931 GST Frauds Identified Through Data Analytics

The Department of Revenue has identified 931 cases of fraudulent Goods and Services Tax (GST) refund claims and tasked the GST Data Analytics Wing to scrutinise all past and pending cases filed across the country for inverted duty structure, sources said on Monday.

Refunds of over Rs 28,000 crore are estimated to have been filed by over 27,000 taxpayers so far on account of inverted duty structure in the current financial year 2019-20.

Officials said these identified taxpayers who purchased goods from tax-evading non-filers will face verification and scrutiny. This is being reviewed and monitored on a weekly basis by Revenue Secretary Ajay Bhushan Pandey.

To curb input tax credit (ITC) frauds, data analytics is being done on all refunds since 2017, keeping an eye on the modus operandi of unscrupulous refund claimants, fly-by-night operators and shell business entities.

GST formations booked 6,641 cases involving 7,164 entities till November last year and recovered about Rs 1,057 crore. The maximum numbers of cases for ITC frauds were booked in Kolkata zone followed by New Delhi, Jaipur and Panchkula in Haryana.

A recently-detected fraud by central tax authorities in New Delhi involving GST refund for inverted duty structure was deliberated at the second national conference on GST last week.

Sources said investigators in the national capital have busted through data analytics a significant fraud case, where fraudsters had created a network of over 500 entities comprising of fake billers, intermediary dealers, distributors and bogus manufacturers of hawai chappals for availing and encashing fake ITC credits.

The bogus manufacturers created in Uttarakhand were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu. The raw material for the chappals, known as EVA compound, was charged at 18 per cent duty whereas chappals are chargeable to GST of 5 per cent.

Resultantly, the law allows manufacturers to claim refunds of the inverted duty structure in cash.

In Surat, preliminary investigations showed that 19 firms fraudulently claimed ITC to the tune of Rs 55 crore against fake invoices valued at Rs 679 crore.

During a search at the premises of Satyam Impex and Aatif Fashion, it was found that 17 other firms were registered with GST by misusing the identities and documents of daily wagers and casual workers.


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