Two traders arrested for Rs 50 crore IGST refund fraud

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An official explained that non-existent suppliers issued invoices for passing of the ITC utilised for payment of IGST on exported goods and IGST refund is claimed.

MUMBAI: The Belapur Central GST Commissionerate arrested two traders for allegedly floating over 50 shell companies to fraudulently to avail IGST refunds after GST council recently issued guidelines to curb refund related frauds, people in the know told ET.

Sources said Ajay Gopinath Mishra and Ramesh Chandra Bhatt availed IGST refund by showing export of textile goods over Rs 350 crore and collected IGST refund of over Rs 50 crore between January and May. The said amount was refunded by the customs to these exporters at the port of export.

“The IGST was paid using input tax credit (ITC) which has been found to be fraudulent,” said one of the officials.

An official explained that non-existent suppliers issued invoices for passing of the ITC utilised for payment of IGST on exported goods and IGST refund is claimed. These companies were created by using the PAN and Aadhar Cards of various un-suspecting persons through whom GST refunds were being claimed.

“In this case too, the Belapur Commissionerate officials unearthed a syndicate of more than 50 companies such as H.A. Creation, A.S. Fashion, Ritiesh Creations, R.D. Creation, Bamane Enterprises were floated to fraudulently avail benefits of IGST refunds,” revealed the official. “No one has actually paid the IGST on which ITC was availed by the exporter.”

During investigation, a source said, the bank accounts declared to the department at the time of obtaining GST registration certificate were allegedly different from the bank account declared to the Customs authorities for the purpose of IGST refund. The probe also revealed that while most of the suppliers and CHAs are located at Delhi, the premises of dummy exporters are registered in Mumbai.

Furthermore, documents such as purchase documents, export documents, cheque books, signed blank cheques, ATM debit cards and PIN of about 50 proprietorship firms were recovered from the office premises of the mastermind.

“Both the persons in their statement have admitted that they were the custodian of the bank documents of all the proprietorship firms,” the official further added.

“The investigations has revealed that fictitious suppliers issued invoices for passing of the ITC which was utilized for payment of IGST on exported goods and claiming IGST refund of the same. This fact was further corroborated by the findings that none of the suppliers down the line have generated mandatory E-way Bills for the purported supplies made to the exporters. Thus entire ITC availed by the exporters was found fraudulent,” said Shrawan Kumar, Commissioner, CGST.

Earlier in June the Central Board of Indirect Taxes and Customs (CBIC) asked director-general (systems) to identify a list of “risky exporters” and share it with customs and GST officers. Thereafter CBIC issued a circular dated June 17, 2019 providing a time bound mechanism to verify the IGST payments for goods exported out before sanctioning IGST refund in suspicious and risky cases.

“The new mechanism would ensure that such frauds are curbed while facilitating genuine exporters,” added Kumar.

Source : https://economictimes.indiatimes.com/news/politics-and-nation/two-traders-arrested-for-rs-50-crore-igst-refund-fraud/articleshow/70221074.cms

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