According to the industry, the new invoice management system would increase the overall cost of compliance for small sellers. The industry claims that the sellers will need qualified resources and a dedicated IT setup to be able to ensure new compliance.
“Specifically, e-commerce has high transaction volumes and the present structure of IMS requires transaction-level action on all vendor invoices and transaction review of customer actions, both of which are dynamic statements and need to be refreshed multiple times during the month,” say the representations.
According to the government, to enable taxpayers to efficiently address invoice corrections/amendments with their suppliers through the portal, a new communication process is being brought to the portal which will facilitate taxpayers in matching their records/invoices vis-à-vis issued by their suppliers for availing the correct Input Tax Credit (ITC). GSTN has developed a new functionality called Invoice Management System (IMS) which will allow the recipient taxpayers to either accept or reject an invoice or to keep it pending in the system, which can be availed later.
Industry claims that the “IMS creates a risk of customers wrongly or mischievously rejecting valid credit notes issued on return of goods sold by sellers on e-commerce. Unlike traditional trade, where there are direct relationships between sellers and B2B customers, IMS would create an incremental risk for e-commerce sellers due to the lack of a direct relationship with the customers. The GST portal also does not allow an option to raise a dispute and to flag off the incorrect rejection of credit notes.”
Another issue that has been bothering the industry is that in traditional trade, sellers can hold the refunds to the customer till they have an assurance of acceptance of credit notes on the IMS portal. “As e-commerce is bound by specific RBI guidelines, they are obligated to refund the amounts in a time-bound manner compounding the financial risks,” the representations added.
Further, the industry has also flagged that “in the case of products rejected by or undelivered to customers, the e-commerce sellers are required to raise a credit note on the customer and need to report the invoice and the credit note on the portal. However, as the customer has not purchased the product, they would rightly reject both these documents. The rejection of a credit note would create an incremental liability for the seller and result in a financial exposure despite issuing the correct documents.”
Not just this, what is also making the industry worried is that “the action taken by the customer or the vendor is reversible. E-commerce sellers would be required to wait till the end of the return filing period to correctly ascertain the tax liability and to initiate reconciliation/discussion with the customers on any disputes. This creates heavy incremental work during the return filing period, and the newly created IMS is unable to deal with this.”
Since the new functionality of IMS is expected to be implemented nationwide from the coming April, it remains to be seen how the government will deal with such concerns.
