Data analytics to curb fake input tax credit claims

NEW DELHI: The Department of Revenue has asked the GST data analysis wing to scrutinise all past and pending refund claims country wide for inverted duty structure, after 931 cases of fraudulent claims were identified using data analytics.

Revenue secretary Ajay Bhushan Pandey is reviewing the matter of fraud input tax credit (ITC) claims on a weekly basis, a government official said, adding that the department will verify and scrutinise taxpayers that have purchased goods from tax evading non-filers.

The direction has been issued to curtail ITC frauds at a time when the government wants to reach tax collection targets of Rs 4.45 lakh crore for the period between December 2019 and March 2020. The move assumes significance since refunds of over Rs 28,000 crore have been filed by over 27,000 taxpayers so far, on account of inverted duty structure in 2019-20.


“Data analytics will be used to look at all refunds since 2017 with the aim to weed out unscrupulous refund claimants or fly-by-night/shell business entities and their modus operandi for availing fake ITC,” the official said.

Data analytics has been used to zero in on fraudulent GST refund claims on many occasions across the country, examples of which were discussed during the second national conference on GST last week, and allowed authorities to identify a few exporters with ‘star’ status—untraceable at their registered addresses—that were fraudulently availing IGST refund through fake invoicing. The official said GST authorities have booked 6,641cases involving 7,164 entities till November 2019 and have recovered around Rs 1,057 crore. Most cases are from the Kolkata zone followed by Delhi, Jaipur and Panchkula (Haryana).

Data analytics was used to unearth a fraud encashment of ITC credits in Delhi where a network of over 500 entities was created comprising fake billers, intermediary dealers, distributors and bogus manufacturers of hawai chappals. The bogus ‘manufacturers’ created in Uttarakhand were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu.