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

Andhra Pradesh GST Circular: Fake Invoice Issuers Face Penalties, No Tax; Recipients Face Recovery, Interest, and Penalties.

The circular issued by the Andhra Pradesh Commercial Taxes Department addresses the misuse of fake invoices under the Andhra Pradesh Goods and Services Tax Act, 2017. It clarifies that issuing invoices without actual supply does not constitute a 'supply' under the Act, hence no tax liability arises for the issuer ('A'). However, 'A' is liable for penalties under section 122(1)(ii) for issuing fake invoices. If the recipient ('B') fraudulently avails input tax credit (ITC) without actual receipt of goods or services, they face recovery and penalties under section 74, with interest under section 50. If 'B' passes ITC to another ('C') without actual supply, they face penalties under sections 122(1)(ii) and 122(1)(vii). The circular emphasizes adopting these principles for similar cases and notes potential invocation of section 132 for fraudulent activities.