As the business era constantly evolves in India, the GST system also grows with a greater spike. At the same time, business owners need to be very careful and watchful in identifying fake invoices to avoid being caught in fraudulent activities. This is often termed a fake GST Invoice. To be very clear fake GST invoices are not defined under the goods and services tax(GST) law. However, any invoice will be treated as a fake invoice if it is generated by an entity without any delivery of goods or services or any payment of GST. Another thing that the fake invoices may contain is hiding details and not mentioning the list of mandatory details on the GST invoices. Furthermore, if any of the vital information is not mentioned in the GST invoice, then there can be a high possibility of a fake invoice. A fake invoice may look like a GST invoice without GSTIN or a business if it has been not registered under GST but possesses a fake GSTIN on the invoice and charges GST. However, the voices may also be considered fake if the tax doesn’t get deposited with the government.
As per the information there are 16 mandatory fields are required to be filled under the GST invoices, including the name, address, and GSTIN. Ensure that the information present in these boxes is filled correctly. If the information in these boxes possesses any gap, the invoice is more likely to be fake.
Checking the GST registration number is one of the most effective methods to check the correctness of GST invoices. It verifies the GST registration number(GSTIN) of the supplier. You can also visit the verified GST portal or the IRIS Peridot App for the correctness of the GST invoices. So, whenever, the GSTIN details don’t match the supplier details, the invoice may be fake or tampered with.
The best place for the consumer to confirm the GST is the CBIC portal where they can validate the accuracy of the GST rate by inspecting the GST rate chart.
Looking the past invoices is the other best way to identify fake invoices. You can collect both invoices and thoroughly check the inconsistencies in the supplier details, the value of goods or services, or the GST amount. If any of the data varies or possesses significant differences, the invoice may be fake invoices.
To avoid the victims of fake invoices, you should be aware of the common market red flags such as unnecessary changes in the prices, missing or inconsistent information, or requests for any immediate or partial payment. These all are the commonly used activities which can trap victims to fake invoices.
There are serious offenses and penalties for issuing fake invoices under the GST Act. The government has imposed several penalties and imprisonment as per the amount of tax evaded. Here it is mandatory to note that the penalties apply to both the person who is issuing the fake invoices and the person involved in using such invoice. This states that if a business involves fake invoices knowingly or unknowingly, they are still liable for the offense.
If the amount obtained is more than Rs.5 crore using the false GST invoices, it imposes imprisonment of up to 5 years plus a fine, and if it exceeds Rs.2 crore but not more than Rs.5 crore, the imprisonment may be up to 3 years plus fine.
Furthermore, if the fake invoices utilize Rs.1 crore but less than Rs.5 the penalty is the same but if it raises the commission of any above-mentioned offences the imprisonment varies from 6 months to years or a fine.
If you are suspicious about any GST invoice, then you can easily verify the authenticity of the GSTIN through the below-highlighted steps.
Open the browser and search for the “GST number search online” Click on the search taxpayer and enter GSTIN/UIN.
Enter the GSTIN number correctly and click on the search button. If the GSTIN number is correct, the information will be displayed on the screen including the name, company name, state, date of registration, etc. while if the GSTIN number is invalid there will be no sort of information.
In some cases, if the website shows you a notification of “Active Pending Verification, it means that GSTIN is valid and applied.
A fake GST invoice is the creation of a Goods and Services Tax(GST) by hiding details and not mentioning the mandatory details on the invoice. It potentially means no supply of goods or services but simply generating invoices. However, doing all these activities imposes heavy penalties and imprisonment on the business owners or involved entities. If you want to know detailed information on the Fake GST Invoice, must consult CA. Manoj K Pahwa has immense knowledge of the subject, as it completely aligns with his experience industry.