GST fraud | Nearly 1,500 ‘risky exporters’ to face FinMin's wrath over fake IGST refund claims

The Finance Ministry will reportedly take stern action against exporters who claimed refunds under the integrated goods and services tax (IGST) and then absconded. It has also sought to allay genuine exporters that they will face no hindrance.

As many as 1,474 such exporters, termed ‘risky exporters’, claimed IGST refunds worth Rs 2,020 crore, but were untraceable at the addresses mentioned in their applications, sources told the Hindu BusinessLine.

Following the fraud, the refund has been suspended in cases where an adverse report has been found about the exporter or suppliers during verification.

Moneycontrol could not independently verify the report.

The sources added that these exporters include some ‘7 Star’ names – five based in Delhi and one each in Kolkata and Mumbai. Overall, a bulk of the cases – 1,125, are from Delhi, followed by Surat which had 215 cases, Thane (28), Faridabad (15) and Kolkata (11).

Many of these risky exporters were involved in segments such as footwear, mobile phones, floor coverings, wallpapers, wall coverings, leather apparel, ready-made garments, ball bearings or roller bearings, smoking pipes, cigarette holders and plastics.

Three ‘3 Star’ exporters – two from Mumbai and one from Jaipur, unsuccessfully tried to claim Rs 28.9 crore. They were engaged in export of microphones, sound systems, amplifiers, utensils, kitchenware, unstitched fabric, ready-made garments, sarees, dupattas, shrimp and seafood.

Fake exporters fraudulently availed ITC by paying IGST at highest 28 percent rate to encash undue claims quickly and are taking advantage of the fully automated IGST refund system, the sources said.