In terms of Rule 138E (a) and (b) of the CGST Rules, 2017, the E-Way Bill (EWB) generation facility of a taxpayer is liable to be restricted, in case the taxpayer fails to file their FORM GSTR-3B returns / Statement in FORM GST CMP-08, for two or more tax periods.

As the December month begins the businesses, both small and big, will not be able to move goods from one place to another if they have not filed GST returns on time.

The GST Network or GSTN will activate an automated system from December 1 that will bar non-filers of monthly GST return form GSTR-3B, irrespective of turnover limits, from generation of E-way Bill.

E-way Bill is an electronic way bill for movement of goods to be generated on the e-Way Bill Portal. A GST registered person cannot transport goods in a vehicle whose value exceeds Rs 50,000 without generating an E-way Bill.

In case such movement takes place without E-way bill, the person is liable for penalty and cancellation of GST registration.

Earlier the automated tool was made applicable only to registered persons with a turnover of over Rs 5 crore. Now extending it to all registered entities would force them to file returns on time, improving the overall compliance level in the country.

Businesses, especially smaller ones with a turnover of less than Rs 5 crore, feel that the time is right to roll out the new compliance regulations at this juncture when business activities continue to be hampered by the Covid-19 pandemic.

"Compliance for registered individuals with a turnover of over Rs 5 crore started just last month. More time should have been given to small businesses for now. This will only make the GST process more painful," said a trader dealing in electronic goods, asking not to be named.

As per an official note on the changes, from December 1, GSTN will check the status of returns filed in form GSTR-3B or the statements filed in form GST CMP-08, for all taxpayers moving goods of over Rs 50,000 before E-way Bill is generated. The permission to move goods would be denied for non-filing of two or more returns for the months up to October and non-filing of two or more statement in form CMP-08 for quarters up to July-September 2020.

The blocking of movement will take place periodically, from next month onwards. The GSTN has advised that to avail continuous E-way Bill generation facility on the portal, taxpayers are required to clear pending filing of returns immediately.