The GST department systematically cross-references E-Way Bill data with GSTR-1 outward supply declarations. When the two do not match, the system generates a mismatch notice. While many mismatches have legitimate explanations, ignoring the notice can lead to tax demands.
This article explains the causes of E-Way Bill and GSTR-1 mismatches and how to respond effectively.
Common Causes of Mismatch
The following are the most common causes of E-Way Bill and GSTR-1 mismatches:
- Non-supply movements: E-Way Bills are generated for reasons other than supply, such as stock transfers, job work, exhibitions, and returns. These movements do not appear in GSTR-1 as outward supplies.
- Timing differences: An E-Way Bill generated in one month may relate to an invoice reported in a different month's GSTR-1.
- Value differences: The value declared in the E-Way Bill may differ from the value reported in GSTR-1.
- Cancelled E-Way Bills: E-Way Bills that were generated and subsequently cancelled may not be reported in GSTR-1.
- Multiple invoices per E-Way Bill: One E-Way Bill may cover multiple invoices, creating apparent mismatches.
The Non-Supply Movement Defence
Many E-Way Bills are generated for movements that are not supplies. These include:
- Stock transfers between branches.
- Goods sent for job work.
- Goods sent for repair or testing.
- Return of goods to suppliers.
- Goods sent to exhibitions or trade fairs.
These movements should not appear in GSTR-1 as outward supplies, and their absence from GSTR-1 is not a discrepancy.
How to Respond to the Notice
- Download the notice from the GST portal.
- Extract the E-Way Bill data for the relevant period.
- Classify each E-Way Bill as supply or non-supply movement.
- Prepare a reconciliation statement.
- For non-supply movements, provide documentary evidence.
- For timing differences, explain the period in which the supply was reported.
- File the reply in the prescribed form within the deadline.
Practical Steps
- Maintain a register of all E-Way Bills generated, categorized by purpose.
- Reconcile E-Way Bill data with GSTR-1 every month.
- Ensure that E-Way Bills are cancelled if the transaction does not materialize.
- Use the correct document type in GSTR-1 for stock transfers and job work.
Conclusion
E-Way Bill and GSTR-1 mismatches are common but manageable. Most mismatches have legitimate explanations, and a well-prepared reconciliation can resolve the notice without a demand.
At Anuj Desai & Associates, we provide expert assistance in responding to E-Way Bill and GSTR-1 mismatch notices. Our team can help you prepare reconciliations and respond effectively.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.