GST fraud: Revenue dept plans stern action against 1,417 exporters who claimed refund but are untraceable

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Published: July 26, 2020 9:13 PM

So far, IGST refunds of more than Rs 1.37 lakh crore have been disbursed and only about Rs 2,026 crore is pending, which is being processed as per law, sources said. 

Non-existing exporters have also been detected in large numbers at Surat (215), Thane (28), Faridabad (15) and Kolkata (11).

The revenue department is planning stern action against 1,474 ‘risky exporters’ who were untraceable but claimed GST refunds worth Rs 2,029 crore, sources said. Integrated GST (IGST) refund is suspended in all such cases where there is adverse report post verification about the exporter or his suppliers, they said.

So far, IGST refunds of more than Rs 1.37 lakh crore have been disbursed and only about Rs 2,026 crore is pending, which is being processed as per law, sources said. A grievance redressal mechanism with a 24×7 mobile helpline is available to genuine exporters to resolve refund related issues, they said, adding Customs officials have been sensitised to expedite refunds to genuine exporters in these difficult Covid-19 days.

The CBIC verifies each exporter in a two-stage verification with hardly 3 to 4 documents as per requirement, sources added. Data analytics by CBIC’s Directorate General of Risk Management (DGARM) which is followed by field-level verification by CGST officers have found 1,474 ‘risky’ exporters including 7 Star Exporters who tried to claim IGST refund of Rs 2,029 crore were untraceable at their declared place of business and therefore their refund has been rejected.

According to sources, out of the 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).
The exporters who claimed refunds fraudulently were mainly involved in the 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.

Out of the non-traceable seven ‘Star Exporters’, five operated from Delhi, and one each from Mumbai and Kolkata.
Adverse reports have been received in respect of other three Star Exporters, two in Mumbai and one in Jaipur. These Star Exporters were involved in export of ready-made garments, kitchenware, utensils, sound system, amplifiers,microphones, sea food, shrimps, unstitched fabric, sarees, dupattas, etc.

They tried to claim IGST refund amounting to Rs 28.9 crore, sources added. Sources said the general modus operandi of risky exporters is to pay IGST at the highest rate of 28 per cent in order to quickly encash the undue ITC claims.

CBIC’s data analytics based on 360 degree profiling of exporters using multiple data sources (GST, Income Tax, Customs, DGFT, etc.) is able to weed out fraudulent exporters from genuine ones. The confirmation comes after Central GST formations carry out a physical and financial verification of the risky exporters, sources added.

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