CBIC vide Circular No. 171/03/2022-GST dated 6.07.2022 clarified on issues relating to applicability of demand and penalty provisions under the CGST Act in relation to transaction involving fake invoices as tabulated hereunder:
Sr.No. |
Issues |
Clarification |
1 |
In case where a registered person has issued tax invoice to another registered person without any underlying supply of goods or services or both.
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However penal action can be taken u/s. 122(1)(ii) of the CGST Act for issuing tax invoices without actual supply of goods or services.
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2 |
In case when a registered person(‘A’) has issued tax invoice to another registered person (‘B’) without any underlying supply of goods or services or both. And the ‘B’ avails ITC on the basis of the said tax invoice. ‘B’ further issues invoice along with underlying supply of goods or services or both to his buyers and utilizes ITC availed on the basis of the above mentioned invoices issued by ‘A’, for payment of his tax liability in respect of his said outward supplies.
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3 |
In a case when a registered person (‘A’) has issued tax invoice to another registered person (‘B’) without any underlying supply of goods or services or both. ‘B’ avails ITC on the basis of the said tax invoice and further passes on the said ITC to another registered person (‘C’) by issuing invoices without underlying supply of goods or services or both.
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In this case, the ITC availed by ‘B’ in his ECL on the basis of tax invoice issued by ‘A’, without actual receipt of goods or services or both, has been utilized by ‘B’ for passing on of ITC by issuing tax invoice to ‘C’ without any underlying supply of goods or services or both.
However, in such cases, ‘B’ shall be liable for penal action both u/s. 122(1)((ii) and section 122(1)(vii) of the CGST Act, for issuing invoices without any actual supply of goods or services and for taking/ utilizing ITC without actual receipt of goods or services. |
4 |
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Disclaimer:
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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