DECEMBER 15, 2020

By P G James

E-invoice, though belatedly implemented after more than three years of GST implementation and that too for large and medium sized entities having turnover of Rupees 500 crores and above, is a revolutionary initiative and enhances the ease of doing business to a certain extent.

Indian Railways, the largest passenger carrier in the world, moving 26 million passengers in a day and a major freight mover of over 1.2 billion tons, is the life line of our nation.

Revenue of the Indian Railways exceeded Rupees Two lakh crores in 2020-21, two third of which accounts for freight income. Hence the Railway is very much required to issue e-Invoice for freight operations.

CRIS (Centre for Railway Information Systems) is an organization under Ministry of Railways, which is claimed to be a unique combination of competent IT professionals and experienced Railway personnel enabling it to deliver complex Railway IT systems.

Their publicized motto is "modernizing IT solutions by introducing emerging technologies" and "making IT happen". But the present state of affairs with regard to GST compliance of the Railways especially with regard to e-Invoicing pokes CRIS as "making IT (mis)happen".

Even though e-Invoicing is made mandatory for businesses having turnover above Rupees 500 crores effective from 1st October, 20, even after more than two months, they have not started issuing e-Invoice resulting in the blockage of crores of rupees in the hands of recipient customers as un-availed Input Tax Credit or tax credit taken at the cost of litigation and prone to disputes from GST authorities.

Ever since Service Tax was introduced on transportation of goods by rail in October 2012 and continued upon migration to GST in July 2017, the Railways had been adopting an apathetic approach which dragged many taxpayers into unwanted litigation. In fact, the levy of Service Tax on railway services was introduced in 2009 but was exempted from time to time until September 2012 for reasons one can easily comprehend.

Even after its levy, Railways were circumventing Service Tax laws by not issuing Tax Invoices and issued their own Circulars advising customers to claim Cenvat credit on certificates issued by them. The Ministry of Finance acted as a silent spectator to these lethargic moves of the Railways but found it prudent to disallow Cenvat credit at the recipient's end and these disputes are pending adjudication at many places even now.

In GST regime also, the Railways refused to issue Tax Invoices as contemplated in Sec 31 read with Rule 46 of CGST Rules and issued a Circular No 19/2017 bearing reference No TCR/1078/2017/19 dated 30th June, 2017 wherein it was stated that Railway Receipt/Money Receipt shall act as Tax Invoice for availing Input Tax Credit.

Another  disingenuous move of Railway was the attempt to shift Service Tax liability on 'Demurrage and Wharfage Charges' on the recipient of service vide Circular No.TC-I/2012/214/2Pt.I dated 15th December, 2016.

In GST too, after widespread complaints from several corners, they issued a clarification vide letter no TC-I/2014/103/2 Pt. I dated 22.11.2019 that GST Invoice is to be downloaded from their Freight Operations Information System (FOIS) and to be got signed by an authorized Railway official. They seem to have forgotten the concept of validity of digital signature extended to GST Invoices and thus the hapless recipients need to run from pillar to post to get the Invoices signed/stamped from the "authorized railway official". Old habits die hard!

Despite the predilection towards non-compliance with regard to taxes, they are extremely diligent and assiduous with regard to the GST compliance of those who supply goods and services (to the Railways). Their terms with regard to procurement are unrelenting as is evident from the GST Circular No. 44/2020 dated 8th October, 2020 issued by Railway Board on the process with respect to procurements undertaken from 1" October, 2020.

It reads -

"We <Name of Authorised Signatory>>of « Trade name / Legal name of the Vendor >> do hereby declare that the aggregate turnover of "the Firm or the Company" computed as per Section 2(6) of Central Goods and Service Tax Act, 2017 exceed the limit prescribed for generation of an unique Invoice Registration Number (IRN) and QR code as per the provisions of Central Goods and Services Tax Act, 2017 and rules thereunder ("GST Law").

Accordingly, we are covered under the ambit of GST e-invoicing provisions w.e.f. 01 October 2020 and therefore the invoices, debit notes, credit notes or any other prescribed document under e-invoicing issued/raised by us duly complies with the notified e-invoicing provisions.

Further, any invoice or document issued by "the Firm or the Company" to Ministry of Railways having GSTIN…. shall be properly and timely reported under respective returns under GST by "the Firm or the Company" in line with the notified provisions and the applicable tax collected from Ministry of Railways shall be timely and correctly paid to the respective Government by us. We acknowledge that information furnished above are true to the best of our knowledge. In case any of the above information is found to be incorrect at a later date or due to failure on our part to comply with the relevant laws/ regulations and if any GST liability, interest, penalties or any other amount becomes payable or input tax credit is denied to Ministry of Railways having GSTIN …we shall indemnity for the same."

Further, while bidding for supplies to be made to the Railways, it is a mandatory condition that all the bidders/tenderers should ensure that they are GST compliant and their quoted tax structure/rate are as per GST law.

None can deny the fact that the above well thought out terms of procurement terms covers all potential and probable risk the Railways may incur owing to the non-compliance of their suppliers.

But reciprocity is a word perhaps unheard by the Railway administration. What about the risk of disallowance of ITC and cost of litigation thereof which the customers may face/incur owing to the lethargy of non-issuance of e-Invoices by Railways?

There is no justification for having such unilateral terms which is detrimental to the public at large. Even the ‘King' is precluded from doing any wrong (Rex non potest peccare) as per the adage.

There is no other alternative than to face the dire consequences of disallowance of ITC, as happened in the erstwhile Service Tax regime and to undergo the pains of costly litigation.

"Omnis innovatio pins novitate perturbat quam utilitate prodest "

Meaning - Every innovation disturbs more by its novelty than benefits by its utility.

[The views expressed are strictly personal.]