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November 30, 2020

Penalty waived for non-compliance to QR code provisions in B2C GST Invoice till 31 March 2021

by CA Shivam Jaiswal in GST

Penalty waived for non-compliance to QR code provisions in B2C GST Invoice till 31 March 2021

The Central Board of Indirect Taxes and Customs (CBIC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview.

Waiver of penalty pertaining to Dynamic Quick Response (QR) code

On 29th of November, 2020, CBIC issued notification No. 89/2020–Central Tax, which waived the amount of penalty payable by any registered person for non-compliance of the provisions of notification No.14/2020–Central Tax, dated the 21st March, 2020

This penalty was waived from the 1st of December, 2020 to the 31st of March, 2021, subject to the condition that the said person complied with the provisions of the said notification from the 1st of April, 2021..

What does the waived penalty exactly pertain to?

CBIC vide Notification No. 14/2020– Central Tax dated 21st March, 2020, had notified that an invoice issued by a registered person, whose aggregate turnover in a financial year exceeded Rs 500 crore to an unregistered person (B2C invoice), shall have Dynamic Quick Response (QR) code.

However, when such registered person made a Dynamic Quick Response (QR) code available to the recipient through a digital display, such B2C invoice issued by such registered person containing cross-reference of the payment using a Dynamic Quick Response (QR) code, shall be deemed to be having Quick Response (QR) code.

What is the penalty for non-compliance of the requirement of the Dynamic Quick Response (QR) code?

Section 125 of the CGST Act pertains to general penalty. According to Section 125 of the CGST Act, any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to Rs 25,000. As no specific penalty is not provided for non-compliance of the requirement of the Dynamic Quick Response (QR) code, penalty under Section 125 will be applicable.

What do you mean by a Dynamic Quick Response (QR) code?

  • To promote digitization and digital payment, Dynamic QR code is brought into the picture by the government.
  • A dynamic QR code is a QR code with a short redirection URL encoded in it.
  • The information you are trying to communicate is not encoded in the QR code itself, like a static QR code.
  • Instead, the information you’re trying to communicate is on a website, and a dynamic QR code redirects to that website.
  • Also, that redirection URL can change. Unlike a static QR code, the information in a dynamic QR code can change without needing a new code.

What does having a Dynamic Quick Response (QR) code indicate?

It indicates that QR code which is to be printed on the invoices shall have to configured/made by the taxpayer himself and that the Government will not be generating for the taxpayers unlike Invoice Reference Number and QR Code which is generated by Invoice Registration Portal (IRP) for taxpayers falling the requirement of E-Invoicing. The benefits of the Dynamic Quick Response (QR) code are:

  • Every dynamic QR code generated is unique.
  • There is control on the supply value.
  • The payee cannot change the value.
  • The amount can be paid easily by using any UPI app.

What data is present in the Dynamic Quick Response (QR) code?

Data embedded in Dynamic QR Code is:

  • Merchant’s UPI Id.
  • Merchant’s Name.
  • Merchant Code, if any.
  • Merchant ID, If any.
  • Reference number that may consist of an order number, subscription number, Bill number, booking number, etc.
  • Short Description.
  • Invoice Value.
  • Minimum Amount Payable.

Who is not required to display the Dynamic Quick Response (QR) code?

  • The said requirement of having QR Code on B2C invoices is not applicable to a registered person referred under sub-rule (2), (3), (4) and (4A) of rule 54 of CGST Rules, 2017.
  • The tax payers falling under sub-rule (2) of rule 54 are insurer or a banking company or a financial institution, including non-banking financial company.
  • The tax payer falling under sub-rule (3) of said rule is goods transport agency supplying services in relation to transportation of goods by road in a goods carriage.
  • The tax payers falling under sub-rule (4) and (4A) are the supplier of passenger transport service and supplier of services by way of admission to exhibition of cinematograph films in multiplex screens. 
  • All other tax payers except those mentioned above having aggregate turnover exceeding Rs 500 crore in a financial year shall print QR code on B2C invoices

Now, the requirement of having Dynamic Quick Response Code on all B2C invoices to be complied by tax payer having turnover more than Rs 500 crore in any preceding financial year from 2017-18 onwards is extended till 31.03.2021. However, a condition is prescribed that w.e.f. 01.04.2021. the tax payer shall comply with the requirement of QR Code on B2C invoices. In case the tax payer fails to do so then the penalty u/s 125 shall be applicable. Because the notification states that penalty under section 125 is waived till 31.03.2021 provided the tax payer complies the provision from 01.04.2021.

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