Frauds prompt government to act tough on errant exporters : 19-06-2019

The government has decided to crack down on errant exporters who it suspects have been showing inflated exports and low income, as well as those who have been claiming fraudulent integrated GST (IGST) refunds. 

On Monday, it issued instructions to clamp down on the fraudulent GST claims and is working on a new “risk management system” under which the income disclosed in the tax returns will be matched with the value of consignment being shipped out of the country. “The idea is to use technology and ensure that it does not impact genuine exporters,” an official told TOI. 

The revenue department suspects that a large part of the misuse is confined to small companies, which over-invoice imports, to remit funds overseas and also inflate the value of export consignments to claim higher benefits under export promotion schemes such as Merchandise Exports from India Scheme (MEIS). A recent seizure showed that diamonds worth Rs 1 crore was valued at Rs 150-odd crore, prompting action against some senior officers. 

Estimates suggest that 80% of the exports from the country are made by 2,000 entities. For new players, a separate system may be devised to ensure that the risk management system does not impact their shipments, sources said. 

On June 3, TOI had reported that the revenue department is probing a large-scale mismatch in GST returns and will soon begin a crackdown. On Monday, the first step was initiated by the Central Board of Indirect Taxes and Customs (CBIC). 

“Exporters have availed ITC (input tax credit) on the basis of ineligible documents or fraudulently and utilised that credit for payment of IGST on goods exported out of India. It has also been observed in several cases that there is huge variation between the freight-on-board value declared in the shipping bill and the taxable value declared in GST return, apparently to effect higher IGST payout, leading to encashment of credit,” CBIC said in a note on Monday. 

The circular said the GST policy wing will devise a standard operating procedure (SoP) for officers to verify the IGST refund claims. GST officers will report to the chief commissioner of central tax in 30 days, specifying whether the amount of IGST paid and claimed/sanctioned as refund was in accordance with the law or not. 

The chief commissioner of central tax will then share the report with customs port within five working days. 

Source : PTI