Finance Ministry investigation arms crack down on ₹470 crore worth fake input tax credit

Our Bureau New Delhi | Updated on September 12, 2019

The investigative arms of the Finance Ministry have conducted the ‘biggest ever joint operation’ against exporters who were claiming refund of Integrated Goods and Services Tax (IGST) fraudulently. The IGST is levied on inter-State movement of goods.

“The preliminary examination of the records/documents resumed during the course of the joint operation along with the statements recorded of various persons indicated that an Input Tax Credit of more than ₹470 crore against invoice value of approximately ₹3,500 crore is bogus/fake.”

These invoices have been utilised by the exporters for effecting exports on payment of IGST through ITC and claiming consequential cash refund of the same. An IGST refund amount of around ₹450 crore is under examination, the statement said.

This operation was conducted by the Directorate General of GST Intelligence (DGGI) and Directorate General of Revenue Intelligence (DRI).

The joint operation of the intelligence agencies of Central Board of Indirect Taxes and Customs (CBIC) was a first of its kind in the history of CBIC which involved about 1,200 officers from both the agencies. An official statement said that searches were carried out at 336 different locations across the country.

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 mis-declaration.

The operation covered entities 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.

Initial intelligence for conducting these searches was amassed on the basis of data analytics provided by the Directorate General of Analytics and Risk Management (DGARM).

An 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 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 ITC was more than the ITC availed by these firms, the statement said.

Published on September 12, 2019

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