In a first of its kind case, the Officers of DGGI, Nagpur Zonal Unit, Nagpur busted a massive racket of Fraudulent Refunds of Input Tax Credit of Rs 213.87 Crores by three non-existent entities based at Nagpur with multiple searches at Nagpur commencing from the 1st of July,2021. Searches were conducted at various places in Nagpur on the basis of specific information regarding the operation of a fake invoices racket at Nagpur whereby some non-existent entities acting as exporters were making dubious â€œexportsâ€™â€™ of Tobacco products from the ICD, Mihan, Nagpur on the strength of which they were obtaining fraudulent refunds of accumulated ITC amounting to hundreds of Crores from CGST Division, Hingna, Nagpur I.
During the course of these searches at the declared PPOBs of these entities, all the three entities were found to be non-existent and they existed only on paper and had no physical existence. In a short span of three months after obtaining Registration, these three non-existent entities had filed Shipping Bills and shown export of a common product i.e Smoking Mixtures for Pipes and Cigarettes (24031910) attracting inter-alia GST @ 28 % and Compensation Cess @290 % on which they had filed refunds of accumulated ITC amounting to Rs 213.87 Crores.
During the extensive investigations, it has been found that there is a mastermind behind the creation of these three non -existent entities which have been floated to first carry out dubious â€œexports and then to claim fraudulent refunds. Some leads regarding the identity and location of the mastermind behind the racket have been obtained and are being explored.
Out of the above refunds, refunds of Rs 123.97 Crores had already been sanctioned CGST Division, Hingna, Nagpur I by the first week of June,2021. However, timely intervention by DGGI, Nagpur Zonal unit has resulted in damage control by stopping the balance refunds of Rs 89.90 Crores filed by these entities just prior to their sanction.
An important fact which has emerged during the investigations is that this racket may not be confined to just these three non-existent entities. It appears that some more similar entities have been floated, all in a particular jurisdiction, to first carry out dubious â€˜exportsâ€™ and then to claim fraudulent refunds. This investigation is being carried out simultaneously.