The government on Monday admitted that GST refunds of some ‘Star exporters’, among thousands of others, are being withheld and cited pending verification of their KYC and other details for it.

“As of now, (GST) refunds of only Rs 3,604 crore are pending with the Customs and out of about 185,000 exporters, a total of 6,421 exporters (about 3.4% ) including some ‘Star exporters’ have been identified as risky and hence, red-flagged,” the Central Board of Indirect Taxes and Customs (CBIC) said. It added that some Star exporters aren’t traceable at the addresses given by them.

FE reported on Monday that GST refunds of thousands of exporters, including nearly 250 units with Star Export House tag, remained withheld, after the GST verification system had identified them as ‘risky’ — which means that they could potentially be involved in fraudulently availing input tax credits (ITCs).

Star Export House exporters are certified by the government on the basis of export performance (Rs 15 crore to Rs 5,000 crore FOB in the current and three preceding years). They are extended certain benefits including customs clearance on self-certification basis and exemption from furnishing bank guarantee under certain schemes.

“These (6,421) exporters are being subjected to KYC and verification process before the grant of refund. It may be noted that the verification so far has revealed that 1,241 exporters are not traceable at their given addresses, which include 8 ‘star exporters’. In addition, adverse verification reports have been received in the case of 399 exporters, which also include 4 ‘Star exporters’,” CBIC said.

It is learnt that the verification process is still going on in the case of 160 Star Export Houses and refunds have been blocked for over 100 of them. Sources from the exporter community say that the firms which are facing the problem of delayed refunds include large and established ones, who are unlikely to resort to fraudulent means to get undeserved refunds. The verification system, according to these sources, is slow-moving and militates against natural justice.

The CBIC, however, said that while it is focusing on quick disbursal of pending refunds to exporters, it has to use data analytics to identify “risky” exporter entities that take input tax credit fraudulently and monetise it by paying IGST and taking refund thereof or taking refund of the accumulated ITC. It further said that the exporters have already been paid IGST refund of over Rs 1.12 lakh crore and over 83,500 exporters have been benefited by these refunds. “This shows that the government’s efforts to fast track refunds under GST especially to exporters are yielding results,” it said. Additionally, the department said that 77% of India’s exports have been under Letter of Undertaking (LUT), which are unaffected by the verification exercise being done by the CBIC officials.

“Moreover, even in respect of exporters identified as risky, the government is taking all necessary steps to expedite the verification. At the same time, the government remains concerned about the misuse of the facility of ITC credit and refunds by few unscrupulous exporters,” it said.

Published On : 31-12-2019

Source : Financial Express