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The Supreme Court flagged a recurring problem in GST matters whereby genuine purchasers who paid Goods and Services Tax (GST) face issues because their suppliers raised fictitious bills to evade crediting the GST to the department.The Court orally wondered how could the purchaser be held liable
The Supreme Court of India recently rapped the conduct of the Goods and Services Tax (GST) Department in failing to crack down on suppliers issuing fake invoices to purchasers, prejudicing entities who have seemingly made genuine purchases from the suppliers. Remarking the same to be a recurrent practice, employed by fraudulent suppliers to avoid crediting due GST to the Department, the Court wondered how the liability could be ascribed to purchasers who have paid requisite price for the goods or services, inclusive of GST Amount to the suppliers. A Bench constituted by Chief Justice of India (CJI) Sanjiv Khanna and Justice Sanjay Kumar was hearing an interlocutory application filed by the GST Department,
wherein the CJI asserted that “This is a problem occurring in GST matters. What is happening is, people are purchasing materials. The person says- I’m giving you these bills..they make payment of those bills. The material is certainly purchased. The payment is certainly made. Now you say that the persons who have raised the bills are fictitious. How can he(purchaser) be held responsible? How much can he do?”
The Counsel appearing for the GST Department referred to the directives issued by the ASG (Additional Solicitor General) to the officers to devolve an online mechanism to thwart the fake invoicing, but was cut short by Justice Khanna who pointed out the unsustainability of the suggestion. “You wanted it to be done, it was not found workable, because the system couldn’t be taking those….let me put it, even if that happens, the problem will persist. Suppose the invoice is uploaded, and the person also takes it, even then, this problem will arise. Because you yourself will later on find out that the GST registration is incorrectly given.
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