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TMI BlogClarification on various issues relating to applicability of demand and penalty provisions under the Himachal Pradesh Goods and Services Tax Act, 2017 in respect of transactions involving fake invoicesX X X X Extracts X X X X X X X X Extracts X X X X ..... Dy. Commissioner of State Taxes and Excise, Shimla, Solan, Una, Sirmour, Bilaspur, Hamirpur, Mandi, Kullu, Chamba, Kangra, Revenue Distt Nurpur and BBN Baddi, H.P. 4. The Asstt. Commissioner of State Taxes and Excise, Incharge Distt. Kinnour, H.P. Dated Shimla-9 14th July, 2022. Sir, Subject: Clarification on various issues relating to applicability of demand and penalty provisions under the Himachal Pradesh Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices Reg A number of cases have come to notice where the registered persons are found to be involved in issuing tax invoice, without actual supply of goods or services or both(hereinafter referred to as fake invoices ), in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the criteria of supply , as defined under section 7 of the HPGST Act. As there is no supply by A to B in respect of such tax invoice in terms of the provisions of section 7 of HPGST Act, no tax liability arises against A for the said transaction, and accordingly, no demand and recovery is required to be made against A under the provisions of section 73 or section 74 of HPGST Act in respect of the same. Besides, no penal action under the provisions of section 73 or section 74 is required to be taken against A in respect of the said transaction. The registered person A shall, however, be liable for penal action under section 122 (1)(ii) of the HPGST Act for issuing tax invoices without actual supply of goods or services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding under section 122. 3. 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 input tax credit on the basis of the said tax invoice and further passes on the said input tax credit to another registered person C by issuing invoices without underlying supply of goods or services or both. Whether B will be liable for the demand and recovery and penal action, under the provisions of section 73 or section 74 or any other provisions of the HPGST Act. In this case, the input tax credit availed by B in his electronic credit ledger on the basis of tax invoice issued by A , without actual r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of demand and penal action to be taken against a person for such unscrupulous activity. Actual action to be taken against a person will depend upon the specific facts and circumstances of the case which may involve complex mixture of above scenariosor even may not be covered by any of the above scenarios. Any person who has retained the benefit of transactions specified under sub-section (1A) of section 122 of HPGST Act, and at whose instance such transactions are conducted, shall also be liable for penal action under the provisions of the said sub-section. It may also be noted that in such cases of wrongful/ fraudulent availment or utilization of input tax credit, or in cases of issuance of invoices without supply of goods or servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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