DGARM also known as Directorate General of Analytics and Risk Management, is a Goods and Services Tax (GST) to expose tax evaders, compiled a list of more than 12,900 businesses, including large companies and export firms suspected of using credit card inputs (i -ITC) with fake invoices costing more than Rs 1 lakh crore since July 1, 2017, when a new indirect tax regime was introduced, said people familiar with the development.
DGARM has captured thousands of suspicious objects carried by business organizations between July 1, 2017 and March 31, 2020 and shared information with investigators to take action. Based on such interventions, the government launched a major anti-GST fraud campaign three weeks ago and arrested 104 people, said three officials, demanding anonymity.
“The data includes the names of some of the largest companies and expatriates,” said one official, without elaborating as an investigation into the wrongdoing of those organizations continues.
The initial estimates suggest that unscrupulous individuals and entities have been defrauding the government of more than Rs of GST in revenue since July 2017, a second official said.
The exact amount of GST fraud perpetrated by the 12,900 organizations is uncertain immediately as inspection is still going on for the matter, in response to a question from Lok Sabha, the total GST related evasion and Rs 70,206.96 crore between July 2017 and January 2020 was estimated. In addition, Rs 34,591.21 million had been recovered. West Bengal Finance Minister Amit Mitra in August last year wrote a letter to Union Finance Minister Nirmala Sitharaman stating that all GST fraud may have already exceeded the Rs 1 lakh crore mark from July 2017. “The DGGI [Directorate General of GST Intelligence] has begun taking action with encouraging results,” said a second official. A national campaign, launched about three weeks ago, has resulted in the arrest of more than 100 people and 1,161 cases booked by 3,479 illegal organizations obtaining GST registration fraudulently. These fraudulent organizations were illegally using or transferring tax debt, he added.
Hence, the government has decided to physically verify all those organizations that have obtained GST registration without providing Aadhaar details between August 21, and November 16, 2020. Experts say the government should look into tax avoidance. Abhishek A Rastogi, a partner with the law firm Khaitan & Co, said: “The government is working on ways to combat the track record of taxpayers who are likely to use unintentionally or unintentionally indebted debt. While this relocation will follow up on a number of cases where a debt may have been incurred, it is likely that the actual transaction may need to be investigated further. As such, it is advised that businesses must be extremely careful and efficient when purchasing goods from retailers. Rastogi has been opposed to various claims on such invoice issues. The aforementioned officials agreed with the measures to punish the unfaithful. On Jan 23 the finance department issued a circular according to that, all sectors of the GST were requested to complete within 14 days the verification of all foreign traders who are found to be making a loan through GST refunds integrated into the sale of goods. It has been found in many cases where ITC is demanded by exporters on the basis of counterfeit invoices and IGST in export is paid through such ITC, according to this circular, officials said.