Answer

1. F

   Facts

   If credit was taken on invoices without real goods, the department can recover the credit with interest and penalty, and serious cases are prosecuted. A genuine buyer with proof of a real purchase stands on a very different footing from a knowing participant.

2. P

   Provisions and law

   • Sec 122(1), CGST Act 2017Penalty for issuing invoices without supply and for taking or using ITC without actual receipt of goods or services
   • Sec 132, CGST Act 2017Fake invoicing and fraudulent ITC are offences punishable with imprisonment based on the amount involved
   • Sec 74, CGST Act 2017Demand with higher penalty where tax or ITC involves fraud or suppression, for periods up to FY 2023-24
   • Sec 74A, CGST Act 2017Single demand provision for FY 2024-25 onwards, with penalty based on whether fraud is involved
3. A

   Analysis

   Sec 132 offences and arrest powers are aimed at those who knowingly issue or use fake invoices; large amounts above Rs 5 crore are cognizable and non-bailable. A buyer who acted in good faith can show orders, e-way bills, transport, receipt and payment. Example: a demand of Rs 6 lakh ITC plus penalty may be contested on facts. Do not ignore summons or notices; respond through a professional.

4. C

   Conclusion

   1. 1Gather full proof of each purchase from the doubtful supplier
   2. 2Consider paying disputed credit under protest to limit interest, on advice
   3. 3Reply to every notice on time with evidence
   4. 4Engage a GST professional for summons or show cause notices

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.