Mr. Rajaram issued a tax invoice to Mr. Balram without any actual supply of goods or services involving total Input Tax Credit (ITC) of 60 lakh on…

(i) Since Balram has availed ITC on the basis of tax invoice issued by Rajaram, without actual receipt of goods and/or services, said ITC is ineligible and thus, Balram is liable to a penalty, viz., higher of: (i) 10,000 or (ii) Amount equivalent to the ITC availed of / passed on irregularly 60 lakh (CGST & SGST) i.e. 30 lakh each under CGST and SGST Further, since Balram has issued tax invoice without actual supply of goods and/or services, he is liable to a penalty, viz., higher of: (i) 10,000 or (i) Amount equivalent to the tax evaded 70 lakh (CGST & SGST) i.e. 35 lakh each under CGST and SGST (ii) Other action to be taken against Balram is as follows: Since Balram issued invoice without supply of goods and/or services and availed ITC in violation of the provisions of the GST law, his GST registration is liable to be cancelled. (iii) Prosecution cannot be initiated against Rajaram since the tax involved in issuing invoices without actual supply does not exceed 1crore. As compounding of offences is allowed only where prosecution is invokable, compounding is not applicable in Rajaram's case. Nevertheless, a person accused of issuing invoices without actual supply is not eligible for compounding of that offence.