‘Biggest’ nationwide joint operation exposes exporters claiming bogus refunds
A nationwide operation spanning 15 states and 336 locations was conducted on exporters fraudulently claiming input tax credit under the GST regime on Thursday, said the finance ministry. Exporters are suspected to have used fake invoices worth Rs 470 crore to claim bogus refunds under integrated GST (IGST). IGST is charged for movement of goods and services from one state to another state.
The day long operation, in the states of Delhi, Haryana, Uttar Pradesh, Gujarat, Maharashtra, Tamil Nadu, West Bengal, Karnataka, Madhya Pradesh, Telangana, Punjab, Rajasthan, Himachal Pradesh, Uttarakhand and Chhattisgarh, also revealed that many of these entities were either “non-existent” or had “fictitious” addresses, a finance ministry statement on the joint operation said.
“The preliminary examination of records…along with the statements… indicated that an Input Tax Credit (ITC) of more than Rs 470 crore (invoice value of approx Rs 3,500 crores) is bogus/fake,” the statement said, adding the fake ITC had been further utilized for effecting exports on payment of IGST and claiming consequential cash refund for the same.
Explaining the modus operandi, it said some exporters were exporting goods out of India on payment of IGST, done almost entirely out of the Input Tax Credit availed on the basis of “ineligible/fake” supplies and claiming it as refund on export.
The companies involved in the alleged gaming of the system were tracked on the basis of ‘red flag’ indicator filters applied to Customs’ export data in conjunction with the corresponding GST data of the exporters, the release said.
It was also noticed that there was no or negligible payment of tax through cash by the exporters as well as their suppliers. In few cases, even the tax paid through Input Tax Credit was more than the ITC availed by these firms. On the basis of this intelligence, massive searches were conducted on the premises of exporters and their suppliers.
The officials are also examining an IGST refund amount of around Rs 450 crore, it said.
According to the ministry, some live export consignments of these exporters have been intercepted at Vadodara Rail Container Terminal, Mundra Port and Nhava Sheva Port for examination in order to ascertain the veracity of their declaration.
The joint operation of the two premier intelligence agencies of Central Board of Indirect Taxes and Customs (CBIC) involving about 1,200 officers is said to be the first of its kind in the history of CBIC, the statement said.