Under a unified Goods and Services Tax scheme, tax is levied on the complete supply chain from production to distribution by avoiding cascading effect by extending input tax credit facilities. There could be many suppliers in the supply chain. In such a supply chain, there could be a supplier who may be a wilful defaulter while others are genuine and bonafide.
Under such circumstances, against whom the proceedings to recover the tax, interest and penalty can be initiated?
First of all, a supplier must establish that he is genuine and bonafide. He is promptly following the statutory provisions. He is promptly filing the returns – GSTR-1, GSTR-3B, GSTR-9 and GSTR-9c. He must able to establish that he is not involved in any offence of the following nature.
Supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply.
Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder.
Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due.
Collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due.
Takes or utilizes input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder.
Fraudulently obtains refund of tax under this Act.
Takes or distributes input tax credit in contravention of section 20, or the rules made thereunder.
Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade.
Is liable to be registered under this Act but fails to obtain registration.
Furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently.
Obstructs or prevents any officer in discharge of his duties under this Act.
Transports any taxable goods without the cover of documents as may be specified in this behalf.
Suppresses his turnover leading to evasion of tax under this Act.
Fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder.
Fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act.
Supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act.
Issues any invoice or document by using the registration number of another registered person.
Tampers with, or destroys any material evidence or document.
Disposes off or tampers with any goods that have been detained, seized, or attached under this Act.
The supplier must fulfill the following conditions, while taking input tax credit.
He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed.
He has received the goods or services or both. He has to establish through E-way bill and payment of freight charges along with the voucher signed by the transporter in case of goods.
Subject to the provisions of section 41 or 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of such supply. He has to ensure that the supplier has filed the GSTR-1 and GSTR-3B and also the supply is incorporated in GSTR-2A.
He has furnished the return under Section 39 (GSTR-3B).
Proceedings can be initiated only against “person chargeable with tax” under Sections 73 or 74 or 75 or 76 and 122 of the CGST Act, 2017 to determine the tax liability, interest and penalty. In the supply chain, the person who is not able to establish his genuineness will be the defaulter and he will be the “person chargeable with tax.”