Issue of Fake Invoices : ClarifiedCA. Akash Phophalia

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The Tax Publishers GST--Fake Invoice Issue of Fake Invoices : Clarified CA. Akash Phophalia Matters related to issue of fake invoices are burning matters and are yet to attain finality as far as proceedings initiated in this respect. Department has come up with an important clarification in this regard vide Circular No 171/03/2022-Central Tax dated 06-07-2022. 1. Key Issue It has been found that with the advent of GST and in absence of initial check measures, many people have been misusing it and are involved in transfer of input tax credit without actual supply of goods. The legacy to issue fake invoice to transfer input tax credit without actual supply of goods is still continuing. In these types of cases, it is commonly pleaded that the department should take action against the person who had issued invoices whereas department always wish to proceed against the person who had availed of input tax credit. Now, the circular issued by the CBIC has clarified the stand to be taken in the matters related to issue of fake invoices and clarified that how proceedings are to be initiated against such persons. 2. Transactions involving fake invoices Generally, transactions involved in the matters of fake invoices can be broadly classified in two categories -- (1) Mr. A issued invoices to Mr. B without actual supply. Mr. B subsequently made actual supply to Mr. C. (2) Mr. A issued invoices to Mr. B without actual supply. Mr. B subsequently also issued invoices to Mr. C without actual supply. Mr. C can further be involved in either actual supply of goods or issue of invoices but in that case situation of C could be understood as situation of B in example (1) or (2), as the case may be and so on. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Fake Invoice

Issue of Fake Invoices : Clarified

CA. Akash Phophalia

Matters related to issue of fake invoices are burning matters and are yet to attain finality as far as proceedings initiated in this respect. Department has come up with an important clarification in this regard vide Circular No 171/03/2022-Central Tax dated 06-07-2022.

1. Key Issue

It has been found that with the advent of GST and in absence of initial check measures, many people have been misusing it and are involved in transfer of input tax credit without actual supply of goods. The legacy to issue fake invoice to transfer input tax credit without actual supply of goods is still continuing. In these types of cases, it is commonly pleaded that the department should take action against the person who had issued invoices whereas department always wish to proceed against the person who had availed of input tax credit. Now, the circular issued by the CBIC has clarified the stand to be taken in the matters related to issue of fake invoices and clarified that how proceedings are to be initiated against such persons.

2. Transactions involving fake invoices

Generally, transactions involved in the matters of fake invoices can be broadly classified in two categories --

(1) Mr. A issued invoices to Mr. B without actual supply. Mr. B subsequently made actual supply to Mr. C.

(2) Mr. A issued invoices to Mr. B without actual supply. Mr. B subsequently also issued invoices to Mr. C without actual supply.

Mr. C can further be involved in either actual supply of goods or issue of invoices but in that case situation of C could be understood as situation of B in example (1) or (2), as the case may be and so on.