When E-Way Bill Generation Is Blocked: Rule 138E

A business that falls two returns behind usually learns of it through an error message, not a notice. A dispatch clerk tries to generate an e-way bill and the portal refuses. The block is automatic and needs no order. It affects anyone who would put the business’s GSTIN on an e-way bill. It lifts automatically once the returns are filed. A business that cannot file at once has one other route: an application in FORM GST EWB-05, decided by an order in FORM GST EWB-06.

This guide covers what triggers the block, what it does and does not stop, and the two ways out. It also covers where the portal’s practice differs from the rule.

The rule

Rule 138E was inserted by Notification No. 74/2018-Central Tax. After two postponements (Notifications No. 22/2019, 25/2019 and 36/2019-Central Tax), it took effect from 21 November 2019. GSTN switched the blocking on at the e-way bill portal from 2 December 2019. As amended, the rule reads:

Notwithstanding anything contained in sub-rule (1) of rule 138, no person (including a consignor, consignee, transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the information in PART A of FORM GST EWB-01 in respect of any outward movement of goods of a registered person, who, -

It then lists four cases:

Clause	Who	Trigger
(a)	A composition taxpayer under section 10, or a person under Notification No. 02/2019-Central Tax (Rate)	“has Not furnished the statement in FORM GST CMP-08 for two consecutive quarters”
(b)	Any other registered person	“has Not furnished the returns for a consecutive period of two tax periods”
©	Any other registered person	“has Not furnished the statement of outward supplies for any two months or quarters, as the case may be”
(d)	A person whose registration is suspended under rule 21A(1), (2) or (2A)	suspension

Three amendments shaped the rule as it stands.

• “Two tax periods.” Notification No. 94/2020-Central Tax replaced “two months” in clause (b) with “two tax periods” from 22 December 2020, so that the rule fits quarterly GSTR-3B filers under QRMP. GSTN’s advisory of 4 October 2021 describes the default as “consecutive two tax periods or more, whether Monthly or Quarterly”.
• “Outward movement.” Notification No. 15/2021-Central Tax (18 May 2021) replaced “in respect of a registered person, whether as a supplier or a recipient” with “in respect of any outward movement of goods of a registered person”. On its words, the rule now stops bills for goods the defaulter sends out, not for goods it receives.
• Suspension. Clause (d) was inserted by Notification No. 94/2020-Central Tax. Clause ©, on GSTR-1, was inserted by Notification No. 75/2019-Central Tax with effect from 11 January 2020.

The rule’s Explanation makes the “Commissioner” the jurisdictional Commissioner. A permission granted or refused by the Commissioner of State tax or Union territory tax is deemed granted or refused by the Commissioner under the CGST Rules.

The history of the AATO threshold

The block has not always applied to everyone, and pandemic-era advisories still circulate.

• Covid suspensions. Two provisos to rule 138E switched the block off: from 20 March 2020 to 15 October 2020 for returns due for February to August 2020, and from 1 May 2021 to 18 August 2021 for March to May 2021.
• Over Rs 5 crore only, briefly. GSTN’s advisory of 10 October 2020 recorded that “the GST Council in its last meeting has decided that this provision will be made applicable for the taxpayers whose Aggregate Annual Turn Over (AATO, PAN based) is more than Rs 5 Crores”. Blocking for that class resumed after 15 October 2020.
• All taxpayers from 1 December 2020. GSTN’s advisory of 16 November 2020 announced that “from 1st December, 2020, onwards, the blocking of EWB generation facility would be made applicable to all the taxpayers (irrespective of their Aggregate Annual Turnover (AATO))”.
• Resumption in 2021. After the second suspension, GSTN’s advisories of 4 August 2021 and 4 October 2021 confirmed that blocking had resumed for all taxpayers. From the August 2021 tax period it has run “as per the regular procedure”.

As of 15 October 2026, no AATO condition applies. The rule contains none, and no later advisory restores one.

What the portal actually blocks

The rule has four triggers, but the portal’s published material describes only two. The FAQ on blocking states: “Form GSTR-3B (to be filed by normal taxpayers) is considered for blocking of EWB generation facility”. The GST portal’s FAQ adds the CMP-08 statement for composition taxpayers. Neither the e-way bill portal’s FAQ nor its user manual (version 1.7, June 2025) describes blocking for a GSTR-1 default under clause © or for suspension under clause (d). Whether and when the system applies those two clauses can be confirmed only from the portal’s response for a particular GSTIN. The rule, not the FAQ, is the law.

The portal’s material also does not consistently reflect the 2021 “outward movement” amendment.

• The FAQ and the home-page banner still say a blocked GSTIN “cannot be used to generate the e-way bills either as Consignor or Consignee”. They say a recipient cannot name a blocked supplier, and a supplier cannot name a blocked recipient.
• The manual (section 5.5) puts it more narrowly: the GSTIN “(as Supplier) will be blocked”.

The rule’s text, since 18 May 2021, concerns “outward movement of goods of a registered person”. Where the portal refuses a bill for goods being sent to a defaulter, that refusal is not evidently supported by the rule as amended.

What still works. The FAQ is clear on the effect on bills already generated. Existing bills “are valid and can be used to move goods to the destination”. Vehicle and transporter details can still be updated and validity extended.

Transporters. A transporter enrolled on the e-way bill portal with no GSTIN files no GSTR-3B and is “not impacted”. A transporter that uses its GSTIN and has itself defaulted cannot be entered as transporter ID until it files.

Notice. No order is issued before blocking. The GST portal’s FAQ says an SMS and e-mail go to the taxpayer’s registered contacts when the facility is blocked and on each change of status. The e-way bill portal shows a pop-up each time generation is attempted.

Way out 1: file the returns

Unblocking is automatic once the default falls below two tax periods. The FAQ says that once the return is filed on the GST portal, “the blocking status is removed by the system, next day”. GSTN’s 2019 advisory gives an example: taxpayers who had not filed GSTR-3B for September and October 2019 were blocked from 2 December 2019.

To clear the status at once, the user goes to the e-way bill portal’s Search menu, selects “Update Block Status”, enters the GSTIN and CAPTCHA, and clicks the update button. This, per the manual, “will fetch the status of filing from the GST Common Portal”. If the status still shows as blocked after filing, the FAQ points to the GST helpdesk.

Filing GSTR-3B and Paying the Tax and Composition Returns: CMP-08 and GSTR-4 cover the returns themselves. Late Returns: Late Fee, Interest, the Three-Year Bar and Notices covers the late fee and interest that come with them. The three-year bar under section 39(11) matters here. A return that can no longer be filed cannot cure the default.

Way out 2: apply in EWB-05 for an order in EWB-06

The first proviso to rule 138E allows the Commissioner, “on receipt of an application from a registered person in FORM GST EWB-05, on sufficient cause being shown and for reasons to be recorded in writing, by order, in FORM GST EWB-06”, to allow Part A to be furnished, “subject to such conditions and restrictions as may be specified by him”. The second proviso adds that “no order rejecting the request … shall be passed without affording the said person a reasonable opportunity of being heard”.

Since 28 November 2020 the application has been made online on the GST portal. GSTN’s advisory of that date says manual applications are discontinued, and that the application goes to the jurisdictional tax officer’s dashboard.

What FORM GST EWB-05 contains. The portal fills in the GSTIN, legal and trade name, address, and the date from which the facility was blocked. The applicant enters the reasons for unblocking and the “expected date for filing of returns for the period under default”. The authorised signatory then makes a verification: “I hereby solemnly affirm and declare that the information given hereinabove is true and correct to the best of my knowledge and belief and nothing has been concealed therefrom.”

What to have ready.

• The default periods and the date from which the facility was blocked, from the e-way bill portal’s block status.
• The grounds, with evidence. The portal offers reasons in a drop-down list and a box for “Other reasons”. Typical evidence includes a medical record, proof of a portal or bank failure, or proof of payment already made.
• A realistic expected date for filing.
• Up to four supporting documents, each a PDF or JPEG of no more than 1 MB.
• The authorised signatory’s DSC or EVC. Under rule 26(1), a company must use a DSC.

Filing on the portal. The GST portal’s user manual for unblocking describes these steps.

1. After login, go to Services, then User Services, then My Applications. Select “Application for unblocking of E-way bill” and click NEW APPLICATION.
2. Select the expected filing date and the reason. Upload the documents.
3. Tick the verification, choose the authorised signatory, enter the place, and click PROCEED.
4. Click SUBMIT WITH DSC or SUBMIT WITH EVC. The portal issues an ARN by SMS and e-mail, and the status becomes “Pending with Tax Officer”.

The hearing and reply. The officer may issue a personal hearing notice, which appears in the NOTICES tab of the case details page under Services, User Services, View Notices and Orders. The taxpayer replies in the same place, with up to four documents, signed with DSC or EVC. The status then reads “Reply to Personal Hearing Filed”. The FAQ states: “The tax official cannot reject an application without issuing Personal Hearing Notice against the application submitted.”

The order in EWB-06. The officer either accepts or rejects.

• An acceptance states the grounds. It notes that “the system will block the facility for generation of E-Way Bill after ____ (date) if the registered person continues to be defaulter”. The FAQ says unblocking is valid up to the date in the order. The portal sends a reminder seven days before that date. If the default remains when the date passes, the block returns automatically.
• A rejection states its grounds. The facility then stays blocked until the returns are filed.

Orders appear in the ORDERS tab and are notified by SMS and e-mail. If the GSTIN has already been unblocked by filing before the officer decides, the application is closed with the status “Already Unblocked- Dropped”.

What courts have done

Few reported decisions deal with rule 138E directly. The two below show that courts have treated filing as the normal cure.

• P.M. Saleem v. State Tax Officer (Works Contract) (Kerala High Court, 31 January 2020). Two works contractors had been assessed under section 62 and had neither paid nor filed returns. They complained that their registrations were “blocked” and they could not buy goods. The Government Pleader relied on rule 138E. The court accepted that the e-way bill blocking followed from that “mandatory provision”. It held that “unblocking of E-way bill is possible only if the due amounts as envisaged in the above said Rule are remitted and the returns are filed up to date”, and left the contractors to their appeals. The judgment quotes the rule in its 2019 form (“two months”, “whether as a supplier or a recipient”).
• Latha Multi Tech Enterprises v. State of Karnataka (Karnataka High Court, 19 November 2024). A machine-tools manufacturer had not filed returns from October 2020 to June 2021. Its registration was cancelled and its e-way bill facility blocked. It asked for time to pay the admitted tax and for unblocking, and the department refused both. The court accepted that the authorities had “rightly cancelled his GST registration and have also blocked his e-way bill generation”. On the “peculiar facts” of a Covid-period default by an otherwise regular taxpayer, it allowed payment of tax, interest and penalty in twelve monthly instalments. It directed restoration of registration and unblocking of the facility, with the benefit to be lost on any default. The court stated expressly: “This judgment will not be treated as precedent.”

The scheme of the rule supports this pattern. The block is a consequence of the default, not a penalty, and it ends when the default ends. Relief without filing comes from the Commissioner’s discretion under the first proviso, exercised by a reasoned order after a hearing.

Related consequences of the same default

Non-filing that triggers rule 138E can also lead to other action.

• Suspension of registration under rule 21A. This brings in clause (d) of rule 138E.
• A notice proposing cancellation under section 29(2). See Responding to a Notice Proposing Cancellation.
• A best-judgment assessment under section 62 after a GSTR-3A notice.

Goods moved without a bill because generation was blocked are moving without the document rule 138 requires, and are open to detention under section 129. Goods in Transit: Inspection, Detention and Release covers that process.

The procedure in summary

1. Check the GSTIN’s status on the e-way bill portal (Search, then Update Block Status) and note the default periods and the date of blocking.
2. Identify the trigger. On the portal’s published practice this is two GSTR-3B returns, or two consecutive CMP-08 statements, outstanding. The rule also covers GSTR-1 defaults and suspension.
3. Where possible, file the outstanding returns with late fee and interest. The block lifts the next day, or at once through Update Block Status.
4. If filing is not immediately possible, file EWB-05 on the GST portal with reasons, an expected filing date and up to four documents, signed with DSC or EVC.
5. Answer any personal hearing notice through the case details page. A refusal cannot be made without a hearing.
6. Read the EWB-06 order for the date up to which generation is allowed, and file before it. Otherwise the block returns automatically.
7. Meanwhile, bills generated before the block remain usable: Part B can be updated and validity extended.

This is the last guide in this set. The set opens with E-Invoicing: Who Must, and for Which Documents.