Compulsory Registration for Inter-State Supply, Blocked ITC and E-Invoicing Default
M/s Nova Appliances Pvt Ltd is registered in Gujarat with aggregate turnover of Rs 7,20,00,000 in FY 2023-24. It has a warehouse in Rajasthan from which it stores and supplies goods; it has not obtained a separate registration there and treats it as an additional place of business. In October 2024 it purchased a passenger car for Rs 12,00,000 plus GST at 28% for the director's personal use, office furniture for Rs 2,00,000 plus GST at 18%, and goods worth Rs 5,00,000 plus GST at 18% that were destroyed in a fire accident in the warehouse. It availed ITC on all three. On 5 November 2024 it issued a B2B invoice for Rs 3,00,000 without generating an e-invoice, though it has been e-invoicing since 2023. It filed GSTR-3B for October 2024 on 25 November 2024, against the due date of 20 November 2024. The department has issued a notice proposing to deny ITC and impose penalty for e-invoicing and late filing.
1. Was Nova required to obtain a separate registration in Rajasthan for its warehouse?
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Yes. GST registration is state-specific. A registered person making taxable supplies from a place of business in another state must obtain registration in that state; an additional place of business is ordinarily used within the same state. Because Nova stores and supplies goods from a Rajasthan warehouse, it is a supplier in Rajasthan and requires separate registration there under section 25 read with the registration rules. The Gujarat registration does not authorise taxable supplies from Rajasthan. Supplies made from the unregistered Rajasthan warehouse are still taxable, but they expose Nova to penalty for supply without registration under section 122, apart from interest and possible detention of goods.
2. Determine the ITC eligibility on the car, office furniture and fire-destroyed goods.
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ITC on the passenger car is blocked under section 17(5)(a) because it is used for the personal purpose of the director and is not used for further supply of vehicles, passenger transport or driving training. The ITC of Rs 3,36,000 is therefore unavailable. Office furniture used in the business is eligible; ITC of Rs 36,000 (18% of Rs 2,00,000) can be availed if the invoice and other conditions are satisfied. ITC on goods destroyed in a fire is blocked under section 17(5)(h), which covers goods lost, stolen, destroyed, written off or disposed of by gift or free samples. The ITC of Rs 90,000 on the destroyed goods must be reversed. Only the furniture credit survives.
3. What are the consequences of issuing the B2B invoice without an e-invoice and filing GSTR-3B late?
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E-invoicing is mandatory for B2B supplies where aggregate turnover exceeds Rs 5 crore in any preceding financial year from 2017-18. Nova's turnover is Rs 7.20 crore, so it must generate an IRN for every B2B invoice. The 5 November invoice without an e-invoice is non-compliant; the supplier attracts penalty for non-compliance, and the recipient's ITC position is put at risk because the invoice is not a valid e-invoice. For late filing of GSTR-3B, late fee applies under section 47 at Rs 50 per day (Rs 25 CGST plus Rs 25 SGST), subject to the cap, and interest under section 50 applies on the tax paid late at 18% per annum from the due date to the payment date. Nova should generate the e-invoice immediately if the IRN window is still open.