All Sections of GST Law For Fraudulent Practice by Taxable Person Like Fake Invoicing /Bogus Billing

INPUT TAX CREDIT’

Section 16 (2): Eligibility and conditions for taking input tax credit

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed;

b) he has received the goods or services or both.

Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––

(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.6

(c) subject to the provisions of section 41 or section 43A, 7]the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 39:

Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

Section 122(1): Penalty for certain offences

(1) Where a taxable person who––

(vii) Takes or utilizes input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made there under;

he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.” (Inserted by FINANCE ACT 2020 yet to be notified)

Section 132(1)/(2)/(5): Punishment for certain offences

(1) Whoever commits or causes to commit and retain the benefits arising out of, any of the following offences namely ;

(a) Supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made there under, with the intention to evade tax; (CASH SALES)

(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made there under leading to wrongful av-ailment or utilization of input tax credit or refund of tax; (FAKE INVOICES/BOGUS BILLING)

c) “avails input tax credit using such invoice or bill referred to in clause (b) or **fraudulently avails input tax credit without any invoice or bill;”(*** Substituted by THE FINANCE ACT 2020 Prior to its substitution clause (c) read as “avails input tax credit using such invoice or bill referred to in clause (b)” to be notified)

d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

shall be punishable —-

(i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken exceeds five hundred Lakh rupees (Rs. 5 Crores), with imprisonment for a term which may extend to five years and with fine;

(ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken exceeds two hundred Lakh rupees but does not exceed five hundred Lakh rupees (> Rs.2 Crores Rs.1 Crores 3M OF DD) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or under sub-section (2) of the said section, he may, by order, authorize any officer of the central tax to arrest such person.

Section 74: Determination of Tax not paid, short paid or erroneously refunded or Input tax credit wrongly availed by reason of fraud or willful misrepresentation or suppression of facts

(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any willful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilized input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.

(2) The proper officer shall issue the notice under sub-section (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order

(3) —————-

(4) ——————-

(5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

(6) ……………….

(7) ……………….

(8) Where any person chargeable with tax under sub-section (1) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded.

(9) ………………….

(10) …………………..

(11) Where any person served with an order issued under sub-section (9) pays the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded.

SUMMARY

Sections Consequences of Fake ITC/Fake Invoicing

16(2) Not eligible for ITC

122(1) Rs.10000 or ITC Availed ,WEH

132 Imprisonment

> Rs.5 Cr -5year

>Rs.2 CrRs.1 Cr<=Rs.2 Cr -1year

69 Arrest-Non-Bailable and Cognizable Offence

74 ITC+Interest+Penalty equal to tax evaded

74(5) ITC+Interest+15% Penalty

Author Bio

Qualification: CA in Practice
Company: Rahul S Singh and Associates ,Chartered Accountants
Location: South Delhi, Delhi, India
Member Since: 11 Jul 2020 | Total Posts: 6
I am recently qualified Practicing Chartered Accountants (CA) in May 19 and also a B.Com graduate from Delhi University View Full Profile

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