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TMI BlogClarification on various issues relating to applicability of demand and penalty provisions under the Tamil Nadu 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 ..... nvoices Regarding. Ref : Circular No. 171/03/2022-GST, dated July 6, 2022, issued by Ministry of Finance, Department of Revenue, Government of India, CBIC, New Delhi. In the reference cited, the CBIC, Department of Revenue, Ministry of Finance, Government of India, New Delhi, has issued Circular No. 171/03/2022-GST, dated July 6, 2022 on the recommendations of the GST Council. Hence, following pari materia circular is issued : 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 to enable the recipients of such invoices to avail and utilize input tax credit (hereinafter refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the provisions of section 7 of TNGST 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 TNGST Act, 2017 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 TNGST Act, 2017 for issuing tax invoices without actual supply 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 bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 TNGST Act, 2017. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the TNGST Act, 2017, 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 services or both, leading to wrongful availment or utilization of input tax credit or refund of tax, provisions of section 132 of the TNGST Act, 2017 may also be invokable, subject to conditions specified therein, based on facts and circumstances of each case. Sd/-Dhee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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