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TMI BlogClarification on various issues relating to applicability of demand and penalty provisions under the Central 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 ..... (All) Subject: Clarification on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices Reg. Madam/Sir The Government of India, Ministry of Finance, Department of Revenue vide Circular No. 171/03/2022-GST dated 6 th July, 2022 has issued a clarification on GST on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices , in order of ensure uniformity in the implementation of the provisions of law across the field formations, which is annexed herewith. In exercise of powers conferred by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices to avail and utilize input tax credit (hereinafter referred to as ITC ) fraudulently. Representations are being received from the trade as well as the field formations seeking clarification on the issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act ), in respect of such transactions involving fake invoices. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues detailed hereunder. Sl. No. Issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of goods or services or both. 2. 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. 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. Whether B will be liable for the demand and recovery of the said ITC, along with penal action, under the provisions of section 73 or section 74 or any other provisions of the CGST Act. Since the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without actual receipt of goods or services or both, has been utilized by B for passing on of input tax credit by issuing tax invoice to C without any underlying supply of goods or services or both. As there was no supply of goods or services or both by B to C in respect of the said transaction, no tax was required to be paid by B in respect of the same. The input tax credit availed by B in his electronic credit ledger on the basis of tax invoice issued by A , without actual receipt of goods or services or both, is ineligible in terms of section 16 (2)(b) of the CGST Act. In this case, there was no supply of goods or services or both by B to C in respect of the said transaction and also no tax was required to be paid in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods or services or both, leading to wrongful availment or utilization of input tax credit or refund of tax, provisions of section 132 of the CGST Act may also be invokable, subject to conditions specified therein, based on facts and circumstances of each case. 3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 4. Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow. (Sanjay Mangal) Principal Commissioner (GST) - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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