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GST fraud cases

With the rise in GST evasion, the Department of Revenue has started using data analytics and so far have unearthed 931 cases of fraudulent refund claims. Most of these cases related to the input tax credit (ITC) have been booked in the Kolkata region followed by Delhi, Jaipur, and Panchkula (Haryana).

The GST data analytics wing has now been tasked with examining all past and current refund claims filed across the country for inverted duty structure. So far, in the current financial year, refund claims of over ₹28,000 Crore are said to have been filed by over 27,000 taxpayers on account of inverted duty structure. The taxpayers, found to be purchasing goods from tax-evading non-filers, would face verification and scrutiny as necessary.

Data analytics is used to re-look at all refunds since 2017

This exercise will be weekly reviewed and monitored by Union Revenue Secretary Ajay Bhushan Pandey. To curb fraudulent claim of the input tax credit, data analytics is being used to re-look at all refunds since 2017, watching out for the modus operandi of unscrupulous refund claimants or fly-by-night operator or shell business entities created for availing fake ITC.

GST authorities have booked 6,641 cases involving 7,164 entities till November last year and recovered around ₹1,057 Crore. The scrutiny exercise was initiated after the recent detection of fraud by central tax authorities in Delhi, involving GST refund for inverted duty structure. The case was deliberated at the 2nd National GST Conference last week.

The tax authorities in Delhi had used data analytics to bust a significant fraud case wherein fraudsters created a network of over 500 entities of fake billers, intermediary dealers, distributors, and bogus manufacturers of hawaii chappals to avail fake ITC credits. The bogus ‘manufacturers’ in Uttarakhand were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra, and Tamil Nadu.

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