CBIC reviews results, finds biggest ever Goods and Services Tax fraud

A joint operation being conducted by Directorate of Revenue Intelligence (DRI) and Directorate of GST Intelligence (DGGI) on Wednesday targeted exporters who were claiming Input Tax Credit (ITC) of Integrated Goods & Service Tax (IGST) fraudulently. These two agencies work under the Central Board of Indirect Taxes and Customs (CBIC).

These searches were conducted at 336 places across 15 states which are Delhi, Haryana, Uttar Pradesh, Gujarat, Maharastra, Tamil Nadu, West Bengal, Karnataka, Madhya Pradesh, Telangana, Punjab, Rajasthan, Himachal Pradesh, Uttarakhand, Chhattisgarh. The searches started on Wednesday morning and continued till Thursday morning.

Preliminary enquiries reveal that an ITC of more than Rs.470 crore was fraudulently claimed, where the invoice value was about Rs.3,500 crore. An IGST refund of Rs.450 crore is also under examination.

The live export consignments of these exporters are also under the scrutiny of DRI-DGGI agencies. As a part of scrutiny, some consignments have been intercepted at Vadodara Rail Container Terminal, Mundra Port and Nhava Sheva port to ascertain misdeclaration.

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The agencies found that many of the exporters and their suppliers are were either non-existent or they have provided fictitious addresses. One layer of fraud was that the traders were exporting goods on payment of IGST, which was paid through ITC that they have availed by furnishing ineligible or fake supplies. Another layer of fraud was traders were claiming illegitimate IGST refunds using fake invoices. 

In a few cases, tax paid through ITC was more than the ITC availed. As per the data provided by the Directorate General of Analytics and Risk Management, the agencies found that there was no or negligible payment of tax through cash by these exporters.

This type of search operation by these two agencies was the first of its kind. Around 1200 officers have participated from these two agencies. The raids were done on the basis of mining of export data and intelligence inputs gathered from various Indian agencies. The agencies say that further investigation will be on a large volume of documents which were seized during the searches.