Biggest ever crackdown on exporters finds fake GST invoice racket worth Rs 3,500 crore

In a massive search operation carried out across the country, DGGI and DRI have busted bogus GST refund racket by exporters.
GST refund racket

By TLI Staff

In a massive search operation carried out across the country, the Directorate General of GST Intelligence (DGGI) and the Directorate General of Revenue (DRI) have busted bogus GST refund racket by exporters.

Termed as first of its kind in the history of Central Board of Indirect Taxes and Customs (CBIC), an official Finance Ministry statement said that the tax-evading exporters had claimed input tax credit (ITC) of more than Rs 470 crore using fake invoices worth Rs 3,500 crore.

The tricksters further utilized the bogus and fake ITC for effecting exports on payment of IGST and claiming consequential cash refund of the same.

Besides, an IGST refund amount of around Rs 450 crore is under examination. In order to check wrong declaration about shipments, the anti-evasion agencies have intercepted consignment of dubious exporters at Vadodara Rail Container Terminal, Mundra port and Nhava Sheva port for examination.

The massive joint operation by the DGGI and the DRI was carried out on the basis of data analytics and intelligence gathering.

During investigation it was found that some exporters were shipping out goods out of India on payment of tax (IGST), being done almost entirely out of the Input Tax Credit (ITC) availed on the basis of ineligible/ fake supplies.

Further, such IGST payment was claimed as refund on export. Based on the data provided by the Directorate General of Analytics and Risk Management (DGARM), 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. On the basis of this intelligence, massive searches were conducted on the premises of exporters and their suppliers,” the Finance Ministry said.