Bogus Purchase and Input Tax Credit Notice

Chetan Chauhan | Last updated: 09 January 2023

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Quick Summary

A bogus purchase and input tax credit notice is issued by tax authorities like the GST department when they suspect fraudulent claims of input tax credit. This can happen if a purchase wasn't made, involved fake invoices, was from an ineligible supplier, wasn't for business use, or lacked proper documentation. If you receive such a notice, it's crucial to review it carefully, gather all supporting documents, and submit a clear, written response to the issuing authority promptly.

A bogus purchase and input tax credit notice is a formal communication issued by a tax authority, such as the GST (Goods and Services Tax) department, to a taxpayer alleging that they have claimed input tax credit on a bogus or fraudulent purchase.

Bogus Purchase and Input Tax Credit: What to Do

A bogus purchase and input tax credit notice may be issued for a number of reasons, including

The taxpayer has claimed input tax credit on a purchase that was not actually made.
The taxpayer has claimed input tax credit on a purchase that was made under fraudulent circumstances, such as using fake invoices or documents.
The taxpayer has claimed input tax credit on a purchase from an unregistered supplier, or from a supplier who is not eligible to charge GST.
The taxpayer has claimed input tax credit on a purchase that was not used for business purposes.
The taxpayer has claimed input tax credit on a purchase that was not properly documented or supported with appropriate invoices or receipts.

How To Deal Will Such Notices

If you receive a notice regarding a bogus purchase and input tax credit, it is important to respond promptly and provide any relevant information or documentation to support your case. Here are some steps you can take to respond to the notice:

Review the notice carefully and make sure you understand the reasons for the notice and the specific issues that are being raised.
Gather any relevant documentation, such as invoices, receipts, and other records, that support your claim for input tax credit.
Prepare a written response to the notice, addressing each of the issues raised. In your response, you should provide a clear and concise explanation of your position, including any relevant facts and supporting documentation.
Submit your response to the issuing authority, either by mail or online, depending on the instructions provided in the notice.
Keep a copy of your response and all supporting documentation for your records.

It is important to respond to the notice in a timely and professional manner, as failure to do so could result in further action being taken against you.