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Data Analytics: Government detects 931 GST fraud cases

Data Analytics: Government detects 931 GST fraud cases

The revenue department has unearthed as many as 931 fraudulent GST refund cases through data analytics, which has forced it to scrutinise all the past refund claims for inverted duty structure that are already settled, along with the pending ones. In the current year itself, refunds of over Rs 28,000 crore have been filed by over 27,000 taxpayers on account of an inverted duty structure, a senior tax official said. He said a fraud unearthed in Delhi showed that the culprits had a network of over 500 entities — comprising fake billers, intermediary dealers, distributors and bogus manufacturers of slippers — for getting fake ITC credits due to the inverted duty structure on the product. “The bogus manufacturers created in Uttarakhand were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu. The raw materials for the slippers, known as EVA compound, are chargeable to 18% duty whereas chappals are chargeable to a GST of 5%,” he said. Inverted duty structure means the final product attracts a lower GST rate while inputs are taxed at higher rates. This typically leads to an accumulation of input tax credit (ITC) in a taxpayers’ ledger, which is claimed as refunds. However, officials say this refund route has been exploited by unscrupolous elements. The scrutiny would focus on taxpayers who have purchased from ‘fly-by-night operators and shell firms’, the official said. The progress will be tracked by revenue secretary Ajay Bhushan Pandey on a weekly basis.

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