DRI and DGGI crack IGST refund fraud

Sushant Ranjan
Saturday, 14 September 2019

Bogus invoices worth `3,500 cr unearthed across the country

PUNE: In the biggest ever joint operation of its kind, the Directorate General of Goods and Service Tax (GST) Intelligence (DGGI) and the Directorate General of Revenue Intelligence (DRI) cracked down on errant exporters who were claiming refund of IGST fraudulently. Pan-India searches were conducted at 336 locations on Wednesday and bogus invoices worth Rs 3,500 crore unearthed.

The operation covered entities in Delhi, Haryana, Uttar Pradesh, Gujarat, Maharashtra, Tamil Nadu, West Bengal, Karnataka, Madhya Pradesh, Telangana, Punjab, Rajasthan, Himachal Pradesh, Uttarakhand and Chhattisgarh. 

In Maharashtra, the operation was conducted in Mumbai, Pune, Nagpur, Solapur and Kolhapur.

The joint operation by the two premier intelligence agencies of the Central Board of Indirect Taxes and Customs (CBIC) was the first such action in its history of CBIC, which involved 1,200 officers from both agencies.

On the basis of data analytics, intelligence was gathered in coordination by both agencies. It was revealed that some exporters sent goods abroad on payment of tax (IGST), being done almost entirely out of the Input Tax Credit (ITC) availed on basis of ineligible or fake supplies.

Further, such IGST payment was claimed as refund on export. Based on the data provided by the Directorate General of Analytics and Risk Management (DGARM), the analysis was conducted, wherein certain red flag indicator filters were applied to customs export data, in conjunction with the corresponding GST data of the exporters. It was noticed that there was no or negligible payment of tax through cash by exporters and suppliers.

In a few cases, even tax paid through ITC was more than the ITC availed by these firms. On the basis of this intelligence, massive searches were conducted on the premises of these exporters and their suppliers. The day-long operation revealed that many of the entities spread across the length and breadth of the country were non-existent or had given fictitious addresses.

The preliminary examination of the documents along with statements recorded indicated that an Input Tax Credit of more than Rs 470 crore (Invoice value of approximately Rs 3,500 crore) was bogus, which has been utilised by exporters for effecting exports on payment of IGST through ITC and claiming consequential cash refund of the same.

Besides, an IGST refund amount of Rs 450 crore is under examination. Further, some live export consignments of these exporters have been intercepted at Vadodara Rail Container Terminal, Munclra Port and Nhava Sheva Port for examination in order to ascertain mis-declaration.

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