Subject: Clarification on various issues relating to applicability of demand and penalty provisions under the Rajasthan Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices.
A number of cases have come to notice where the registered persons are found to be involved in issuing tax invoice, without actual supply of goods or services or both (hereinafter referred to as "fake invoices"), in order to enable the recipients of such invoices to avail and utilize input tax credit (hereinafter referred to as "ITC") fraudulently. Representations are being received from the trade as well as the field formations seeking clarification on the issues relating to applicability of demand and penalty provisions under the Rajasthan Goods and Services Tax Act, 2017 (hereinafter referred to as "RGST Act"), in respect of such transactions involving fake invoices. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Chief Commissioner, in exercise of its powers conferred by section 168 of the RGST Act, hereby clarifies the issues detailed hereunder.
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Further, as per provisions of section 75(13) of RGST Act, if penal action for fraudulent availment or utilization of ITC is taken against 'B' under section 74 of RGST Act, no penalty for the same act, i.e. for the said fraudulent availment or utilization of ITC, can be imposed on 'B' under any other provisions of RGST Act, including under section 122.
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2. The fundamental principles that have been delineated in the above scenarios may be adopted to decide the nature of demand and penal action to be taken against a person for such unscrupulous activity. Actual action to be taken against a person will depend upon the specific facts and circumstances of the case which may involve complex mixture of above scenarios or even may not be covered by any of the above scenarios. Any person who has retained the benefit of transactions specified under sub-section (1A) of section 122 of RGST Act, and at whose instance such transactions are conducted, shall also be liable for penal action under the provisions of the said sub-section. It may also be noted that in such cases of wrongful/ fraudulent availment or utilization of input tax credit, or in cases of issuance of invoices without supply of goods or services or both, leading to wrongful availment or utilization of input tax credit or refund of tax, provisions of section 132 of the RGST Act may also be invokable, subject to conditions specified therein, based on facts and circumstances of each case.
(Dr. Ravi kumar surpur)
Chief Commissioner,
State Tax, Rajasthan, Jaipur