The government will probe claims seeking goods and services tax refunds of more than Rs 28,000 crore as it looks to check fraud, according to an official.
About 27,000 taxpayers filed these claims in the ongoing financial year on account of an inverted duty structure, the official said on the condition of anonymity. The structure refers to a situation where inputs for making a product are taxed at a higher rate than the product itself.
The decision to probe claims was taken after the Department of Revenue, under the Ministry of Finance, identified 931 cases of fraudulent GST claims using data analytics. The department has now asked the data analytics wing to scrutinise all past and pending inverted duty structure claims, the official said.
The government is relying on data analytics tools to keep a check on illegal GST refund claims and fly-by-night firms. The tax authorities filed 6,641 cases involving 7,164 entities from July 2017 to November 2019, and recovered around Rs 1,057 crore, the official quoted earlier said.
The maximum number of such cases have been unearthed in Kolkata followed by Delhi, Jaipur and Haryana, the official said.
The tax authorities busted a case in Delhi where offenders created a network of over 500 entities comprising fake billers, intermediary dealers, distributors and bogus manufacturers of ‘hawai chappals’ (flip flops) for availing fake input tax credit. Raw materials for chappals are taxed at 18 percent while a 5 percent GST is imposed on chappals, the official said.
Bogus manufacturers in Uttarakhand were showing fake supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu, and were claiming refunds under the inverted duty structure in cash, the official said. Tax authorities blocked claims of Rs 27.5 crore. The fraudsters had created over Rs 600 crore in fake credit, which they would have continued to encash, if not caught, the official said.
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