A GST refund scam to the tune of over ₹42 crore was unearthed with the Commercial Taxes Department investigating eight such cases, in which at least one person was arrested and produced in court.
The investigation was a collective effort of the Commissioner, Commercial Taxes, and Joint Commissioner, Madhapur.
“The modus operandi was that these people showed auto spare parts purchases, and bringing these spare parts in trucks. Waybills were also produced. They showed that these were assembled as electric bikes. But, what actually happened was that there were no purchases. No transportation was done, and no assembling was done. And there was no sale. All of these were bogus (documents) so that they could claim a 13% refund,” T. K. Sreedevi, CCT, said.
Usually, once the department got wind of what was happening, teams were pressed into service to identify and track the accused. Officers contacted banks and used KYC details to identify and nab them.
The accused allegedly projected that they bought the spare parts which attract 5% GST, and showed that they sold them. Given that sale attracts GST of 18%, they sought to claim a 13% refund.
One of the accused, a director of a company called Vinardh Automobiles Pvt Ltd, was arrested, and produced on Wednesday night in an economic offences court. Efforts are underway to recover the amounts which were claimed as refund, and some headway has been made.
A circular issued on October 9 by Dr Sreedevi states that processing and sanctioning of GST refunds is to be done by Assistant Commissioner or Deputy Commissioner of the circle, irrespective of the amount of refund that has been claimed.
The circular noted that there “are frequent claims of refunds involving huge amounts, it is felt necessary to have a prior scrutiny in such cases by higher authorities before issuing final sanction order by the proper officer”. The rationale behind this was to bring about better scrutiny, and prevent the sanctioning of fraudulent or ineligible refund claims.
