Rs 400 cr GST fraud involving NCR, Kandla SEZ units detected

The Directorate General of GST Intelligence has unearthed a scam in which exporters from the National Capital Region (NCR) allegedly availed Goods and Services Tax refund of Rs 400 crore in connivance with units in Gujarat's Kandla Special Economic Zone, an official said on Tuesday.

A DGGI release said the scam was centred around low grade tobacco products like scented 'zarda' (partially fermented tobacco) and filter 'khaini' (chewing tobacco) procured at Rs 50-350 per kilogram being exported to Kandla SEZ units at Rs 5000-9000 per kg.

The exporters then claimed Rs 400 crore refund of accumulated Input Tax Credit (ITC), the release said, adding that the conspiracy was hatched by 20 export firms from NCR and some units located in Kandla SEZ in Gandhidham in Kutch district.

"The modus operandi indicates a huge over-valuation, to the extent of 3000 per cent, of the market value of goods exported to the SEZ and claiming of refund of Input Tax Credit through fraudulent means," the release said.

The DGGI has identified over 25 suppliers in Assam, Bihar, Delhi, Haryana, Madhya Pradesh and Uttar Pradesh who, without supply of goods, issued fake invoices of more than Rs 1000 crore to the NCR-based exporters to facilitate refunds, the release said.

These suppliers are either non-existent or are being indirectly controlled by the exporters, it added.

"To give legitimacy to the sham transactions, low value goods manufactured in Noida or procured locally in Delhi have been dispatched to SEZ units under cover of invoices," said the release.

"Thus, while Input Tax Credit has been obtained fraudulently from one source, the low value goods have been procured from another source and both the streams have converged at the end of exporters who made highly overvalued supplies to the SEZ units for illegal gains through ITC refund route," it added.

Due to DGGI's proactive steps, ITC refund claims of over Rs 300 crore in the process of getting disbursed to the scamsters have been withheld, the release claimed.

Surplus ITC of over Rs 100 crore, lying in the credit ledger of these exporters, have been prevented from being siphoned off, the release said, adding that illegal export incentives availed by the SEZ units will be probed by the Customs.

Key conspirators have been identified and efforts were underway to apprehend them, it said.