The GST wing seeks strict vigilance over exporters

NEW DELHI: The revenue department has asked the General Directorate of Foreign Trade (DGFT) to perform a stronger control of the star exporters after an investigation discovered that nine top-level commercial houses were not traceable in the addresses mentioned by them.

In addition, 40 of the 241 entities that were scanned declared a turnover of zero to Rs Rs 1 million during 2017-18 and 2018-19, although they were expected to have annual exports of at least $ 3 million (more than Rs 20 Rs million) to be eligible for the state.

Star status entitles exporters to various facilities, including reduced customs inspections. Given the large number of frauds detected by the GST authorities, the Central Board of Indirect Taxes and Customs (CBIC) has now written to the DGFT to continuously seek compliance reports and verification of other regulators or mandate exporters to produce legal records of compliance, including certifications of banks that have not been classified as non-productive assets (NPA) for loan default .

The investigation was carried out after the GST authorities initiated a campaign to take strong action against fraudulent claims of integrated GST. Exporters have been one of the loudest critics of the new indirect tax regime with lobbyists, including the Federation of Export Organizations of India, as well as export promotion councils, repeatedly pointing this out as an important concern, arguing that a refund withholding had increased its operating costs.

The issues are expected to be discussed by the secretary of revenue, Ajay Bhushan Pandey, when meeting with state and central GST officials, as well as representatives of the Central Board of Direct Taxes and the Financial Intelligence Unit, later this week to see new steps to verify fraud On January 2, TOI had reported that the government is looking for new ways to repress GST frauds , including access to bank account details.

Tax authorities said widespread irregularities were noted during the investigation initiated by them. Of the nine star exporters that were not traceable at the registered addresses, in two cases the premises were also sealed and confiscated by the banks, since the exporters had been classified as NPA.

In another case, a garment exporter with more than Rs 50 crore received a reimbursement of Rs 3.9 crore when the total cash tax payment was Rs 1,650. Similarly, cash tax payments were Rs 51,201, while the exporter obtained refunds of Rs 9.6 million rupees. While a portion of the tax payment can be made in cash, the taxes paid on the inputs, which must be offset or reimbursed, can be used to meet the other tax obligations.

However, investigators accuse these exporters of using fake invoices and fraudulent tax credits, which have been collected through the installation of IGST refunds.