Mumbai Jan 14
The officials of an anti-evasion wing of the Central Goods and Services Tax (CGST), recovered nearly Rs.1057 crore by registering 6641 cases involving 7164 entities, engaged in frauds such claiming GST refund under bogus income credit claims, all over the country.
The cases included 931 cases of fraudulent Input Tax Credit (ITC) cases registered in Kolkata zone followed by Delhi, Jaipur and Punchkula (Haryana).
These case were detected through data analytics, which revealed that the fraudsters had created a network of over 500 entities comprising fake billers, intermediary dealers, distributors and bogus manufacturers of hawai chappals for availing and encashing fake ITC in Uttarakhand. The bogus “manufacturers” were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu. The raw material for the chappals, known as Ethylene vinyl acetate (EVA)( a plastic made by combining ethylene and vinyl acetate) attracts 18 per cent GST, whereas ready chappals are charged 5 per cent GST. Resultantly the manufacturers are allowed to claim refund of the inverted duty structure in cash.
In Uttarakhand the fraudsters had created over Rs. 600 crore of ‘fake credit’, which they would have continued to encash had it not been busted and fake refund claims worth Rs 27.5 crore were prevented. The main accused in this case was arrested in December and was sent to judicial custody.
Another Integrated Goods and Service Tax (IGST) fraud came to light in Surat in Gujarat in which 19 firms had fraudulently claimed ITC to the tune of Rs. 55 crore against the fake invoices valued at Rs. 679 crore. During the search of the premises of two kingpin firms M/s Satyam Impex and M/s Aatif Fashion, it was revealed that 17 other firms were registered with GST by misusing the identity/documents of daily wagers, casual workers, etc. Data analytics revealed that these 19 firms had issued invoices valued at Rs. 461 crore involving IGST worth Rs. 39 crore for exports and invoices valued at Rs. 196 crore involving GST to the tune of Rs. 12 crore for domestic supply.
Perpetrators of this fraud later confessed that they used to receive fake invoices from fake firms without receipt of goods and have availed fraudulent ITC to claim refund of IGST. They used to purchase cheaper quality textile items from market for export and used the said high value invoices for claiming IGST refund.
Refunds of over Rs. 28,000 crore have been filed by over 27,000 taxpayers on account of inverted duty structure in the current year so far. Such identified taxpayers who have purchased goods from tax evading non-filers would face verification and scrutiny.
To curb ITC frauds, data analytics will be done on all refunds since 2017. The fraud detected by central tax authorities in Delhi, involving GST refund for inverted duty structure, was deliberated at the 2ndNational Conference on GST last week.