GST
Penalty on the beneficiary of fake invoices
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Facts
Sec 122(1A) imposes a penalty equal to the tax on any person who retains the benefit of, or causes, fake invoicing transactions. A genuine buyer with real purchases should not fall within it.
Provisions and law
- Sec 122(1A), CGST Act 2017Any person who retains the benefit of fake invoicing transactions or at whose instance they are done is liable to a penalty equal to the tax involved.
- Sec 122(1), CGST Act 2017Penalty of ₹10,000 or the tax involved, whichever is higher, for listed offences such as supplying without registration, wrong invoices or wrongful ITC.
Analysis
The department sometimes invokes this section against buyers, directors or brokers. Your defence is that you did not cause or benefit from fake transactions, supported by evidence of genuine purchase. If the notice names you personally as a director, reply separately. Take legal advice since personal penalties are serious.
Conclusion
- Check whether Sec 122(1A) is invoked against you or your firm.
- Reply showing no benefit or role in fake invoicing.
- Attach purchase evidence.
- Get legal advice for personal notices.
A Savvy can do this for you
Reply to fake ITC notice when a supplier is found non-existent, Sec 16(2)(c)
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