Supply of Invoice without goods

[Guest]

Issue: Assesse has purchased yarn through broker and recieved Invoice. Seller in the Invoice was the party from which broker purchased yarn and sold to assesse. Now the issue is there has been departmental raid in Seller's office. Seller denied the above sale, despite of fact that the bill was in his name. The said broker fled away. Because of this Gst officer are pressurizing the assesse that this is case of bogus invoice u/s 122. But assesse has genuinely purchased those goods through broker. The only proof we have is Invoice and payment made to seller through bank. No E-way bill was active at that time. And assesse does not maintain any goods recieved note. Please guide us.

[SHARAD ANADA]

Arrange to collect GSTR 3B and GSTR 1 of supplier. If supplier's GSTR 3B and GSTR 1 matches with reference to supply and output tax liability and supplier has paid tax by cash or by utilising ITC, meaning thereby supplier have declared output supply and tax and the same is also reported in your GST 2A. If E way bill was not there provide transport consignment note in support of goods received by you.

If you can't arrange gst returns of supplier then check returns status and confirm that supplier have filed their returns.

Ask for cross examination of supplier and broker. This will help you.

[Alkesh Jani]

Shri

In this case, have you received the goods and have you taken the credit? As ITC can be taken only when Invoices are reflected in your GSTR-2A.

Thanks

[KASTURI SETHI]

Dear Querist,

It appears that your grievance is genuine but as per Section 155 of CGST Act the burden of proof is cast on the person who takes the credit. You will have to face the litigation. SCN will be issued to you. In the meantime, collect documentary evidence in your favour as suggested by Sh.Alkesh Jani Ji and Sh. Sharad Anada ji.

Had the Govt. introduced facility of KYS (Know Your Supplier) earlier (this has been proposed now in GST Council meeting held on 14.3.2020 ), you would have not been the victim of litigation. Anyhow if your transaction is genuine, you will not suffer loss of money.

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir's view. The person who takes the credit has to substantiate his claim. You have to produce the invoice copy, supplier ledger where you would have accounted the receipt of goods, in the same ledger payment entry must be visible, banks statement where paid entry would appear and Larry Receipt etc will help you to justify your claim of input tax credit. Further, it should also appear in GSTR 2A report.

[Ganeshan Kalyani]

Customers are now planning for withholding the GST part while making payment towards supply to the supplies if the details of the supply does not appear in the GSTR 2A report. This would encourage the supplier to.deposit the tax, if not paid and file the return by correctly showing the invoice in GSTR 1 return.

AI Summary

Burden of Proof for Input Tax Credit: substantiate purchases with supplier returns, GSTR 2A, bank proof and transport docs. Assessee received goods through a broker and retains invoice and bank payment proof, but supplier denies the sale after a raid and broker absconded. To substantiate input tax credit, procure supplier GSTR 1 and GSTR 3B and confirm matches in your GSTR 2A, produce transport consignment notes or delivery proofs, and collate supplier ledger entries, bank payment evidence and lorry receipts. The burden to prove entitlement to credit rests on the claimant under Section 155 principles; lack of corroboration may prompt a show cause notice and litigation.