This is being weekly reviewed and monitored by Revenue Secretary Ajay Bhushan Pandey.
The sources said that to curb input tax credit (ITC) frauds, data analytics is to be done on all refunds since 2017, keeping an eye on the modus operandi of unscrupulous refund claimants or fly-by-night or shell business entities for availment of fake ITC.
GST formations have booked 6,641 cases involving 7,164 entities till November last year and have so far recovered around Rs 1,057 crore.
The highest number of such fraud cases have been booked in Kolkata zone, followed by Delhi, Jaipur and Panchkula (Haryana), the sources said adding that a recently detected fraud by central tax authorities in Delhi, involving GST refund for inverted duty structure, was deliberated at the 2nd National Conference on GST last week.
The sources also said investigators in Delhi have busted through data analytics a significant fraud case, where fraudsters created a network of over 500 entities comprising fake billers, intermediary dealers, distributors and bogus manufacturers of hawai chappals for availing and encashing fake ITC credits.
The bogus 'manufacturers' created in Uttarakhand were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu.
The raw materials for the chappals, known as EVA compound, are chargeable with 18 per cent duty whereas chappals are chargeable to GST of 5 per cent, sources said adding that resultantly, law allows the manufacturers to claim refunds of the inverted duty structure in cash.
GST investigators found an ongoing parallel investigation in Uttarakhand to be connected and took swift action in preventing refund claims of Rs 27.5 crore. Through meticulous cyber-planning, fraudsters had created over Rs 600 crore of 'fake credit', which they would have continued to encash had it not been busted. The main accused in this case was arrested in December and continues to be on judicial remand.
It was also through data analytics that recently, GST formations have identified a few exports with 'star' status that were fraudulently availing IGST refund and were untraceable at their registered addresses.
In these cases, an exporter with over Rs 50 crore of exports of readymade garments has taken refund of Rs 3.90 crore, while the entity's total GST payment in cash was merely Rs 1,650.
In another case, tax payments in cash have been found at Rs 51,201 while the exporter has obtained refund of Rs 9.59 crore.
The GST data analytics wing has been able to identify all such cases involving fake invoicing and fraudulent tax credits, which have been encashed through the facility of IGST refunds, the sources said.
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