1. The Background - When Volume Meets Compliance
"Even entertainment must pay its taxes - melody may move the soul, but compliance moves the system."
A quiet rhythm complements every significant event, dazzling show, and moment of applause - the beat of compliance. While the stage shines under bright lights, behind the scenes, there's another performance unfolding - one led not by musicians but by accountants, tax managers, and legal experts, all working together to ensure the business stays in tune with the law.
When a large organiser like Abhishek Arora Ltd. hosts an event that attracts thousands of enthusiastic spectators, the practicalities of administration and the commercial aspects come into play. Every ticket sold is considered a separate taxable supply in terms of Section 7(1)(a) of the CGST Act, 2017. Further, according to Section 31(2) of the CGST Act, 2017, each taxable supply of services must be supported by a proper tax invoice. It's not just a suggestion - it's a legal obligation.
Picture an evening when 15,000 fans buy tickets, none are registered under GST, and none plan to claim ITC. The organiser's practical concern is understandable - Does it really need to issue 15,000 separate invoices? Could there be a way to combine them in a reasonable way? Fortunately, the law addresses this question thoughtfully - but the relief it provides is specific, limited, and based on Section 31(3)(b) along with the third proviso to Rule 46 of the CGST Rules.
This combination offers a relaxing option for affordable B2C supplies - but, as we'll discover, its reach doesn't extend to the Rs 1000 and Rs 1,500 tickets of Abhishek Arora Ltd.
2. The Legal Mandate - The Foundation of Invoicing
The foundation of GST invoicing is Section 31(2) for the supply of taxable services, which requires every registered supplier to issue a tax invoice either before or after the provision of service within a prescribed time. Think of this document not just as proof of the transaction, but also as the key that starts the tax process and helps keep everything transparent during audits. It acts as a vital link between businesses and the government - bridging private commerce and public-interest accountability.
Given India's vibrant retail scene, the law recognises that issuing a separate invoice for small purchases - such as a cup of tea or a Rs 100 souvenir - can sometimes add extra hassle. That's why Section 31(3)(b) offers a helpful exception. It permits registered businesses to skip issuing a tax invoice for supplies valued at less than Rs 200, provided they meet certain conditions and procedures. This makes doing business a bit easier and more convenient. However, it must be borne in mind that Section 31(3)(b) is not an exemption but rather a limited relief for low-value retail transactions.
3. The Text of the Third Proviso to Rule 46 - The Procedural Key
The third proviso to Rule 46 reads as follows:
"Provided also that the registered person, other than a supplier engaged in making supply of services by way of admission to exhibition of cinematograph films in multiplex screens, may not issue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31, subject to the following conditions, namely: -
(a) the recipient is not a registered person; and(b) the recipient does not require such invoice;and shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies."
This proviso helps to clarify how Section 31(3)(b) works. It gently guides taxpayers on how to apply the relaxation - not just whenever they want, but within the Rs 200 limit. The message is warm and straightforward: for small sales under Rs 200 to unregistered customers who don't request invoices, the supplier can skip issuing individual invoices. Instead, they can send a single combined tax invoice at the end of each day for these sales. However, if any transaction is for Rs 200 or more, or if the customer requests an invoice for a taxable supply of less than Rs 200, the said relaxation shall not apply, and the standard requirements of Rule 46 come back into full force.
4. The Legislative Intention - Practicality within Precision
Every aspect of GST is designed to create a friendly balance-making doing business easier while keeping good records. Lawmakers, in introducing this clause, understood that India's economy grows through both large ventures like multiplexes and events, as well as small local shops and neighbourhood cafes. The system had to be flexible, supporting smooth operations while still ensuring everything could be traced easily.
The third proviso to Rule 46 was thoughtfully designed to be practical, focusing mainly on smaller B2C transactions rather than B2B supplies. It helps make compliance more straightforward to manage based on transaction size. By setting the Rs 200 threshold, the legislature clearly decided that there should be a point at which the cost of compliance is no higher than the tax collected.
5. The Scope and Boundaries of the Third Proviso to Rule 46
The scope of this relaxation is thoughtfully outlined and carefully designed to be clear and legally accurate. It includes three simple conditions: First, the value per supply should not exceed Rs 200; second, the recipient must be unregistered under GST; and third, the recipient should not need an invoice. These easy-to-understand requirements aim to make the process more straightforward and more accessible for everyone.
The supplier can issue a single consolidated invoice at the end of the day when all three conditions are met. If any condition isn't met-like the value going Rs 200 or above or the buyer asking for an invoice-the exemption no longer applies, and the usual rule under Section 31(1) takes effect. In such cases, the supplier needs to issue a separate tax invoice that includes all the necessary details as specified in Rule 46. This system offers a helpful shortcut while still maintaining significant oversight-it's a small degree of flexibility carefully regulated by specific conditions.
6. The Case of Abhishek Arora Ltd. - The Rs 500 Reality Check
Let's revisit the example of Abhishek Arora Ltd. The company is hosting an entertaining event with ticket prices ranging from Rs 1,000 to Rs 25,000 per person. Since the lowest ticket price is already above the Rs 500 threshold set by Notification No. 12/2017-CT(R)-which only exempts admissions costing up to Rs 500-the exemption doesn't apply here. As a result, all tickets sold will be considered taxable supplies.
Since each ticket's value exceeds Rs 200, relief under Section 31(3)(b) and the third proviso to Rule 46 doesn't apply. The law emphasises that such valuable supplies must be invoiced individually, so consolidated billing isn't permitted here. As a result, Abhishek Arora Ltd. should issue separate B2C invoices for each ticket sold, regardless of the number of customers involved. The reasoning is quite simple - when the consideration is higher, there's a greater need to track things individually.
7. The Practical Reality - When Compliance Meets Volume
The real challenge for Abhishek Arora Ltd. isn't just understanding the law, but making sure everything runs smoothly on the ground. How can a business send out thousands of invoices without getting overwhelmed or creating chaos? The key is in leveraging technology to make it all easier and more efficient.
An integrated ticketing and ERP system can instantly generate tax invoices for every transaction. Each ticket number serves as an invoice serial number, including all the necessary details per Rule 46 - such as supplier information, SAC code, taxable value, tax rate, and total amount. This kind of automation makes things easier, ensures compliance, and enhances internal controls and transparency.
8. Recordkeeping and Audit Trail - The Hidden Strength
Recordkeeping is a quiet yet vital support for GST. Even when small-value supplies are combined into a single invoice, the supplier still needs to keep detailed records of each transaction. Section 36 read with Rule 56 emphasises the importance of accurately maintaining all accounts related to goods or services provided, including invoices, bills of supply, and payment receipts and retaining the same for a period of 72 months from the due date of furnishing of the annual return for the year about such accounts and records.
For entities like Abhishek Arora Ltd., it's essential to update your records daily, matching ticket sales, tax invoices, and payment receipts. Think of your ledger as a harmonious song - every ticket number should be in its rightful place. Remember, in taxation, anything not recorded is often considered non-existent. So, keeping thorough documentation isn't just about following relevant provisions of Section 36 and Rule 56 - it's your best safeguard against potential future disputes.
9. What the Proviso Does Not Permit - The Misuse Myth
Many people believe that the third proviso allows for daily consolidation of all B2C sales regardless of their value, but that's not quite right. The law actually limits this to supplies not exceeding Rs 200 per recipient, so it can't be used to combine higher-value transactions or to avoid e-invoicing requirements.
Additionally, it's important to remember that this proviso doesn't cover delayed invoicing, combining multiple days into a single entry, or leaving items out of returns. Misusing this proviso can lead to penalties under Section 122(1)(i), especially if proper tax invoices aren't issued. Penalties could be as much as Rs 10,000 each under the CGST Act and respective SGST Act or based on the amount of tax evaded, whichever is higher. So, what was meant to help make things easier should not turn into a loophole.
10. The Broader Philosophy - Simplicity with Accountability
The third proviso to Rule 46 highlights an essential truth about GST - that making things simple and being accountable go hand in hand. The system offers sensible flexibility, as long as it stays within precise limits. It values practicality, but always insists on transparency.
This approach embodies thoughtful tax governance: the small trader selling Rs 100 items gets some relief, while the prominent event organiser managing lakhs needs to be precise. Remember, compliance isn't about punishment - it's a cooperative effort between taxpayers and the nation. The law acts as a quiet conductor, helping every part of the business stay in harmony.
11. Conclusion - The Rhythm of Law and Logic
When the music concludes, and the applause dies down, what stays with us is the record - the invoices, ledgers, and filings. These are the genuine echoes of accountability. The case of Abhishek Arora Ltd. reminds us that even though the number of invoices might decrease for small-value supplies, the importance of proper invoicing should never waver for high-value transactions.
The third proviso provides a helpful support, rather than a complete liberation; it acts as a convenient option for small transactions while still protecting the overall system's integrity for larger ones.
कानून भी एक सुर है, जीवन की धुन में मिला हुआ,जो इसे समझ ले, वो व्यापार को कला बना देता है।
(The law too is a note, merged within life's melody - and whoever learns to play it well, turns business into art.)
So, even a concert has to follow the rhythm of GST-because even if the tune of compliance is silent, it's what helps keep the harmony of good governance vibrant and strong.
CAclubindia
