Answer

1. F

   Facts

   Fake suppliers often show common warning signs. These include very recent registration with large sales, residential or untraceable addresses, prices far below market and requests to pay a third party. Spotting them early protects your credit.

2. P

   Provisions and law

   • Sec 16(2)(c), CGST Act 2017ITC is allowed only if the tax charged has actually been paid to the Government by the supplier
   • Sec 155, CGST Act 2017The burden of proving eligibility for ITC lies on the person claiming it
   • Rule 86A, CGST Rules 2017Officer may block credit in the electronic credit ledger where it was availed on invoices from non-existent suppliers or without receipt of goods
3. A

   Analysis

   Departments detect fake firms through data analytics, return mismatches, physical verification and Aadhaar authentication. If your supplier is caught, your ITC can be blocked under Rule 86A and recovered. Example red flags: GSTIN two months old billing Rs 2 crore, no e-way bills for goods, payment asked in a different firm's account, steel offered 8 percent below market. Avoid such suppliers and record why you trusted others.

4. C

   Conclusion

   1. 1Check registration date versus the size of the deal
   2. 2Visit or video-verify the premises and warehouse
   3. 3Insist on e-way bills and named transporters for goods
   4. 4Pay only to the supplier's own bank account by banking channel
   5. 5Record your checks in a supplier file

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