Clarification on various issues relating to applicability of demand and penalty provisions under the Delhi Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices

Fraudulent Input Tax Credit triggers GST demand and exclusive penal liability; fake invoice issuers face separate penal provisions.

Issuing tax invoices without actual supply is not a 'supply' and does not create tax demand under the DGST Act for the issuer, but the issuer is punishable for issuing invoices without supply. A recipient who fraudulently avails and utilizes ITC without receipt of goods/services is liable to demand and recovery of the ITC with interest and penal action under the fraudulent-ITC provision, with exclusivity of that penalty. If such a recipient passes on the credit by issuing invoices without supply, no tax demand arises for nonexistent outward supply, but penal provisions for issuing fake invoices and wrongful availment/utilization of ITC apply, and others who benefit may also be penalised.