As the festive financial audit cycle approaches, Central and State GST intelligence wings have activated an automated compliance drive targeting wholesale textile merchants. The review focuses on strict adherence to mandatory electronic invoicing (e-invoicing) for registered business-to-business (B2B) transactions among firms with an aggregate annual turnover exceeding ₹5 crore in any preceding financial year.
Unregistered Software & Missing IRN Numbers
According to commercial tax practitioners on Ring Road, multiple textile commission firms, grey cloth brokers, and process house job-workers have received automated intimation letters. Under GST regulations, any tax invoice issued by a covered entity that lacks a valid 64-character Invoice Reference Number (IRN) and cryptographically signed QR code generated via the Invoice Registration Portal (IRP) is deemed invalid under Rule 48(4) of the CGST Rules.
Tax consultants explain that several mid-sized trading firms still rely on older, standalone desktop accounting programs that generate standard paper bills without connecting to government API gateways. When buyers claim Input Tax Credit (ITC) on these non-IRN invoices, automated matching systems flag discrepancies in GSTR-2B, triggering input credit reversals for the receiving firm.
Reconciliation Guidelines Before Diwali Ledger Closing
Chartered accountants in Surat have advised wholesale traders to verify their turnover calculations across all affiliated PAN entries, including auxiliary job-work income, transport reimbursements, and trading across sister firms:
- Verify Threshold History: If aggregate turnover surpassed ₹5 crore in any financial year from 2017–18 onward, e-invoicing remains permanently mandatory.
- Exempt Supplies Check: Verify whether sales to unregistered retail walk-in buyers (B2C) carry dynamic QR codes or are properly segregated from B2B ledgers.
- Software API Integration: Upgrade legacy billing setups to modern ERP solutions or integrated platforms that automatically push invoice data to the IRP portal before goods depart market godowns.
Trade bodies have warned that issuing non-e-invoices exposes businesses to penalties of up to ₹10,000 per invoice or 100% of the tax due under Section 122(1) of the CGST Act.