BLOCKING OF INPUT TAX CREDIT AGAINST FAKE INVOICES OR AGAINST INVOICES WITHOUT RECEIPT OF GOODS OR SERVICES OR BOTH EFFECTIVE FROM 11.1.2020
The Goods and Services Tax Act,
2017 came into force with effect form 1.7.2017 in India
The Central Government has
amended Rule 86 of the Central Goods and Services Tax Rules, 2017 and inserted
Rule 86-A containing certain conditions and also authorized Tax authorities to
block Input Tax Credit against fake invoices or against invoices without
receipt of Goods or Services or both.
The amended rule is given below:
“86A. Conditions of use
of amount available in electronic credit
ledger.-
(1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe
that credit of input
tax available in the electronic credit ledger
has been fraudulently availed or is ineligible in as much as-
a)
the credit of input tax has been availed on the strength of tax invoices or debit notes or any
other document prescribed
under
rule 36-
I.
issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or
II.
without receipt of goods or services or
both; or
b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax
charged in respect of which has
not been paid to
the Government; or
c) the registered person availing the credit of input tax has been found non-existent or
not to be conducting any business from any place
for which registration has been
obtained; or
d) the registered person availing any credit of input tax is not in possession of a tax
invoice or debit note or any other
document prescribed
under rule 36,
may, for reasons to be
recorded in writing, not allow debit of an amount equivalent to such
credit in electronic credit ledger for discharge
of any liability under section 49 or for claim of
any refund of any
unutilised amount.
(2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer
exist, allow such
debit.
(3) Such restriction
shall cease to have
effect after the
expiry of a period of one year from the
date of imposing such restriction.”.
4. In the said rules, with effect from the 11th January, 2020, in rule 138E, after
clause (b),
the following clause shall be inserted, namely:-
“(c) being a person other than a person specified in clause
(a), has not furnished the statement
of outward supplies for any
two months or quarters, as
the case may be.”.
The above rule 86A came into
force effective from 11.1.2020 and powers has been delegated to respective
officers on 13.1.2020.
The relevant Notification and
Circular issued were given below for ready reference.
[To be published in the Gazette of
India
(i)]
Government
of India
Ministry of Finance
(Department
of Revenue)
Central
Board of Indirect Taxes
and
Customs
Notification No. 75/2019 – Central
Tax
G.S.R…(E). -
In exercise of the powers conferred by section 164 of
the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of
the Council, hereby makes the following rules further
to amend
the Central Goods and Services
Tax Rules, 2017, namely:-
1. (1) These rules may be called the Central Goods and Services Tax (Ninth Amendment) Rules, 2019.
(2) Save as otherwise
provided, they shall come
into
force on the date
of their publication in
the Official Gazette.
2. In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said
rules), with effect from the 1st January, 2020, in rule 36, in sub-rule (4), for the figures and
words “20 per cent.”, the figures and
words “10 per
cent.” shall be substituted.
3.
In the said rules, after rule 86,
the following rule shall be inserted,
namely:-
“86A. Conditions
of use of amount available
in electronic credit
ledger.-
(1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe
that credit of input
tax available in the electronic credit ledger
has been fraudulently availed or is ineligible in as much as-
a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any
other document prescribed
under
rule 36-
i.issued by a
registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or
ii.without receipt of
goods or services or
both; or
b) the credit of input tax has been availed on the strength of tax invoices or debit notes
or any other document prescribed under rule 36 in respect of any supply, the tax
charged in respect of which has
not been paid to
the Government; or
c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place
for which registration has been
obtained; or
d) the registered person availing any credit of input tax is not in possession of a tax invoice or
debit note or any
other document prescribed under
rule 36,
may, for reasons to be recorded in writing, not allow
debit of an amount equivalent to such
credit in electronic credit ledger for discharge
of any liability under section 49 or for claim of
any refund of any
unutilised amount.
(2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer
exist, allow such
debit.
(3) Such restriction
shall cease to have
effect after the
expiry of a period of one year from the
date of imposing such restriction.”.
4. In the said rules, with effect from the
11th January, 2020, in rule 138E, after
clause (b),
the following clause shall be inserted, namely:-
“(c) being a
person other than a person specified in clause
(a), has not furnished the statement
of outward supplies for any
two months or quarters, as
the case may be.”.
[F.No.20/06/09/2019-GST]
(Ruchi
Bisht)
Under Secretary to the Government
of India
Note: The principal rules were
published in the Gazette
of India, Extraordinary,
Part
II, Section 3, Sub-section
(i)
vide notification No. 3/2017-Central Tax, dated the
19th June, 2017, published vide number G.S.R. 610(E), dated the 19th June, 2017 and last amended vide notification No. 68/2019 - Central
Tax, dated the 13th December, 2019, published vide number
G.S.R. 924(E), dated the 13th December, 2019.
