Stern action is proposed against the risky exporters who have been claiming IGST Refund worth Rs.2,020 crore and were found untraceable, said finance ministry sources in the know of the matter, stating that the number of such untraceable risky exporters has gone up to 1474 as on date. Sources said that IGST refund is suspended in all such cases where there is adverse report post verification about the exporter or his supplier/s. However, Customs officials have been sensitized to expedite refunds to genuine exporters in these difficult Covid-19 days.
Ministry sources said that so far, IGST refunds of more than Rs.1.37 lakh crore have been disbursed and only about Rs. 2,026 crore is pending, which is being processed as per law. A grievance redressal mechanism with a 24x7 mobile helpline is available to genuine exporters to resolve refund related issues.
CBIC sources added that feeling the heat, some fake/risky exporters are lobbying with some prominent trade associations to allege that genuine exporters are being harassed by being asked for over 1,500 documents each for conducting verification, but this is completely untrue. CBIC verifies each exporter in two-stage verification with hardly 3 to 4 documents as per requirement, sources added.
Sources said that data analytics by CBIC’s Directorate General of Risk Management (DGARM) which is followed by field-level verification by CGST officers have found 1,474 ‘risky’ exporters including 7 Star Exporters who tried to claim IGST refund of over Rs. 2,020 crores were untraceable at their declared place of business and therefore their refund has been rejected.
Informed sources said that Exporters’ Risk Management started in June 2019. Reportedly, some fake exporters have fraudulently availed ITC taking advantage of the highly efficient fully-automated IGST refund system to encash it after paying IGST on export goods and then claiming a refund. The general modus operandi of risky exporters is to pay IGST at the highest rate of 28% in order to quickly encash the undue ITC claims.
According to sources, out of the 1,474 untraceable exporters, 1,125 exporters are from Delhi alone. Non-existing exporters have also been detected in large numbers at Surat (215), Thane (28), Faridabad (15) and Kolkata (11). These fraudulent exporters were mainly involved in the export of ready-made garments, wallpaper, wall coverings, leather apparel, smoking pipes, mobile phones, cigarette holders, footwear, plastics, floor coverings, ball bearings or roller bearings.
Out of the non-traceable 7 Star Exporters, five operated from Delhi and one each from Mumbai and Kolkata. Adverse reports have been received in respect of other 3 Star Exporters, two in Mumbai and one in Jaipur. These Star Exporters were involved in the export of ready-made garments, kitchenware, utensils, sound system, amplifiers, microphones, seafood, shrimps, unstitched fabric, sarees, dupattas, etc. They tried to claim IGST refund amounting to Rs.28.9 Crores unsuccessfully.
Informed sources claimed that CBIC’s data analytics based on 360-degree profiling of exporters using multiple data sources (GST, Income Tax, Customs, DGFT, etc.) is able to weed out fraudulent exporters from genuine ones with a high degree of success. The confirmation comes after CGST formations carry out physical and financial verification of the risky exporters.
First Published: Jul 26, 2020 7:32 PM IST
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