We can start with the basic question – “Is an e-way bill required when the goods are supplied by an unregistered supplier?”
Before we attempt to answer it, let’s chalk out the various possibilities as far as purchases made from unregistered dealers under GST are concerned. An unregistered supplier may supply goods to the following types of recipients:
Unregistered Dealers under E-way Bill supplying to Registered Dealer
As per the e-way bill rules, in case the unregistered dealer is supplying goods to the registered dealer, the movement shall be said to be caused by the recipient i.e. the registered dealer, provided the recipient is known at the time of commencement of the movement of goods.
If we go through this rule, we will find a clause – “provided the recipient is known at the time of commencement of the movement of goods”. This basically means that there are two possibilities, we need to explore:
- Registered Recipient is known
- Registered Recipient is not known
Case 1: Registered Recipient is known
Since the recipient is deemed responsible for the movement of goods, the recipient i.e. the registered dealer will be liable to generate the e-way bill in this case.
Given that the supply of goods can be done by unregistered dealers under e-way bill, either in his own conveyance or a hired vehicle, or via a transporter, either the unregistered dealer or the transporter will have an option to generate the e-way bill at the portal i.e. they may choose to generate or not to generate the e-way bill, and they will not have any liability to do it.
Case 2: Registered Recipient is unknown
Before we understand the e-way bill provisions for this scenario, let us understand the practical business situations, where a recipient may not be known.
To begin with we need to understand that the recipient may be deemed as known or unknown, based on the knowledge available to the supplier at the time of commencement of movement of goods. If the recipient is known at the time, the goods are being moved, we need to refer Case 1. But in certain business models, unregistered suppliers manufacture goods at their place, and then bring the goods for sale to a common market, where lot of buyers are available. In such a situation, the unregistered supplier will obviously not know at the time of movement of goods, who he is ultimately going to sell the goods to. In such a situation, the e-way bill is not mandatory.
However, similar to the previous case, here too, the unregistered supplier will have an option to generate the e-way bill. He may do so by clicking the “Enrolment for Citizen” option on the e-way bill portal as shown below:
Note: This option has not yet been activated on the portal, but it may be expected to be activated once the e-way bill roll-out is commenced on 1st April, 2018.
Unregistered Dealers under E-way Bill supplying to Unregistered Dealer
As per the e-way bill rules, in case unregistered dealers under e-way bill are supplying goods to other unregistered dealers, e-way bill is not required to be generated. However, here too, the unregistered supplier will have an option to generate the e-way bill under the “Enrolment for Citizen” option on the e-way bill portal, as discussed above.
Exceptions – Handicraft goods supplied Inter-State
One notable exception in the case of purchases made from unregistered dealers under GST, is in the case of handicraft goods which are supplied across the state borders. As discussed on our previous blogs, in such a case e-way bill has to be mandatorily generated irrespective of the value of the consignment, and the liability to generate the e-way bill will be of the same person i.e. the unregistered dealer, who supplied such goods.