The Belapur Central GST Commissionerate captured two traders for allegedly floating more than 50 shell companies to deceitfully to benefit IGST refunds after GST council as of late issued rules to control refund related frauds, people in the know told ET..

Sources said Ajay Gopinath Mishra and Ramesh Chandra Bhatt profited IGST refund by indicating fare of textile goods over Rs 350 crore and gathered IGST refund of over Rs 50 crore between January and May. The said amount was discounted by the traditions to these exporters at the port of export.

“The IGST was paid utilizing input tax credit (ITC) which has been observed to be deceitful,” said one of the authorities.

An authority clarified that non-existent providers issued invoices for going of the ITC used for payment of IGST on exported goods and IGST refund is guaranteed. These organizations were made by utilizing the PAN and Aadhar Cards of different un-suspecting people through whom GST refunds were being claimed.

“For this situation as well, the Belapur Commissionerate authorities uncovered a syndicate of more than 50 organizations, for example, H.A. Creation, A.S. Fashion, Ritiesh Creations, R.D. Creation, Bamane Enterprises were drifted to falsely get advantages of IGST refunds,” revealed the authority. “Nobody has really paid the IGST on which ITC was benefited by the exporter.”

During investigation, a source stated, the bank accounts declared to the department at the time of getting GST registration certificate were supposedly not quite the same as the bank account declared to the Customs specialists with the end goal of IGST refund. The probe additionally uncovered that while a large portion of the suppliers and CHAs are situated at Delhi, the premises of dummy exporters are registered in Mumbai.

Besides, reports, for example, purchase documents, export documents, cheque books, signed blank cheques, ATM debit cards and PIN of around 50 ownership firms were recovered from the workplace premises of the mastermind.

“Both the people in their announcement have conceded that they were the custodian of the bank documents of all the ownership firms,” the authority further added.

“The investigations has uncovered that fictitious providers issued invoices for passing of the ITC which was used for payment of IGST on exported goods and claiming IGST refund of the same. This reality was additionally collaborated by the discoveries that none of the providers down the line have produced compulsory E-way Bills for the purported supplies made to the exporters. Hence whole ITC profited by the exporters was discovered deceitful,” said Shrawan Kumar, Commissioner, CGST.

Earlier in June the Central Board of Indirect Taxes and Customs (CBIC) asked director general (systems) to distinguish a list of “risky exporters” and share it with customs and GST officials. From that point CBIC issued a circular dated June 17, 2019 giving a time bound system to check the IGST payments for goods exported out before sanctioning IGST refund in suspicious and risky cases.

“The new mechanism would guarantee that such cheats are curbed while facilitating real exporters,” included Kumar.

For more details or queries, please contact Certicom Consulting.