Blocking and Unblocking of E-way Bill: Understand How it is Done!
An electronic bill, known as an E-way bill, is a GST compliance mechanism where the taxpayer, with the help of digital interference, has to generate this document on the E-way bill portal by uploading relevant information about the goods to be transported prior to such movement of goods. This document includes all the details relating to the shipment made, details of the goods, name and GSTIN of the consignor and that of the consignee, place of delivery, details of transporter and vehicle number in which the goods are transported.
Compliance with the E-way bill is mandatory where the value of the consignment of goods is more than Rs. 50K.
Now, the system of e-way bills is designed so that not only can all the movement related to taxable goods be traced, but also no taxable goods can be transported without generating taxable invoices and mentioning such relevant details to the GST department through the generation of e-way bills. Thus e-way bill compliance ensures that there is no tax evasion. As the e-way account is such an important document to complete the sales process, GST authorities came up with a significant change in 2019, i.e., blocking the generation of E-way bills.
By this change, they ensure the regular filing of returns by the taxpayer. Let us understand the blocking of the E-way bill and the process of further unblocking.
What is Blocking of generation of E-way Bill
Blocking of the generation of an E-way bill is when a taxpayer is unable to generate a new e-way bill using his GSTIN. This system was implemented on the 2nd of December 2019 in order to keep a check on the tax defaulters.
Due to their inability to generate E-way bills, the taxpayer will find receiving or sending goods to or from other states or union territories challenging until their GSTIN is unblocked.
Whose GSTIN will be blocked for the generation of the E-way Bill
A person is not permitted to provide any information in Part A of the GST EWB-01, as per rule 138E, including a consignor, consignee, transporter, e-commerce operator or courier service provider :
I. if a composition taxpayer – not filling out a statement of payment on self-assessed tax for two consecutive terms, i.e., two consecutive quarters.
II. if a person, other than a person specified in I. above, has Not furnished the returns for a consecutive period of 2 tax periods.
III.if a person other than a person specified in I. above, has not furnished the statement of outward supplies for two months or two quarters wherever applicable.
IV. if a person whose registration has been suspended in accordance with provisions of CGST Rule 21A.
How will the taxpayer know about the blocked status?
If a taxpayer tries to generate an e-way bill on the GST portal online and the following message pops up, as shown in the image, stating an error that the following GSTIN is blocked for the generation of an E-way bill due to non-compliance of filling of GSTR return of last two consecutive terms.
Also, if a taxpayer enters the GSTIN of an already blocked party, then the generation of an e-way bill won’t be possible, and the following message will pop up, as shown in the image, stating that the GSTIN of the other party is blocked.
Thus once blocked e-way bill cannot be generated from the GST portal by the consignor, consignee or transporter.
How a taxpayer is impacted due to blocking of GSTIN
- The taxpayer cannot receive or deliver goods as an E-way bill cannot be generated from the portal with a blocked GSTIN.
- The penalty will be levied if taxable goods are transported without compliance with the E-way bill as applicable.
- Risk of goods being seized if transported without an E-way bill, which eventually will delay the delivery of goods, impacting cash turnover
- Will slow down business activities
Benefits to GST Authorities with blocking of GSTIN
- Ensures the timely payment of tax
- Ensures timely submission of Returns and other compliances by the taxpayers
- Increase in tax revenue collection
- Increase in GST compliances
How to Unblock the blocked GSTIN for the generation of E-way Bill
The taxpayer’s status from Blocked to Unblocked can be changed only after the default made by the taxpayer is resolved. Thus, the reason for getting blocked must first be attended to generate a new E-way bill. Once the defaulter meets all the compliances, the pending returns are filled; then, the status is updated automatically from ‘Blocked’ to ‘Unblocked’ the next day on the GST portal.
If an automatic update in the status of the defaulting taxpayer is not made on the portal, then the taxpayer can do the following to update the status manually:
I. Visit the E-way bill system on the GST portal (https://www.ewaybillgst.gov.in/)
II.Go to the option of Search and choose “Update Block Status.”
III. Now, enter GSTIN and the Captcha Code
IV. Once all the details are entered, click ‘GO.’
V. On the next step, the GSTIN and the blocked status will be displayed as shown in the figure
VI. In order to update the status from blocked to Unblocked, click on the button displaying “Update or Unblock GSTIN Status from GST portal.”
On availing of such an option, it will further check the compliance status on the GST portal, and if all the compliances are met, it will update the status accordingly.
VII. If the status still needs to be subsequently updated, the taxpayer shall contact Help Desk and raise a complaint on the GST portal to resolve the matter.
Suppose the defaulting taxpayer is unable to comply with the filing of returns but wants to change his status from blocked to unblocked. In that case, one can do so by filling out an online application, EWB-05 requesting to change the status by giving an adequate reason for such non-compliance with an estimated date of filing a return in the future. The status will further depend upon acceptance or rejection of this application and future compliance with filing returns.
The generation of E-way bills is very important in order to conduct the movement of goods. Therefore businesspeople need to be able to afford the blocking of GSTIN on the E-way bill portal. Thus for smooth operations, compliance with GST provisions and timely filing of returns becomes mandatory for all taxpayers.
