan 28 www.arpitatulsyan.com

 Volume 1
9326962521

- Notification means a notification published in the Official Gazette and the expression “notify”
and “notified” shall be construed accordingly [Section 2(80)].

- Output tax in relation to a taxable person, means the tax chargeable under this Act on taxable
supply of goods or services or both made by him or by his agent but excludes tax payable by him
on reverse charge basis [Section 2(82)].

- Valid return means a return furnished under sub-section (1) of section 39 on which self-
assessed tax has been paid in full [Section 2(117)].

3. PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS

[SECTION 49]
A. Electronic Cash Ledger [Section 49(1),(3),(6),(10) & (11) Read With Rule 87 Of
CGST Rules] (Refer Q7, Q14)
The Electronic Cash Ledger, maintained on the GST portal, contains a summary of all the
deposits/payments made by a taxpayer.
Any deposit made towards payment of tax, interest, penalty, late fee or any other amount will be
credited to the electronic cash ledger. Any debit to the electronic cash ledger represents
payment therefrom towards tax, interest, penalty, late fee or any other amount.

The deposit in the electronic cash ledger shall be made through any of the following modes,
namely:-
(A) Online Mode
(i) Internet Banking through authorised banks;
(ii) Unified Payment Interface (UPI) from any bank;
(iii) Immediate Payment Services (IMPS) from any bank;
(iv) Credit card or Debit card through the authorised bank;
(B) Offine Mode
(v) National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) from
any bank; or
(vi) Over the Counter payment through authorized banks for deposits up to Rs. 10,000 per
challan per tax period, by cash, cheque or demand draft: It may be noted that the restriction for
deposit up to Rs. 10,000 per challan in case of an Over the Counter payment will not apply to
deposit to be made by –
(a) Government Departments or any other deposit to be made by persons as may be notified by
the Commissioner in this behalf;

- Arpita Tulsyan 29 www.arpitatulsyan.com

 Volume 1
9326962521

(b) Proper officer or any other officer authorised to recover outstanding dues from any person,
whether registered or not, including recovery made through attachment or sale of movable or
immovable properties;
(c) Proper officer or any other officer authorised for the amounts collected by way of cash,
cheque or demand draft during any investigation or enforcement activity or any ad hoc deposit.

Payment by Challan
- What is CPIN, CIN, BRN and E-FPB?
CPIN stands for Common portal Identification Number. It is created for every Challan
successfully generated by the taxpayer. It is a 14-digit unique number to identify the challan.
CPIN remains valid for a period of 15 days.

CIN or Challan Identification Number is generated by the banks, once payment in lieu of a
generated Challan is successful. It is a 18-digit number that is 14-digit CPIN plus 4-digit Bank
Code.
CIN is generated by the authorized banks/Reserve Bank of India (RBI) when payment is actually
received by such authorized banks or RBI and credited in the relevant Government account held
with them. It is an indication that the payment has been realized and credited to the appropriate
Government account. CIN is communicated by the authorized bank to taxpayer as well as to
GSTN.

BRN or Bank Reference Number is the transaction number given by the bank for a payment
against a Challan

E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks
which are authorized to collect payment of GST. Each authorized bank will nominate only one
branch as its E-FPB for pan India transaction.
The E-FPB will have to open accounts under each major head for all governments. Any amount
received by such E-FPB towards GST will be credited to the appropriate account held by such
E-FPB. For NEFT/RTGS/IMPS Transactions, RBI will act as E-FPB.

- Arpita Tulsyan 30 www.arpitatulsyan.com

 Volume 1
9326962521

Other Aspects relating to Challan

- Manual or physical Challans are not allowed under the GST regime. It is mandatory to
generate Challans online on the GST Common Portal.
- There is single Challan prescribed for all taxes, fees, penalty, interest, and other payments to
be made under the GST regime.
- Any person, or a person on his behalf, can generate a challan in prescribed form [Form PMT
06] on the common portal and enter the details of the amount to be deposited by him towards
tax, interest, penalty, fees or any other amount.
- E- challan validity is for 15 days. The commission for making payment through e-challan has
to be borne by the person making the payment.
- The mandate form obtained after making NEFT/RTGS/IMPS payment has to be submitted
in the Bank. The validity of the mandate form is 15 days.
- On successful credit of amount in the concerned (Central/State) Government Account
maintained in the authorized bank, a CIN will be generated by the collecting bank which will be
indicated in the challan.
- On receipt of the CIN from the collecting bank, the said amount is credited into the electronic
cash ledger of the person on whose behalf the deposit is made and the common portal will
generate a receipt to this effect.
- If CIN is not generated even after making payment and submission of mandate form or when
after generation, it has not been reflected in the common portal, the person making the deposit
or the person on whose behalf the deposit has been made, can make a representation in
prescribed form i.e. FORM GST PMT-07 through the common portal or e-gateway through
which the payment has been made.
- Where the bank fails to communicate details of Challan Identification Number to the common
portal, the Electronic Cash Ledger may be updated on the basis of e-Scroll of the RBI in cases
where the details of the said e-Scroll are in conformity with the details in challan generated in
Form GST PMT-06 on the common portal.
- Date of credit into the treasury of the State Government/Central Government is deemed
to be the date of debit in the electronic cash ledger and not the actual date of deposit of amount
in the electronic cash ledger of the taxable person.
- Any amount deducted under section 51 [TDS] or collected under section 52 [TCS] and
claimed by the registered taxable person from whom the said amount was deducted or collected
shall be credited to his electronic cash ledger.
- In case any discrepancy is noticed in electronic cash ledger, the registered person shall
communicate the same to the officer exercising jurisdiction in the matter, through the common
portal in prescribed form.
- An unregistered person has to make payment through electronic cash ledger on the basis of
temporary identification number generated through common portal.

- Arpita Tulsyan 31 www.arpitatulsyan.com

 Volume 1
9326962521

Manner of utilization of amount reflected in Electronic Cash Ledger (Section 49(3))

The amount reflected in the electronic cash ledger may be used for making any payment towards
tax, interest, penalty, fee, or any other amount in the prescribed manner.
In the e-ledger, information is kept minor head-wise for each major head. The ledger is displayed
major head-wise i.e., IGST, CGST, SGST/UTGST, and CESS. Each major head is divided into
five minor heads: Tax, Interest, Penalty, Fee, and Others.
A registered taxpayer can make cash deposits in the recognized Banks through the prescribed
modes to the Electronic Cash Ledger using any of the Online or Offline modes permitted by the
GST Portal. The Cash deposits can be used for making payment(s) like tax liability, interest,
penalties, fee, and others.

Transfer of amount reflected in Electronic Cash Ledger (Section 49(10) & 49(11))
(Refer Q5, Q7, Q10)
A registered person can transfer
- an amount from one (major/minor) head to another (major/minor) head in the electronic cash
ledger (i.e. trf. of erroneous deposits or amounts already lying unutilised) or
- transfer any amount available in the electronic cash ledger, to the electronic cash ledger for
IGST/CGST of a distinct person, provided there is no unpaid liability in his own electronic
liability register.
These transfers can be done using Form GST PMT - 09

Note:
- A Registered person has to claim the TDS under Section 51 or TCS under Section 52 to
appear in his Electronic Cash ledger. There is no automatic updation of this
deduction/collection currently on the common portal. Similar to a claim of TDS credits under
Income Tax Act, 1961 at the time of filing Income tax return, the Registered person has to claim
for the TDS/TCS in his periodical returns to get updated in the Electronic Cash ledger.
Example: M/s. Daksha Enterprises has made a cash deposit of Rs. 10,000 under minor head
'tax' of major head 'SGST’. It has a liability of Rs. 2,000 for minor head "Interest" under the
major head "SGST". State whether M/s. Daksha Enterprises can utilise the amount available
for payment of interest.

- Arpita Tulsyan 32 www.arpitatulsyan.com

 Volume 1
9326962521

Answer: The registered person is allowed to transfer the amount available under any minor head
of a major head to any of the minor head of the same or other major head as per Section 49(10)
of the CGST Act vide Form PMT-09.
Therefore, in the given case, amount of Rs. 10,000 available under minor head ‘tax’ of major
head ‘SGST’ can be utilised for payment of liability of Rs. 2,000 under minor head ‘interest’ of
the same major head, after making a due transfer entry using Form GST PMT-09 from the
minor head of ‘tax’ to ‘interest’.

B. Electronic Credit Ledger [Section 49(2), (4) & (5), Section 49A, Section 49B
Read with Rule 86, 86A, 86B and 88A of CGST Rules] (Refer Q6, Q8, Q13)
Section 49(2) of the CGST Act provides that the Self-Assessed input tax credit (ITC) by a
registered person shall be credited to his Electronic Credit Ledger or Electronic Input Tax
Credit Ledger. This is to be maintained in the prescribed form.

Non-utilisation of ITC for tax liability under reverse charge mechanism

The amount available in the electronic credit ledger may be used for making any payment
towards output tax under CGST, SGST, UTGST or IGST. It is pertinent to note that “output
tax” in relation to a taxable person, means the tax chargeable under this Act [i.e. SGST/
UTGST/ CGST Act, 2017 respectively] on taxable supply of goods/services made by him, but
excludes tax payable by him on reverse charge basis. Thus, ITC available in Electronic Credit
ledger, cannot be utilised for tax payable under reverse charge mechanism under Section 9(3) or
9(4) of CGST/SGST Act, 2017 read with Section 5(3) or 5(4) of IGST Act, 2017.

Note:
Input Tax Credit as self-assessed in monthly returns will be reflected in the ITC Ledger. The
credit in this ledger can be used to make payment of ONLY TAX and not other amounts such
as interest, penalty, fees etc.
As per section 49(4), the electronic credit ledger can be used for making payment of output tax
only under the CGST Act or the IGST Act. It cannot be used for making payment of any
interest, penalty, fees or any other amount payable under the said Acts. Similarly, electronic
credit ledger cannot be used for payment of erroneous refund sanctioned to the taxpayer, where
such refund was sanctioned in cash.

- Arpita Tulsyan 33 www.arpitatulsyan.com

 Volume 1
9326962521

Manner of utilisation of ITC [Combined reading of section 49(5), 49A, 49B, rule
88A and Circular No. 98/17/2019 GST dated 23.04.2019] (Refer Q4)
Output IGST Output CGST Output
SGST/UTGST
Input IGST (1) (2) [refer1] (2) [refer1]
Input (2) (1) Not allowed
CGST [refer 2 & 3] [refer 2 & 3]
Input (2) Not allowed (1)
SGST/ [refer 2 & 4] [refer 2 & 4]
UTGST
1. Available IGST credit in the credit ledger should first be utilized towards payment of IGST.
Remaining amount if any, can be utilized towards the payment of CGST and SGST/UTGST in
any order and in any proportion, i.e. ITC of IGST can be utilized either against CGST or SGST.
2. Entire ITC of IGST is to be fully utilised first before the ITC of CGST or SGST/UTGST
can be utilized.
3. Available CGST Credit in the credit ledger shall first be utilized for payment of CGST.
Remaining amount if any, will be utilized for payment of IGST
4. Available SGST /UTGST credit in the credit ledger shall first be utilized for payment of
SGST/UTGST. Remaining amount if any, will be utilized for payment of IGST, only when credit
of CGST is not available for payment of IGST.
5. CGST credit cannot be utilized for payment of SGST/UTGST. Similarly, SGST/UTGST
credit cannot be utilized for payment of CGST.

Conditions of use of amount available in electronic credit ledger [Rule 86A]

In case the Commissioner or an officer authorised by him in this behalf, not below the rank of an
Assistant Commissioner, has reasons to believe that ITC available in the electronic credit
ledger has been fraudulently availed or is ineligible, he may, after recording reasons in writing,
prohibit use of ITC for discharge of any liability under section 49 or for claim of any refund of
any unutilised amount. [Already discussed in detail in Chapter Input Tax Credit]

Restrictions on use of amount available in electronic credit ledger [Rule 86B]

Rule 86B restricts the amount available in electronic credit ledger which a registered person
can use to discharge his output tax liability to 99% of such tax liability in cases where the value
of taxable supply other than exempt supply and zero-rated supply, in a month exceeds Rs. 50
lakh. [Already discussed in detail in Chapter Input Tax Credit]

- Arpita Tulsyan 34 www.arpitatulsyan.com

 Volume 1
9326962521

Other Aspects of Electronic Credit Ledger

- In case any discrepancy is noticed in the electronic credit ledger, the registered person shall
communicate the same to the officer exercising jurisdiction in the matter, through the common
portal in prescribed form.
- No entry shall be made directly in the electronic credit ledger under any circumstance except
as provided in the provisions.

Common Points for Electronic Cash & Credit Ledger

- Where a person has claimed refund of any amount from the electronic cash or credit ledger,
the said amount shall be debited to the electronic cash or credit ledger.
- If the refund so claimed is rejected, either fully or partly, the amount debited earlier, to the
extent of rejection, shall be credited to the electronic cash or credit ledger by the proper officer
by an order made in prescribed form.
- A unique identification number shall be generated at the common portal for each debit or credit
to the electronic cash or credit ledger.
- Similarly, the unique identification number relating to discharge of any liability shall be indicated
in the corresponding entry in the electronic liability register.

C. Electronic Liability Register [Section 49(7), (8) & (9) read with Rule 85 of
CGST Rules] (Refer Q15)
- Section 49(7) enumerates about the 3rd kind of ledger [Auto updated on common portal] viz.
Electronic Liability Register. Electronic Liability Register is not defined under Law. The Section
lays down that all liabilities of a taxable person will be recorded & maintained in a separate
register named ‘Electronic Liability Register’.

- Order of discharge of tax and other dues (This sequence has to be mandatorily followed):
Section 49(8) prescribes the chronological order in which the liability of a taxable person has to
be discharged:
✓ Self-assessed tax, and other dues related to returns of previous tax periods have to be
discharged first;
✓ Self-assessed tax, and other dues related to the return of the current tax period next.
✓ Once these two steps are exhausted, thereafter any other amount payable under this Act
or the rules made thereunder including the demand determined under section 73 or section
74 comes last.
The expression “tax dues” means the tax payable under this Act and does not include interest,
fee and penalty; and “other dues” referred above mean interest, penalty, fee or any other amount
payable under the Act or the rules made thereunder.

- Arpita Tulsyan 35 www.arpitatulsyan.com

 Volume 1
9326962521

- Presumption that incidence of tax is passed on (Section 49(9)) (Refer Q3)

This part of the section provides that when a taxable person has paid the GST under the
corresponding Act, the taxable person is deemed to have passed on the incidence of such
payment of tax to the recipient of such goods and /or services. Thus, if tax has been paid under
the CGST Act, 2017 then the taxable person is deemed to have passed on the incidence of such
payment of CGST to the recipient. This is subject to the contrary being proved.

- Chapter IX of CGST Rules provide the following: (Refer Q16)

(I) Debit to Electronic Liability Register:
✓ all amounts payable towards tax, interest, late fee and any other amount as per return filed;
✓ all amounts payable towards tax, interest, penalty and any other amount determined in a
proceeding by a proper officer or as ascertained by the said person;
✓ interest payable under Section 50 that may accrue from time to time.

(II) Debit to Electronic Credit/Cash ledger:

Debit to Electronic Credit Debit to Electronic Cash Ledger and Credit to Electronic
Ledger and Credit to Liability Register
Electronic Liability Register
Payment of all the liabilities of Payment of all the liabilities of a registered person as per
a registered person as per his his return subject to section 49 or section 49A or section
return subject to section 49 or 49B.
section 49A or section 49B.
Payment of TDS deducted under section 51, TCS deducted
by e-commerce operator under section 52, amount payable
under reverse charge basis, amount payable under section
10, amount payable towards payment of interest, penalty,
fee or any other amount under the Act.
- How do the payment systems benefit the taxpayer and the Commercial Tax
Department?
Benefits to Taxpayer: (Refer Q14)
✓ No more queues and waiting for making payments as payments can be made online 24 X 7.
✓ Instant online receipts for payments made online.
✓ Tax Consultants can make payments on behalf of the clients.
✓ Single Challan form to be created online, replacing the three or four copy Challan.
✓ Revenue will come earlier into the Government Treasury as compared to the old system.
✓ Greater transparency.
✓ Online payments made after 8 pm will be credited to the taxpayer’s account on the same
day.

- Arpita Tulsyan 36 www.arpitatulsyan.com

 Volume 1
9326962521

Benefits to Commercial Tax Department: -

✓ Revenue will come earlier into the Government Treasury as compared to the old system.
✓ Logical tax collection data in electronic format.
✓ Speedy accounting and reporting.
✓ Electronic reconciliation of all receipts.
✓ Warehousing of digital challan.

4. INTEREST ON DELAYED PAYMENT OF TAX [SECTION 50]

(Refer Q2, Q9, Q11, Q12, Q14, Q17, Q18)
Section 50 of the CGST Act, 2017 provides for applicability of interest for default in payment
of taxes within the stipulated time. Under GST law, a registered person, can make the payment
of tax through electronic credit ledger or electronic cash ledger in terms of section 49 of CGST
Act, 2017. Usually, the balance in electronic credit ledger is exhausted first (subject to
provisions of rule 86B) before utilizing the balance available in the electronic cash ledger for
discharging tax liabilities.
In case a registered person does not have sufficient amount available in electronic credit ledger
to pay the tax dues for a particular tax period and also if the registered person does not have
sufficient money for making deposit of balance tax amount in electronic cash ledger then in such
a situation, GST common portal doesn’t have a mechanism to allow a registered person to make
part payment of taxes.
If the law maker demands tax dues along with interest on the gross payments i.e. tax paid through
electronic cash ledger and credit ledger both, it may be an unhealthy practice from business
perspective.
To counter such recovery mechanism, the proviso under Section 50 provides that when a
registered person has paid his taxes through a return specified under Section 39 of CGST Act,
2017 belatedly, interest shall be applicable only on the net taxes paid through electronic cash
ledger and not on the gross taxes paid for such tax period.

Hence, it can be concluded as :

- Interest is payable in case of delay in payment of tax, in full or in part within the prescribed
period @ prescribed Rate of Interest
- The rate of interest shall be notified by the Government on the basis of recommendation of
the Council. However, such rate to be notified shall not exceed 18% in case of belated payment
of tax i.e. on failure to pay tax (or part of tax) to the Government’s account.
- Generally, the period of interest will be from the date following the due date of payment to
the actual date of payment of tax.

- Arpita Tulsyan 37 www.arpitatulsyan.com

 Volume 1
9326962521

- Manner of calculating interest on delayed payment of tax [Rule 88B]

(1) In case, where the supplies made during a tax period are declared by the registered person in
the return for the said period and the said return is furnished after the due date in accordance
with provisions of section 39, except where such return is furnished after commencement of any
proceedings under section 73 or section 74 in respect of the said period, the interest on tax
payable in respect of such supplies shall be calculated on the portion of tax which is paid by
debiting the electronic cash ledger, for the period of delay in filing the said return beyond the
due date, at such rate as may be notified under section 50(1).
(2) In all other cases, where interest is payable under section 50(1), the interest shall be
calculated on the amount of tax which remains unpaid i.e. Gross Tax Liability, for the period
starting from the date on which such tax was due to be paid till the date such tax is paid at the
rate specified under section 50(1).
(Eg.: Return was furnished within the prescribed due date, still some tax dues are pending)

(3) Where interest is payable on the amount of ITC wrongly availed and utilised in accordance
with section 50(3), the interest shall be calculated on the amount of input tax credit wrongly
availed and utilised, for the period starting from the date of utilisation of such wrongly availed
input tax credit till the date of reversal of such credit or payment of tax in respect of such amount
at the rate specified under section 50(3).

The explanation to the rule lays down that-

(i) input tax credit wrongly availed shall be construed to have been utilised, when the balance in
the electronic credit ledger falls below the amount of input tax credit wrongly availed, and the
extent of such utilisation of input tax credit shall be the amount by which the balance in the
electronic credit ledger falls below the amount of input tax credit wrongly availed.

(ii) the date of utilisation of such input tax credit shall be taken to be-
(a) the date, on which the return is due to be furnished under section 39 or the actual date of
filing of the said return, whichever is earlier, if the balance in the electronic credit ledger falls
below the amount of input tax credit wrongly availed, on account of payment of tax through the
said return;
or
(b) the date of debit in the electronic credit ledger when the balance in the electronic credit
ledger falls below the amount of input tax credit wrongly availed, in all other cases.

- Other relevant points relating to interest

✓ The term “tax” here means the tax payable under the Act read with underlying Rules made
thereunder.

- Arpita Tulsyan 38 www.arpitatulsyan.com

 Volume 1
9326962521

✓ The payment of interest in case of belated payment of tax should be made voluntarily i.e.
even without a demand.
✓ The interest payable under this section shall be debited to the Electronic Liability Register.
✓ The liability for interest can be settled by adjustment with balance in Electronic Cash Ledger
but not with balance in Electronic credit ledger.

Example: Mr. Alok, a registered supplier of taxable goods, filed GSTR 3B for the month of
January, 2023 on 15th April, 2023. The prescribed due date to file the said GSTR 3B was 20th
February, 2023. The amount of net GST payable, in Cash i.e. Electronic Cash Ledger on
supplies made by him for the said month worked out to be Rs. 36,500 which was paid on 15 th
April, 2023. Briefly explain the related provisions and compute the amount of interest payable
under the CGST Act, 2017 by Mr. Alok. Ignore the effect of leap year, if applicable in this case.
Answer:
Interest is payable in case of delayed payment of tax @ 18% per annum from the date following
the due date of payment to the actual date of payment of tax.
Thus, the amount of interest payable by Mr. Alok is as under:-
Period of delay = 21st February, 2023 to 15th April, 2023 = 54 days
Hence, amount of interest = Rs. 36,500 x 18% x 54/365 = Rs. 972

Example: ABC Ltd., have filed their GSTR 3B for the month of July, 2022 within the due date
prescribed under Section 39 i.e. 20.08.2022. Post filing of the return, the registered person
has noticed during September 2022 that tax dues of Rs. 40,000 for the month of July, 2022
have not been paid. ABC Ltd., has paid the above amount of Rs. 40,000, through GSTR-3B
of September 2022, filed on 20.10.2022 [payment through Cash ledger - Rs. 30,000 and
Credit ledger Rs. 10,000]. Examine the Interest payable under the CGST Act, 2017.
What would be your answer if, GSTR-3B for the month of July 2022 has been filed belatedly
on 20.10.2022 and the self-assessed tax of Rs. 40,000/- has been paid on 20.10.2022
[payment through electronic cash ledger - Rs. 30,000 and electronic credit ledger Rs.
10,000]
Notes:
▪ No other supply has been made nor tax payable for the month of July, 2022 other than Rs.
40,000/- missed out to be paid on forward charge basis
▪ Ignore the effect of leap year, if applicable in this case.
Answer:
Interest is payable under Section 50 of the CGST Act, 2017 in case of delayed payment of tax
@ 18% per annum from the date following the due date of payment to the actual date of payment
of tax.

- Arpita Tulsyan 39 www.arpitatulsyan.com

 Volume 1
9326962521

As per proviso to sub-section (1) of Section 50, interest is payable on the net tax liability paid
in cash, only if the return to be filed for a tax period under Section 39, has been filed after the
due date to furnish such return.
In the above scenario, ABC Ltd., has defaulted in making the payment for Rs. 40,000 on self-
assessment basis in the return for the month of July, 2022.
Accordingly, interest is payable on the gross liability and proviso of sub-section 50(1) shall not
be applicable.
Thus, the amount of interest payable by ABC Ltd., is as under:-
Period of delay = 21st August, 2022 to 20th October, 2022 = 61 days
Hence, amount of interest = Rs. 40,000 x 18% x 61/365 = Rs. 1,203

Alternatively, if ABC Ltd., have filed the return for the month of July, 2022 on 20.10.2022,
beyond the stipulated due date of 20.08.2022 and if the self-assessed tax for July, 2022 has
been paid on 20.10.2022, Interest under proviso to Section 50(1) shall be payable on the tax
paid through Electronic Cash Ledger only.
Hence Interest is payable from 21st August 2022 till 20th October 2022 = 61 days
Amount of Interest = Rs. 30,000 x 18% x 61/365 = Rs. 902

Clarification on charging of interest under section 50(3) in cases of wrong availment of IGST
credit and reversal thereof [Circular No. 192/04/2023 GST dated 17.07.2023]
The issues which arose for consideration are as to:
(i) whether in the cases of wrong availment of IGST credit by a registered person and reversal
thereof, for the calculation of interest under rule 88B, whether the balance of ITC available in
electronic credit ledger (ECL) under the head of IGST only needs to be considered or total ITC
available in electronic credit ledger, under the heads of IGST, CGST and SGST taken together,
has to be considered.
Since the amount of ITC available in ECL, under any of the heads of IGST, CGST or SGST,
can be utilized for payment of liability of IGST, it is the total ITC available in ECL, under the
heads of IGST, CGST and SGST taken together, that has to be considered for calculation of
interest under rule 88B and for determining as to whether the balance in the ECL has fallen
below the amount of wrongly availed ITC of IGST, and to what extent the balance in ECL has
fallen below the said amount of wrongly availed credit.
Thus, in the cases where IGST credit has been wrongly availed and subsequently reversed on a
certain date, there will not be any interest liability under section 50(3) if, during the time period
starting from such availment and up to such reversal, the balance of ITC in the ECL, under the
heads of IGST, CGST and SGST taken together, has never fallen below the amount of such
wrongly availed ITC, even if available balance of IGST credit in ECL individually falls below the
amount of such wrongly availed IGST credit.

- Arpita Tulsyan 40 www.arpitatulsyan.com

 Volume 1
9326962521

However, when the balance of ITC, under the heads of IGST, CGST and SGST of ECL taken
together, falls below such wrongly availed amount of IGST credit, then it will amount to the
utilization of such wrongly availed IGST credit and the extent of utilization will be the extent to
which the total balance in ECL under heads of IGST, CGST and SGST taken together falls
below such amount of wrongly availed IGST credit, and will attract interest as per section 50(3)
read with section 20 of the IGST Act, 2017 and of rule 88B(3).

(ii) whether the credit of compensation cess available in ECL shall be taken into account while
considering the balance of ECL for the purpose of calculation of interest under rule 88B(3) in
respect of wrongly availed and utilized IGST, CGST or SGST credit.
Since ITC in respect of compensation cess can be utilised only towards payment of
compensation cess. Thus, credit of compensation cess cannot be utilized for payment of any tax
under CGST or SGST or IGST heads and/ or reversals of credit under the said heads.
Accordingly, credit of compensation cess available in ECL cannot be taken into account while
considering the balance of ECL for the purpose of calculation of interest under rule 88B(3) in
respect of wrongly availed and utilized IGST, CGST or SGST credit.

5. TRANSFER OF INPUT TAX CREDIT [SECTION 53 OF CGST ACT &

SECTION 18 OF IGST ACT]
If the amount of CGST is utilised towards dues of IGST then, in terms of section 53 of the
CGST Act, there shall be reduction in the amount of CGST, equal to the credit so utilized, and
the Central Government shall transfer such amount equivalent to the amount so reduced in
CGST account to the IGST account.

Similarly, if the amount of IGST is utilised towards dues of CGST/UTGST then, in terms of
section 18 of the IGST Act, there shall be reduction in the amount of IGST, equal to the credit
so utilized, and the Central Government shall transfer such amount equivalent to the amount so
reduced in IGST account to the CGST/UTGST account.

However, if the amount of IGST is utilised towards dues of SGST then, in terms of section 18
of the IGST Act, there shall be reduction in the amount of IGST, equal to the credit so utilized,
and will be apportioned to the appropriate State Government and the Central Government shall
transfer the amount so apportioned to the account of the respective State Government. Here,
"appropriate State" in relation to a taxable person, means the State or Union territory where
taxable person is registered or is liable to be registered under the provisions of the Central
Goods and Services Tax Act.

- Arpita Tulsyan 41 www.arpitatulsyan.com

 Volume 1
9326962521

TAX DEDUCTION AT SOURCE &

TAX COLLECTION AT SOURCE

The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless
otherwise specified.

INTRODUCTION:
Section 51 of CGST Act, 2017 provides for deduction of tax at source in certain circumstances.
This Section specifically lists out the deductor’s who are mandated by the Central Government
to deduct tax at source, the rate of tax deduction and the procedure for remittance of the tax
deducted. On the other hand, Tax Collection at Source (TCS) has similarities with TDS, as well
as a few distinctive features.

TDS refers to the tax which is deducted when the recipient of goods or services make payment
to or credits a supplier’s account under a contract etc., while TCS refers to the tax which is
collected by the electronic commerce operator, when a supplier supplies some goods or services
through its portal and the payment for that supply is collected by the electronic commerce
operator.

Section 52 of CGST Act, 2017 provides for collection of tax at source in certain circumstances.
The Section specifically lists out the tax collecting persons who are mandated by the Central
Government to collect tax at source, the rate of tax collection and the procedure for remittance
of the tax collected.
The amount of tax deducted/collected is reflected in the Electronic Cash Ledger of the
deductee/supplier respectively.

- Arpita Tulsyan 42 www.arpitatulsyan.com

 Volume 1
9326962521

1. TAX DEDUCTION AT SOURCE [SECTION 51 OF CGST ACT]

(Refer Q6, Q7, Q14)
Under the GST regime, Section 51 of the CGST Act, 2017 prescribes the authority and
procedure for ‘tax deduction at source’. The TDS provisions empower the Central Government
to make it mandatory for the following persons (the deductor) to deduct tax at source from
payments made to the suppliers of taxable goods and/or services.

Deductors:
• Central/State Government department or establishment [Section 51(1)(a)]
(With respect to deductors under section 51(1)(a), provisions of TDS are applicable to
certain prescribed authorities of Ministry of Defence, remaining authorities under the
Ministry of Defence are exempt)

• Local Authority [Section 51(1)(b)]

• Governmental Agencies [Section 51(1)(c)]

• Notified Persons/category of persons [Section 51(1)(d)]

(a) an authority or a board or any other body, -
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with 51% or more participation by way of equity or
control, to carry out any function;
(Provisions of section 51 of the CGST Act are applicable only to such authority or a board
or any other body set up by an Act of parliament or a State legislature or established by any
Government in which 51% or more participation by way of equity or control is with the
Government)

(b) society established by the Central Government or the State Government or a Local
Authority under the Societies Registration Act, 1860;

(c) public sector undertakings.

- Categories of persons not liable to deduct TDS

Tax is not liable to be deducted at source in the following cases:-
(i) When goods and/or services are supplied from a public sector undertaking (PSU) to another
PSU, whether or not a distinct person

- Arpita Tulsyan 43 www.arpitatulsyan.com

 Volume 1
9326962521

(ii) When supply of goods and/or services takes place between one person to another person
specified in clauses (a), (b), (c) and (d) of section 51(1) of the CGST Act.
- Deductees:
The deductees are the suppliers whose total value of supply of taxable goods and/or services
under a contract exceeds Rs. 2,50,000 exclusive of tax & cess as per the invoice.

- Standard Rate of deduction

The tax would be deducted @ 1% under CGST Act, 2017 of the payment made to the supplier
(the deductee) of taxable goods and/or services, where the total value of such supply, under a
contract, exceeds Rs. 2,50,000 (excluding the amount of Central tax, State tax, Union
Territory tax, Integrated tax and cess indicated in the invoice).
Thus, individual supplies may be less than Rs. 2,50,000/-, but if total value of supplies under a
contract is more than Rs. 2,50,000/-, TDS has to be deducted.
The deductors have to deduct tax at the rate of 1% from the payment made or credited to the
supplier of taxable goods and/or services under CGST Act, 2017.

TDS = 1% +1% [CGST + SGST] on net value of taxable supplies

It may be noted that Section 20 of IGST Act provides that in the case of tax deducted at
source, the deductor shall deduct tax at the rate of 2% from the payment made or credited to
the supplier.

- NO TDS
The Proviso to Section 51(1) lays down that when the location of the supplier and the place of
supply is in a State/ Union territory which is different from the State/ Union territory of
registration of the recipient, there will be no TDS.

The above statement can be explained in the following situations:

(a) Supplier, place of supply and recipient are in the same state.
It would be intra-State supply and TDS (Central plus State tax) shall be deducted. It would be
possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.

(b) Supplier as well as the place of supply are in different states.

In such cases, Integrated tax would be levied. TDS to be deducted would be TDS (Integrated
tax) and it would be possible for the supplier (i.e. the deductee) to take credit of TDS in his
electronic cash ledger.

- Arpita Tulsyan 44 www.arpitatulsyan.com

 Volume 1
9326962521

(c) Supplier as well as the place of supply are in State A and the recipient is located in State B.
The supply would be intra-State supply and Central tax and State tax would be levied. In such
case, transfer of TDS (Central tax + State tax of State B) to the cash ledger of the supplier
(Central tax + State tax of State A) would be difficult. So, in such cases, TDS would not be
deducted.
Thus, when both the supplier as well as the place of supply are different from that of the
recipient, no tax deduction at source would be made.
Location of Supplier Place of Supply Registration of TDS u/s 51
Recipient
State A State A State A Yes
State A State A State B No
State A State B State B Yes
UT1 UT1 UT1 Yes
UT1 UT2 UT2 Yes
UT1 UT1 UT2 No

- Value of Supply
The amount indicated in the invoice excluding the Central tax, State tax, Union territory tax,
Integrated tax and cess element, is the value of supply for the purpose of TDS under Section 51
of CGST Act, 2017.

- Deposit of TDS with the Government

The amount of tax deducted at source should be deposited to the Government account by
deductor by 10th of the succeeding month in which the deduction is made.

- Arpita Tulsyan 45 www.arpitatulsyan.com

 Volume 1
9326962521

- TDS Certificate
A TDS certificate is required to be issued by deductor (the person who is deducting tax) in
prescribed form to the deductee (the supplier from whose payment TDS is deducted).
The content of Form GSTR 7A (TDS Certificate) are given below:
1. TDS Certificate No.
2. GSTIN of deductor
3. Name of deductor
4. GSTIN of deductee
5. (a) Legal name of the deductee & (b) Trade name, if any
6. Tax period in which tax deducted and accounted for in GSTR-7
7. Details of supplies
8. Amount of tax deducted

- Non- remittance by the deductor

If the deductor has not remitted the amount deducted as TDS to the Government within the
prescribed time limit, he is liable to pay interest under Section 50 in addition to the amount of
tax deducted.

- Reflection of amount of TDS

The amount of tax deducted is reflected in
➢ Electronic Cash Ledger of deductee.
➢ Return filed by deductor under section 39(3) [GSTR-7]

The deductee can claim credit of the tax deducted, in his electronic cash ledger. This provision
enables the Government to cross check whether the amount deducted by the deductor is
correct and that there is no mis-match between the amount reflected in the electronic cash
ledger and the amount shown in the return filed by deductor.
This is similar to existing practice in income tax relating to E-TDS returns filed by deductor and
26AS statement available for viewing the TDS remitted in respect of transactions by deductee.

- Determination of amount in Default

Any default in determination of the amount under Section 51 shall be made in the manner
specified in Section 73 or section 74, as the case may be.

- Refund on excess/erroneous deduction

The deductor or the deductee can claim refund of excess deduction or erroneous deduction. The
provisions of section 54 relating to refunds would apply in such cases. However, if the deducted

- Arpita Tulsyan 46 www.arpitatulsyan.com

 Volume 1
9326962521

amount is already credited to the electronic cash ledger of the supplier, the same shall not be
refunded.

- Registration [Rule 12 of CGST Rules, 2017]

Any person required to deduct tax as per provisions of Section 51 shall electronically submit a
registration application in prescribed form through the common portal. The proper officer shall,
after due verification, grant registration within 3 working days from the date of the application.
Also, on a request or upon an enquiry or pursuant to any other proceeding under the Act, if the
proper officer is satisfied that a person is no longer liable to deduct TDS under section 51, then
the said officer may cancel the said registration, following procedures as provided in Rule 22 of
the CGST Rules for the cancellation of registration.

Example: Supplier makes a supply worth Rs. 20 lakh to a recipient and the GST at the rate of
18% is required to be paid. The recipient, while making the payment of Rs. 20 lakh to the
supplier, shall deduct 2% [CGST 1% + SGST 1%] viz Rs. 40,000 as TDS.
The value for TDS purpose shall not include 18% GST. The TDS, so deducted, shall be
deposited in the account of Government by 10th of the succeeding month.
The TDS so deposited in the Government account shall be reflected in the electronic cash
ledger of the supplier (i.e. deductee) who would be able to use the same for payment of tax or
any other amount.

- Arpita Tulsyan 47 www.arpitatulsyan.com

 Volume 1
9326962521

2. COLLECTION OF TAX AT SOURCE [SECTION 52 OF CGST

ACT] (Refer Q1, Q2, Q3, Q4, Q5, Q8, Q9, Q10, Q11, Q12, Q13)

TCS to be collected by ECO: There are many e-commerce operators, like Amazon, Flipkart,
Myntra, Meesho, etc. operating in India. These operators display/ list on their portal products
as well as services which are actually supplied by some other person to the consumer.
The goods or services belonging to other suppliers are displayed on the portals of the ECOs
and consumers buy such goods/services through these portals.
On placing the order for a particular product/ service by the consumer, the actual supplier
supplies the selected product/services to the consumer. The collection of supply consideration
for the product/services, handling of goods, etc. is undertaken by the ECOs depending upon the
arrangement between the supplier and ECO – Online Marketplace Model. The ECO
thereafter deducts its commission from the consideration for the goods or services collected by
it and passes on the net consideration to the supplier.

In such cases, where a supplier supplies GOODS AND/OR SERVICES through an ECO
portal and the payment for that supply is collected by the ECO, the Government has placed a
responsibility on such ECO to collect TCS an amount @ 1% from such supplier.
ECO shall pay the supplier the price of the product /services, less the amount calculated @ 1%.
The said amount will be calculated on the net value of the goods/ services supplied (i.e. after
considering returns) through the portal of the ECO.

Example: Suppose a certain product is sold at Rs. 1000/- through an ECO by a seller. The
ECO would collect tax @ 1% of the net value of Rs. 1000/- i.e. Rs. 100/-.

Exceptions:
(1) Where a suppler supplies through an ECO those SERVICES which are notified under
section 9(5) of the CGST Act/ section 5(5) of the IGST Act [notified services], the tax on such
services is to be paid by the ECO as if he is the supplier liable to pay tax on the supply of such
services.

(2) Where a supplier supplies the goods or services or both on his own account through a web
site hosted by him, there is no requirement to collect tax at source.

- Arpita Tulsyan 48 www.arpitatulsyan.com

 Volume 1
9326962521

Note:
The provisions of section 9(5) of the CGST Act/ section 5(5) of the IGST Act have been
already discussed in earlier chapters.
For Reference: Transportation of passengers, Accommodation service, House-keeping
services, Restaurant service

Types of Supply

Supply of SERVICES
Supply of GOODS through ECO
through ECO

Subject to TCS u/s Other than Notified

52 Notified Services
Services

E commerce operator
has to pay GST under Subject to TCS u/s
reverse charge. TCS 52
Not applicable.
(Sec.9(5))

Tax collected at source (TCS) by ECO [Section 52]

(A) What is TCS?
Every ECO (not being an agent) is required to collect an amount calculated at the rate not
exceeding 1%, as notified by the Government on the recommendations of the Council, of the net
value of taxable supplies made through it, where the consideration with respect to such supplies
is to be collected by such ECO. The amount so collected is called as Tax Collection at Source
(hereinafter referred as TCS).

Provisions of TCS under CGST Act have also been made applicable to IGST Act vide section
20 of the IGST Act. It may be noted that section 20 of the IGST Act provides that in case of
tax collected at source, the operator shall collect tax at such rate not exceeding 2%, as may be
notified on the recommendations of the Council (actual rate notified is 1% - discussed
subsequently herein), of the net value of taxable supplies.

- Arpita Tulsyan 49 www.arpitatulsyan.com

 Volume 1
9326962521

(B) Who is liable to collect TCS and from whom?

Every Electronic Commerce Operator (ECO), not being an agent, has been mandated to collect
tax at source (TCS) on the net value of taxable supplies made through it by suppliers, where the
ECO collects the consideration on behalf of the supplier for such supplies.

However, it is important to note here that practically, ECOs don’t actually collect this amount
from the suppliers; they simply retain the TCS amount and their commission from the
consideration received by them for supply of supply of goods/services made by the suppliers,
and pay the remaining amount to the suppliers.

✪ In case of Multiple E-Commerce Model where a customer orders supplies via ECO-1 who
in turn is integrated with ECO-2 who has agreement with the supplier. In this case, ECO-1 will
not have any GST information of the supplier. TCS is to be collected by that ECO who is making
payment to the supplier for the particular supply happening through it, which is in this case will
be ECO-2.
✪ A composition taxpayer cannot make supplies of services through an ECO [Section 10(2)(d)].
However, a composition taxpayer can make supplies of goods through an ECO. As a corollary,
TCS can be collected only in respect of supplies of goods made by the composition taxpayer
through an ECO.

(C) What is the rate of TCS notified?

Rate of TCS notified is 0.5% of the net value of intra-State taxable supplies (under the CGST
Act, 2017 and the respective SGST Act / UTGST Act respectively) and 1% of the net value of
inter-State taxable supplies (under the IGST Act, 2017).
Example: Suppose a certain product is sold at Rs. 1,120 [including GST @12%] through an
Operator by a supplier. The operator would collect tax @ 1% of the net value of Rs. 1,000 i.e.
Rs. 10 in case of inter- State supplies.

(D) What is the value on which TCS is to be collected?

TCS is collected @ 1% on net value of taxable supplies. The “net value of taxable supplies” means
the aggregate value of taxable supplies of goods or services or both, other than the services on
which entire tax is payable by ECO u/s 9(5), made during any month by all registered persons
through such ECO reduced by the aggregate value of taxable supplies returned to the suppliers
during the said month.

It is important to note here that the value of net taxable supplies is calculated at GSTIN level
on monthly basis. Further, value of only TAXABLE SUPPLIES is to be taken into
consideration. Moreover, an ECO is required to collect tax only on the NET value of taxable

- Arpita Tulsyan 50 www.arpitatulsyan.com

 Volume 1
9326962521

supplies made through it. In other words, value of the supplies which are returned (supply return)
are to be adjusted from the aggregate value of taxable supplies made by each supplier. This is to
adjust the return of goods made by the customers to ECOs which is a very common feature of
said business.

Sometimes sales return is more than sales. However, negative amount cannot be declared.
There will be no impact in next tax period also. In other words, if returns are more than the
supplies made during any tax period, the same would be ignored in current as well as future tax
period(s).

Example: If two suppliers “A” and “B” are making supplies through an ECO, the “net value of
taxable supplies” would be calculated separately in respect of “A” and “B”. If the value of
returned supplies is more than supplies made on behalf of any of such supplier during any tax
period, the same would be ignored in his case.

NET VALUE OF TAXABLE SUPPLIES:

✪ Since TCS is to be collected on “net value of supplies” made through it, TCS is not required
to be collected on supplies.
✪ TCS is not required to be collected on supplies on which the recipient is required to pay tax
on reverse charge basis.
✪ TCS is not liable to be collected on import of goods or services. TCS is not liable to be
collected on import of services since these are the supplies on which the recipient is required
to pay tax on reverse charge basis. As far as import of goods is concerned, since same would fall
within the domain of the Customs Act, 1962, it would be outside the purview of TCS.

- Arpita Tulsyan 51 www.arpitatulsyan.com

 Volume 1
9326962521

Example: Shiksha Book Depot is selling books through an ECO - Zamazon Ltd. Books are
exempted/zero-tax goods. As per section 52(1), TCS is to be collected on “net value of taxable
supplies” made through an ECO. When the supply itself is not taxable, the question of TCS
does not arise. Thus, Zamazon Ltd. is not required to collect TCS on the sale of books.

(E) Deposit of TCS by ECO to Government

The TCS amount collected by the ECO has to be remitted to the Government Treasury within
10 days after the end of the month in which the collection was made.

(F) Which monthly statement is required to be furnished by an ECO? [Sub-sections (3), (4), (6)
and (7) of section 52 read with rule 67]
- An ECO liable to collect TCS shall furnish a monthly statement in Form GSTR-8
electronically through the common portal. It shall contain the details of supplies of goods or
services or both effected through ECO including the supplies of goods or services or both
returned through it, amount of consideration collected by ECO pertaining to supplies made
through ECO and the amount of TCS collected on such supplies.
- The details in GSTR-8 should be furnished on/before 10th day of the month succeeding the
calendar month in which tax has been collected at source.
The due date of filing GSTR-8 may be extended by the Commissioner/Commissioner of State
GST/Commissioner of UTGST for a class of taxable persons by way of a notification.
The ECO can file Form GSTR 8 only when full TCS liability has been discharged.
Example: If the TCS has been collected in the month of July, the amount has to be remitted into
the Government Treasury on or before 10th August.
- The details of tax collected at source under section 52(1) furnished by the ECO shall be made
available electronically to each of the registered suppliers on the common portal after filing of
Form GSTR-8 for claiming the amount of tax collected in his electronic cash ledger after
validation.
The amount of TCS shall be credited to the cash ledger of the supplier who has supplied the
goods/services through the ECO in the respective tax head in which TCS amount was
deposited by ECO. The said credit can be used at the time of discharge of tax liability by the
actual supplier.
If the supplier is not able to use the amount lying in the said cash ledger, the actual supplier may
claim refund of the excess balance lying in his electronic cash ledger in accordance with the
provisions contained in section 54(1)

- Arpita Tulsyan 52 www.arpitatulsyan.com

 Volume 1
9326962521

(G) Which annual statement is required to be furnished by an ECO?

An ECO required to collect TCS is required to file an annual statement referred to in section
52(5) in Form GSTR-9B (yet to be notified). The statement for a financial year needs to be
filed by 31st December of the next financial year.
The due date of filing annual statement may be extended by the Commissioner/Commissioner
of State GST/Commissioner of UTGST for a class of taxable persons by way of a notification.

(H) Registration [Rule 12 of CGST Rules, 2017]

Any person required to deduct tax in accordance with the provisions of section 52 shall
electronically submit a registration application in prescribed form through the common portal.
The proper officer shall, after due verification, grant registration within 3 working days from
the date of the application.
Also, on a request or upon an enquiry or pursuant to any other proceeding under the Act, if the
proper officer is satisfied that a person is no longer liable to deduct tax at source under section
52 then the said officer may cancel the said registration.

(I) Interest on non-collection of TCS [Section 52(6)]

As per section 52(6), interest is applicable on omission as well in case of incorrect particulars
noticed. In case of non-collection of TCS, interest is applicable since it is a case of omission.
Further penalty under Section 122 would also be leviable.

(J) At what time should the ECO collect TCS?

TCS is to be collected once supply has been made through the ECO and where the business
model is that the consideration is to be collected by the ECO, irrespective of the actual
collection of the consideration.
Example: If the supply has taken place through the ECO on 30th October, but the consideration
for the same has been collected in the month of November, then TCS for such supply has to be
collected and reported in the statement for the month of October.

(K) Authority not below the rank of Deputy Commissioner may serve a notice requiring ECO to
furnish the details of their supplies of goods or services or both as well as stock of goods held
by the suppliers
The power conferred on the ECO to collect TCS, is without prejudice to other modes of
recovery from ECO. The powers of ECO is restricted only to the extent of TCS under
circumstances specified therein and nothing more.
An officer not below the rank of Deputy Commissioner can issue notice to an ECO, asking him
to furnish the details relating to volume of the goods/ services supplied, stock of goods lying in
warehouses/ godowns etc. The ECO is required to furnish such details within 15 working days.

- Arpita Tulsyan 53 www.arpitatulsyan.com

 Volume 1
9326962521

In case an ECO fails to furnish the information, besides being liable for penal action under
section 122, it shall also be liable for general penalty up to Rs. 25,000.

(L) Payment of TCS by ECO is not allowed through input tax credit of ECO. This implies that
TCS has to be paid in cash only.

Example:
Nishpaksh Associates is a supplier selling its own products through a web site hosted by it.
Does it fall under the definition of an “electronic commerce operator”? Whether Nishpaksh
Associates is required to collect TCS on such supplies?
Answer:
As per the definitions in sections 2(44) and 2(45), Nishpaksh Associates will come under the
definition of an “electronic commerce operator”.
However, according to section 52, TCS is required to be collected on the net value of taxable
supplies made through it by other suppliers where the consideration is to be collected by the
ECO. In cases where someone is selling their own products through a website, there is no
requirement to collect TCS as per the provisions of this section. These transactions will be
liable to GST at the prevailing rates.
Thus, Nishpaksh Associates is not required to collect TCS on the supplies made by it through
its own website.

Example:
If Sitcom Technologies Ltd. purchases goods from different vendors and thereafter sells them
on its own website under its own billing. Is TCS required to be collected on such supplies?
Answer:
No. According to section 52, TCS is required to be collected on the net value of taxable supplies
made through ECO by other suppliers where the consideration is to be collected by the ECO.
In this case, there are two transactions - Sitcom Technologies Ltd. purchases the goods from
the vendors, and thereafter those goods are sold through its own website.
For the first transaction, GST is leviable, and will need to be paid to vendor, on which credit is
available to Sitcom Technologies Ltd. The second transaction is a supply on own account of
Sitcom Technologies Ltd., and not by other suppliers and there is no requirement to collect
TCS. The transaction will attract GST at the prevailing rates.

- Arpita Tulsyan 54 www.arpitatulsyan.com

 Volume 1
9326962521

Clarification on TCS liability in case of multiple ECOs in one transaction

[Circular No. 194/06/2023 GST dated 17.07.2023]

In the current platform-centric model of e-commerce, the buyer interface and seller interface
are operated by the same ECO.
This ECO:
• collects the consideration from the buyer,
• deducts the TCS under section 52,
• credits the deducted TCS amount to the GST cash ledger of the seller and
• passes on the balance of the consideration to the seller after deducting their service charges.

In the case of the ONDC Network (Open Network for Digital Commerce) or similar other
arrangements, there can be multiple ECOs in a single transaction -one providing an interface
to the buyer and the other providing an interface to the seller. In this setup, buyer-side ECO
could collect consideration, deduct their commission and pass on the consideration to the seller-
side ECO. In this context, clarity has been sought as to which ECO should deduct TCS and
make other compliances under section 52 in such situations, as in such models having multiple
ECOs in a single transaction, both the Buyer-side ECO and the Seller side ECO qualify as
ECOs as per section 2(45).

CBIC has clarified following issues in this regard:

Issue 1: In a situation where multiple ECOs are involved in a single transaction of supply of goods
or services or both through ECO platform and where the supplier-side ECO himself is not the
supplier in the said supply, who is liable for compliances under section 52 including collection of
TCS?

Clarification: In such a situation where multiple ECOs are involved in a single transaction of
supply of goods or services or both through ECO platform and where the supplier-side ECO
himself is not the supplier of the said goods or services, the compliances under section 52,
including collection of TCS, is to be done by the supplier-side ECO who finally releases the
payment to the supplier for a particular supply made by the said supplier through him.
Example:
Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits the
balance to Seller-side ECO. Here, the Seller-side ECO will release the payment to the
supplier after deduction of his fees/commissions and therefore will also be required to collect
TCS, as applicable and pay the same to the Government in accordance with section 52 and also

- Arpita Tulsyan 55 www.arpitatulsyan.com

 Volume 1
9326962521

make other compliances under section 52. In this case, the Buyer-side ECO will neither be
required to collect TCS nor will be required to make other compliances in accordance with
section 52 with respect to this particular supply.

Issue 2: In a situation where multiple ECOs are involved in a single transaction of supply of
goods or services or both through ECO platform and the Supplier-side ECO is himself the
supplier of the said supply, who is liable for compliances under section 52 including collection of
TCS?

Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO while making
payment to the supplier for the particular supply being made through it.
Example: Buyer-side ECO collects payment from the buyer, deducts its fees and remits the
balance to the supplier [who is itself an ECO as per the definition in Sec 2(45)] In this scenario,
the Buyer-side ECO will also be required to collect TCS, as applicable, pay the same to the
Government in accordance with section 52 and also make other compliances under section 52.

Tax on passenger transportation services by omnibus except where the person supplying such
services through ECO is a company, payable by ECO
The Government may, on the recommendations of the GST Council, notify specific categories
of services the tax [CGST/SGST/IGST] on supplies of which shall be paid by the electronic
commerce operator (ECO) if such services are supplied through ECO. Such services shall be
notified on the recommendations of the GST Council [Section 9(5) of the CGST Act/Section
5(5) of the IGST Act].
One of such notified categories of services is services by way of transportation of passengers
by a radio-taxi, motorcab, maxicab, motor cycle, omnibus or any other motor vehicle;
With effect from 20.10.2023, above category of services has been amended as under:
Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motorcycle,
or any other motor vehicle except omnibus.

Further, following new category of services has been introduced:

Services by way of transportation of passengers by an omnibus except where the person
supplying such service through ECO is a company.
Thus, with effect from 20.10.2023, the tax on services by way of transportation of passengers
by an omnibus provided by a company through ECO is not payable by ECO. It will be payable by
the company itself.

- Arpita Tulsyan 56 www.arpitatulsyan.com