12 Sep Govt conducts nationwide raids on exporters, unearths GST f…
After a sharp drop in GST collections over the past few months, the government seems to have finally tracked down one of the key reasons behind it.
Following a major search operation across 15 states, joint teams of Directorate of Revenue Intelligence (DRI) and Directorate of GST Intelligence (DGGI) have unearthed a major Integrated Goods and Service Tax (IGST) fraud.
The joint DRI-DGGI teams targeted exporters who claimed a refund on GST fraudulently. Sources told India Today TV that searches were carried out across 336 different locations across the country on Wednesday.
Exporters and suppliers across Delhi, Haryana, Uttar Pradesh, Gujarat, Maharashtra, Tamil Nadu, West Bengal, Karnataka, Madhya Pradesh, Telangana, Punjab, Rajasthan, Himachal Pradesh, Uttarakhand, and Chhattisgarh were raided by the joint teams.
The search operation carried out by the two agencies, which work under the Central Board of Indirect Taxes and Customs (CBIC), was the first of its kind after GST came into effect. It involved 1,200 officers working in DRI and DGGI.
It is worth mentioning that raids were conducted after carefully mining export data and intelligence inputs, following which the agencies carried out search and found that exporters claimed bogus integrated GST refund and used it for effecting exports on payment of IGST through input tax credit (ITC) and then claiming cash refund on it.
Another layer of fraud involved was that entities were pocketing the IGST paid by claiming them as a refund on exports.
The joint teams reached the premises of exporters and suppliers on Wednesday morning and conducted searches till Thursday. The teams found that many exporters and their suppliers were either non-existent or had provided fictitious addresses.
Preliminary examination of the records/documents during the course of joint operation indicated that an ITC of more than Rs 470 crore (Invoice value of approximately Rs 3,500 crore) was bogus/ fake.
The teams found that this ITC was further utilized by the exporters for effecting exports on payment of IGST and claiming consequential cash refund of the same.
Besides, IGST refund amount of around Rs 450 crore is under examination. The DRI-DGGI teams are also carrying out a scrutiny of live export consignments of these exporters.
These consignments were intercepted at Vadodara Rail Container Terminal, Mundra port and Nhava Sheva port for examination in order to ascertain misdeclaration.
The data generated on the fraudulent activity yet again proved that under the GST regime, any amount of camouflaging cannot hide transactions. The basic data for analytics came from the Directorate General of Analytics and Risk Management (DGARM).
The analytics team had applied ‘red flag’ indicator filters to Customs’ export data in conjunction with the corresponding GST data of the exporters. The DRI-DGGI teams found that there was negligible tax payment tax made through cash by exporters as well as their suppliers.
In a few cases, even tax paid through Input Tax Credit (ITC) was more than the ITC availed by these firms.
DRI-DGGI sources say that further investigations are on as a large number of documents have been seized during the searches.