Another scam of Rs. 400 crore has been unearthed by the Directorate General of GST Intelligence in which 20 exporter firms/companies based on the National Capital Region (NCR) allegedly availed Goods and Services Tax refund in connivance with units in Gujarat’s Kandla Special Economic Zone.The Directorate General of GST Intelligence (DGGI), Ahmedabad Zone (an Investigative arm of the Central Government), has initiated investigations by conducting searches in three units located in SEZ and thereafter at the premises of NCR based exporters and their godowns.
DGGI’s investigation revealed that the scam involved the low-grade tobacco products like scented ”zarda” (partially fermented tobacco) and filter ”khaini” (chewing tobacco) which were purchased at Rs. 50-350 per kilogram and being exported to Kandla SEZ units at Rs. 5000-9000 per kg.
After exporting, the exporters claimed Rs. 400 crore refund of accumulated Input Tax Credit (ITC), which indicates a huge over-valuation, to the extent of 3000 percent, of the market value of goods exported to the SEZ and claiming of refund of Input Tax Credit through fraudulent means.
The planning was hatched by 20 export firms from NCR and some units located in Kandla SEZ in Gandhidham in Kutch district.
The agency has identified over 25 suppliers had issued fake invoices of more than Rs. 1,000 crore to the NCR-based exporters to facilitate refunds, including Assam, Bihar, Delhi, Haryana, Madhya Pradesh, and Uttar Pradesh.
Moreover, these suppliers are either non-existent or are being indirectly controlled by the exporters.
Thus, the process worked in such manner that while Input Tax Credit has been obtained fraudulently from one source, the low-value goods have been procured from another source and both the streams have converged at the end of exporters who made highly overvalued supplies to the SEZ units for illegal gains through ITC refund route.
However, a proactive step was taken by DGGI where ITC refund claims of over Rs. 300 crores have been withheld of being getting disbursed to the scamsters.
Surplus ITC of over Rs. 100 crore is still lying in the credit ledger of these exporters, have been prevented from being siphoned off.
This is a major detection of export fraud coupled with fraudulent ITC refunds through SEZ based units. This investigation is an outcome of specific intelligence input which was further refined by rigorous analysis of data available on the GST Network and the E-way Bill system.
