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of <h1>Clarification on Fake Invoices: No Tax for Issuer, Penalties u/ss 122 and 74 for Fraudulent ITC Claims.</h1> The circular addresses issues related to fake invoices under the Central Goods and Services Tax Act, 2017. It clarifies that issuing invoices without actual supply does not constitute a 'supply' under the Act, thus no tax liability arises for the issuer. However, penalties under section 122 apply for issuing such invoices. For recipients who fraudulently claim input tax credit (ITC) without receiving goods or services, recovery and penalties under section 74 are applicable. If the recipient further passes on the ITC without underlying supply, they face penalties under sections 122(1)(ii) and 122(1)(vii). The circular emphasizes case-specific actions and potential applicability of section 132 for fraudulent activities.
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