New Delhi, Nov 2 (KNN) Haryana has become the first state in India to announce denying input tax credit (ITC) to any Goods and Services Tax (GST) assesse found to be bogus or fake.

The State Government has issued detailed guidelines explaining the circumstances during which credit can be blocked. “The functionality of blocking and unblocking ITC is an important tool for safeguarding the Government revenue, particularly in cases of fraudulent activities by the taxpayer.”

According to the guidelines, one of the circumstances is that full amount of credit available in the Electronic Credit Ledger of the taxpayer should be blocked instantly in cases where the “registered taxpayers are found to be bogus/fake by any investigation or intelligence.

Such taxpayers are not entitled for the credit on the grounds that no supply has been made and proper tax has also not been deposited in respect of the claimed credit.

Full amount of credit should also be blocked, if the firms have been found non-functional.

As per GST law, the credit should be blocked only to the extent of excess credit claimed by the taxpayers over and above their entitlement.

The registered taxpayers are not entitled for credit availed of by them accruing from receipt of supplies which have not been used in the course of business or furthering business.

Similarly taxpayers will not be entitled for credit, if it is not admissible under the law or the taxpayers are not entitled for the credit in accordance with various provisions of the law.

If the tax on supplies has not been paid by the supplier, the recipient is not in possession of the tax invoice, the supply is outdated, or the supplier is composition taxpayer.

More and more states are expected to issue similar circular in the days to come.