Preface

Bogus purchases were always an issue under Income Tax but in the recent past law has developed more in this regard. Under Income tax sections 68 to 69C were invoked so as to bring bogus purchases to tax. Generally the assessing officers try to add entire amount of bogus purchases to income but courts/tribunal benches have generally held that only profit element in such purchases can be added and not the entire amount of purchases particularly in cases where the corresponding sales have not been doubted.

The menace of Fake invoices surfaced more post implementation of GST particularly in view of seamless, barring few circumstances, flow of input tax credit. The bogus billing gained significant momentum post implementation of GST. Directorate General of Goods and Services Tax Intelligence (DGGI) took serious note of it and identified bogus invoice suppliers and brought them to justice. DGGI has detected tax frauds to the tune of more than Rs. 54 Thousand Crore during the Financial Year 2021-22 and recovered more than Rs. 21 Thousand Crore of such evaded tax. DGGI has unearthed number of modus operandi by which tax evasion was been done such as: (i) short payment of tax by undervaluing taxable goods and services, (ii) wrong availment of exemption notifications, (iii) wrong availment/non-reversal of input tax credit, (iv) non-payment of tax on supply of taxable goods and services (clandestine removal), (v) tax collected but not paid to Govt. exchequer, (vi) non-payment of tax under reverse charge mechanism, (vii) fraudulent availment of input tax credit on the basis of invoices from fake firms, (viii) fraudulent availment of refund of IGST on export of goods, etc.

Whosoever involves in bogus purchases will have to face consequences both under the Income Tax Act and GST laws, while the fake invoice issuer will face more consequences in GST but additions under Income Tax may be limited to commission earned on such fake invoicing.

This book, the first of its kind, takes a 360 degree view of taxation issues concerning bogus purchases/fake invoices.

Each and every aspect beginning from addition to income on account of bogus purchases till the prosecution provisions are discussed in enough detail incorporating almost all the available cases. Not only the addition aspects but allied issues like possibility of reassessment and revision due to bogus purchases, impact of search and survey and last but not the least impact of section 115BBE due to addition under sections 68 to 69C has also been explained.

Penalty under section 271AAD specific to bogus purchases has been explained in full details in a separate part devoting eight chapters thus discussing each and every aspect of the levy.

Since this penalty may be levied in addition to other penalties hence that aspect has also been taken care of.

Similarly, each and every aspect relating to GST implications of fake invoices from each angle has been discussed, like, Blocking of Input Tax Credit Under Rule 86A, Audits under GST, Search, Seizure and Arrest, Penal Provisions vis--vis Fake Invoices, Recovery of Tax, Interest and Penalty, Provisional Attachment to Protect Interest of Revenue and Offences Relating to Fake Invoices, Prosecution and Arrest, apart from allied aspects that may have bearing on menace of fake invoices.

Thus, a complete product is in the hands of readers discussing each and every aspect of Tax Implications of Bogus Purchases/Fake Invoices.

We have made our best efforts to make the product useful for our readers. Suggestions, if any, are welcome.

20th FEBRUARY, 2023		CA. MANOJ GUPTA
JODHPUR		CA. SATYADEV PUROHIT