GST Scams using Fake Invoices: CBIC clarifies Applicability of Demand and Penal Provisions [Read Circular]

GST Scams - Fake Invoices - CBIC - Demand - Penal Provisions - Taxscan

The Central Board of Indirect Taxes and Customs (CBIC) has come up with a circular clarifying the 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.

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, in order to enable the recipients of such invoices to avail and utilize input tax credit 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, in respect of such transactions involving fake invoices.

The circular stated that “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 scenarios or 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 CGST 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 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.”

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Circular No: 171/03/2022-GST

Date of Judgement:   6th July, 2022

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