Fraudsters use handpumps to evade GST
A scam has been unearthed in Uttar Pradesh with fraudsters using hand pumps for claiming fake refunds using Inverted Duty Structure (IDS) under GST mechanism.
Taxes on inputs can be deducted from tax on final product and net is deposited with the government. However, this is not possible under IDS, where inputs attract tax at higher rates while it is lower for final product. So, under IDS, taxpayer gets refund. Very few goods under GST fall into IDS category and hand pump is one of them.
According to Sanjay Kumar Agarwal, Chairman of Central Board of Indirect Tyaxes & Custom (CBIC), Lucknow Zonal Unit of Directorate General of GST Intelligence (DGGI) booked a case after officers gathered that three Agra based taxpayers were availing fake Input Tax Credit (ITC) on the raw material allegedly for manufacturing hand pumps. “The fake ITC on raw materials (attracting GST at 18 per cent) was further used to issue fake invoices of hand pumps (attracting GST at five per cent) to non existent entities without any actual manufacturer and supply,” he said in a communication to all the officers and staff of CBIC.
