The government has identified 931 cases of fraudulent GST refund claims through data analytics. According to finance ministry sources, the revenue department has asked the GST Data Analytics wing to scrutinise all past and pending refund claims filed all over the country for inverted duty structure.
The ministry sources said that refunds of over Rs 28,000 crore are said to have been filed by over 27,000 taxpayers so far on account of inverted duty structure in the current year. Such taxpayers, who have purchased goods from tax evading non-filers would be subject to verification and scrutiny if necessary.
In order to curb input tax credit (ITC) frauds, the department would also do data analytics on all refunds since 2017. Sources in the finance ministry said that the authorities have booked 6,641 cases involving 7,164 entities till November last year and have so far recovered around Rs1,057 crore.
Maximum numbers of ITC frauds cases have been booked in Kolkata zone followed by Delhi, Jaipur and Punchkula (Haryana).
Investigators in Delhi have busted through data analytics a significant fraud case, where fraudsters 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 materials for the chappals, known as EVA compound, are chargeable to 18% duty whereas chappals are chargeable to GST of 5 per cent.
The law allows the manufacturers to claim refunds of the inverted duty structure in cash.
The fraudsters had generated fake credits worth over Rs 600 crore, which they would have continued to encash if the racket was not busted. The main accused in this case was arrested in December.
In a case of IGST fraud from Surat, preliminary investigations revealed that 19 firms fraudulently claimed ITC worth Rs 55 crore against the fake invoices of Rs 679 crore. During the search at the premises of two firms Satyam Impex and Aatif Fashion involved in the case, it was found that 17 other firms were registered with GST by misusing the identity/documents of daily wagers, casual workers, etc.
Data analytics showed that the 19 firms issued invoices of Rs 461 crore, involving IGST of Rs 39 crore for exports and invoices valued at Rs 196 crore involving GST to the tune of Rs 12 crore for domestic supply.
The perpetrators in this case later revealed that they used to receive fake invoices from shell entities without receipt of goods and have claimed refund of IGST against these invoices. They used to purchase cheaper quality textile items from market for export and used the said high value invoices for claiming IGST refund.
GST authorities also identified a few exporters with 'star' status, who were fraudulently availing IGST refund and were untraceable at their registered addresses. In one such case, an exporter with over Rs 50 crore of exports of readymade garments had taken refund of Rs 3.90 crore while the entity's total GST payment in cash was merely Rs 1,650. In another case, tax payments in cash have been found as Rs 51,201 while the exporter has obtained refund of Rs 9.59 crore.