PENALTY UNDER SECTION 122(1)(II) OF THE GST ACT

[Sadanand Bulbule]

Dear experts

Section 122(1)(ii) of the GST Act speaks about the offence of "issue of invoices without the supply of goods or services or both". However in exceptional cases, such invoices do not lead to the wrongful availment or utilisation of input tax credit. The CBIC Circular No. 171/03/2022 dated 06/07/2022 has illustrated such kind of events for the purpose levy of only penalty in a particular situation or adjudication under Section 74 and levy of penalty under section 122(1)(vii) in proven situations of wrongful availment or utilisation of input tax credit.

Query:

What is the amount of penalty under Section 122(1)(ii) for the offence of issue of invoices without the actual supply of goods or services or both not leading to the wrongful availment or uitlisation of input tax credit?

Experts to throw spotlight.

AI Summary

Penalty for issuing invoices without supply: nominal sanction debated versus broader penalty application depending on tax impact.
The discussion focuses on penalty under Section 122(1)(ii) for issuing invoices without supply where no wrongful input tax credit arises, contrasting the Board's circular treating certain non fraud transactions as attracting a nominal flat penalty with practitioner views that alternative sub sections may warrant higher penalties. It also examines the interaction with adjudication under Sections 73 and 74, particularly Explanation 1 to Section 74 which deems proceedings against other persons to be concluded when proceedings against the principal are concluded, and queries the scope of statutory immunity for secondary actors and the consistency of the CBIC circular with these deeming and non duplication provisions.