Taxmen dodge massive GST fraud as exporters claiming Rs 2,000 cr refund go missing on verification

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Updated: Jul 28, 2020 7:56 AM

As many as 1,474 exporters have gone untraceable after fraudulently claiming over Rs 2,000 crore of integrated GST (I-GST) refunds, in what shows the extent of tax evasion attempts in the GST regime.

Out of the non-traceable 7 star exporters, five operated from Delhi, and one each from Mumbai and Kolkata.

As many as 1,474 exporters have gone untraceable after fraudulently claiming over Rs 2,000 crore of integrated GST (I-GST) refunds, in what shows the extent of tax evasion attempts in the GST regime. These claims were rejected after verification at the actual places of business, official sources said, adding that the wrongdoers will be brought to book.

The data analytics performed by Directorate General of Risk Management (DGARM) which is followed by field-level verification by CGST officers have found these ‘risky exporters’ included 7 ‘Star’ exporters. The analysis of frauds among exporters started in June last year.

Star Export House exporters are certified by the government on the basis of export performance (Rs 15 crore to Rs 5,000 crore FOB in the current and three preceding years). They are extended certain benefits, including customs clearance on self-certification basis and exemption from furnishing bank guarantee under certain schemes.

Out of the non-traceable 7 star exporters, five operated from Delhi, and one each from Mumbai and Kolkata. Further, the revenue department has received adverse reports about 3 star exporters, two in Mumbai and one in Jaipur. “They were involved in export of ready-made garments, kitchenware, utensils, sound system, amplifiers, microphones, sea food, shrimps, unstitched fabric, sarees and dupattas, among other items. They tried to claim IGST refund amounting to `28.9 crore unsuccessfully,” the official said

Out of 1,474 untraceable exporters, 1,125 exporters are from Delhi alone. Non-existing exporters have also been detected in large numbers at Surat (215), Thane (28), Faridabad (15) and Kolkata (11). “These fraudulent exporters were mainly involved in export of ready-made garments, wallpaper, wall coverings, leather apparel, smoking pipes, mobile phones, cigarette holders, footwear, plastics, floor coverings, ball bearings or roller bearings,” a tax official said.

A top tax official said that some exporters identified as fraudulent have been lobbying with some prominent trade associations to claim that government was asking for over 1,500 documents which was affecting genuine exporters where as the Central Board of Indirect Taxes and Customs verifies each exporter in two stage verification with hardly 3-4 documents, the official added.

Another source said the government has so far cleared I-GST refunds of over Rs 1.37 lakh crore and only about Rs 2,026 crore is pending currently. He added that data analytics based on 360 degree profiling of exporters using multiple data sources (GST, income tax, customs, DGFT, etc) has caught fraudulent exporters from genuine ones with a high degree of success. The analysis, which identified which exporters could be risky, is corroborated after CGST formations carry out a physical and financial verification of the risky exporters.

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