An invoice, GSTIN and bank payment do not prove that goods or services were actually received.
Build a transaction-substance file and escalate red flags before claiming ITC or releasing further payment.
Freeze new orders.
Vendor KYC.
Invoice without deliverable.
Fake-invoice cases often involve shell vendors, circular payments, fictitious movement or services that cannot be evidenced. The buyer’s due diligence and internal controls become central.
ITC conditions require actual receipt and use in business. E-invoice or 2B visibility validates data transmission, not commercial substance.
Where fraud or identity theft is suspected, preserve digital and banking evidence and involve legal, tax and cybercrime teams.
| Area | What to establish | Operating rule |
|---|---|---|
| Vendor | Legal existence and beneficial ownership. | Verify independently. |
| Supply | Goods movement or service deliverable. | Demand evidence. |
| Payment | Bank beneficiary and fund flow. | Screen changes. |
| Conflict | Employee, agent and related-party links. | Investigate. |
GST control should connect five records: commercial contract, tax invoice, movement or service evidence, accounting entry and portal return. A filing that cannot be traced back to all five records is difficult to defend.
Every reconciliation should have a clear opening balance, current-period additions, corrections, reversals, payments and closing balance. Avoid unexplained plugs that make the total match but do not identify the invoice or legal reason.
Portal data is important but not conclusive by itself. GSTR-2B, e-invoice, e-way bill and ledger data should be read with the statute, rules, notifications, contracts and actual supply evidence.
Keep original source files and final filed versions. Screenshots help explain a portal event but should not replace downloaded returns, JSON, signed invoices, acknowledgements or bank records.
For material exposure, prepare a written position memo stating facts, issue, law, alternatives, conclusion, amount and approval. The memo should record uncertainty rather than hide it.
ITC review must establish supplier, invoice, receipt, business use, tax reporting and absence of a statutory block. A purchase-register match is only one layer.
Vendor remediation should have an ageing rule: request correction, escalate commercially, defer or reverse credit where required and preserve later re-availment evidence.
Start with the GST portal record, responsible business owner and tax working. Where the issue is operational, correct the source system and retain the acknowledgement. Where it is legal or disputed, obtain a reasoned professional position before payment, reply, refund or appeal.
Track the statutory or portal deadline separately from internal approval. Preserve helpdesk tickets, ARN, hearing requests, orders and payment records so a later reviewer can reproduce the entire path.
Before filing or replying, prepare a one-page issue sheet showing GSTIN, tax period, transaction type, amount, applicable provision, portal form, evidence owner and due date. This prevents different teams from solving different versions of the same problem.
Reconcile tax by CGST, SGST, IGST and cess rather than only by total. A total can match even when the wrong tax head, state or period has been used, which can still create interest, cash-flow and customer-credit consequences.
Build an exception register with five statuses: identified, evidence pending, vendor or customer action, tax treatment approved and closed. Every exception should retain its original amount even after correction so the audit trail remains visible.
Test the position against the counterparty’s records. Customer ITC, vendor GSTR-1, transporter data, marketplace statements and bank receipts can expose differences that are invisible in the taxpayer’s own ledger.
The final approval should record who reviewed the legal position and who approved the return, reply, payment, refund or appeal. Material GST decisions should not remain buried in informal email chains.
Use an invoice ageing report that distinguishes missing in 2B, wrong GSTIN, duplicate, ineligible, blocked, received-not-booked and booked-not-received. Each category requires a different action.
Re-availment should link back to the original reversal month and document. Without that link, the business can claim the same credit twice or fail to reclaim it.