GST
Money coming back after paying a supplier
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Facts
Rotation of money back to the buyer is a key sign investigators use to find circular trading. If your money did not come back, your bank statements are the best proof.
Provisions and law
- Sec 155, CGST Act 2017The person who claims ITC has the burden of proving that the claim is genuine.
- Sec 132(1), CGST Act 2017Lists offences, including availing ITC on invoices without supply; punishment depends on the amount involved.
Analysis
Show the full bank trail: your payment to the supplier and no matching receipts from the supplier or related parties. Explain any genuine receipts from that party, such as returns or refunds, with documents. If related parties are involved, be transparent. This is a defence point only; the law treats such rotation as evidence of fake transactions.
Conclusion
- Get bank statements for the period.
- Map payments to the supplier and any receipts from related parties.
- Explain each genuine receipt with documents.
- Attach the trail to your reply.
A Savvy can do this for you
Reply to fake ITC notice when a supplier is found non-existent, Sec 16(2)(c)
Quote
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