In the biggest pan-India joint operation conducted by Directorate General of GST Intelligence and Directorate General of Revenue Intelligence against deceitfully claiming a refund of Integrated Goods and Service Tax (IGST) through exporters.
This search operation has been conducted in almost 15 states and national capital Delhi and involved nearly 1200 officers from both the agencies.
However, two years after the application of a common countrywide goods and services tax law, the Modi government has commenced a major enforcement measure against the tax evaders. In an extraordinary operation, a joint team of the directorate of revenue intelligence and directorate general of GST intelligence against violating exporters as well as suppliers carried out the raid in more than 300 locations across the country.
Depending on the data analytics, intelligence has been developed in close direction by both the agencies revealed that few exporters are exporting products outside of India on payment of IGST, being conducted almost completely out of the Input Tax Credit (ITC) availed on the basis of ineligible or counterfeit supplies.
Such IGST payment has been claimed as a refund on export. It was also seen that there was no or slight payment of tax through cash through the exporters and their suppliers. Considering this intelligence, a huge search operation has been conducted on the locations of exporters and their suppliers. The all-day-long operation exposed that many of the enterprises which are spread across the length and breadth of the nation were either non-existent or had given false addresses.
The initial examination of the records or documents continued during the course of the joint operation in consort with the statements recorded of many persons indicated that an Input Tax Credit of above 470 crore rupees (Invoice value of approximately 3,500 Crore rupees) is false and counterfeit which has been used by the exporters for effecting exports on payment of IGST by means of ITC and claiming consequential money refund of the same.
Also, an IGST refund sum of around 450 crore rupees is under examination. Furthermore, certain live export consignments of these exporters were intercepted at Vadodara Rail Container Terminal, Mundra.
The ministry of finance stated in a statement that it is the biggest ever joint operation conducted by DGGI and DRI against the exporters who were falsely claiming a refund of IGST, pan-India searches were done at 336 different places across the country.
The raids were an outcome of export data mining as well as intelligence inputs generated through coordination amid various Indian agencies.
How the government uncovered the GST fraud
With the intention to detect this huge GST evasion through exporters, tax officers utilized the data provided by the directorate general of analytics and risk management (DGARM). The action covered matching of export data available with the Customs department along with the corresponding GST data of exporters.
The action revealed that there was barely any payment of tax through cash through exporters and their suppliers.
In some cases, the tax paid through ITC was more than the ITC availed by these entities. On the basis of this intelligence, raids were conducted on the locations of exporters and their suppliers. The day-long operation exposed that many of the firms spread across the length and breadth of the nation were either non-existent or had given false addresses.
Amount of GST Fraud
An initial investigation carried out by the tax officials exposed that input tax credit of above Rs 470 crore has been availed on the basis of false or counterfeit invoices. The invoice value of these transactions was nearly Rs 3,500 crore. It was utilized by exporters for fraudulently claiming money refund.
One more IGST refund of Rs 450 crore is also under the check of tax authorities. During the operations, tax officers had apprehended live export consignments of these exporters at Vadodara Rail Container Terminal, Mundra Port and Nhava Sheva Port towards detecting any misrepresenting of the information.
Conclusion
Thus the data generated on deceptions proved yet again that under the GST regime any sum of camouflaging could not be kept as hidden transactions. The elementary data for analytics came from the Directorate General of Analytics and Risk Management (DGARM).
The analytics team had applied 'red flag' indicator filters towards Customs' export data along with the corresponding GST data of the exporters. The DRI-DGGI teams discovered that there was none or slight payment of tax made through the mode of cash by the exporters as well as their suppliers. In some cases, the tax paid through ITC was above the ITC availed by these entities. The sources of DRI-DGGI stated that further examinations are on as a large number of documents were seized during the searches.
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