Introduction of manual checks in IGST refunds aimed at preventing unscrupulous exporters from defrauding the exchequer

CBIC would assure all genuine exporters that they would continue to get their IGST refunds in a timely manner in a fully automated environment

Some newspapers have today highlighted a perceived set-back to the automated process of refunds for exporters under GST on account of the introduction of manual checks to curb large scale frauds in IGST refunds. These news items regrettably create a misleading impression that genuine exporters would suffer on account of the newly introduced verification process.

The CBIC has recently instructed its Customs and GST formations to verify the correct availment of input tax credit (ITC) by few exporters who are perceived as “risky” on the basis of pre-defined risk parameters. Only 5,106 risky exporters have been identified so far as against about 1.42 lakh total exporters.  Thus the risky exporters are only 3.5% of the total exporters.  Further, in the last two days i.e. 17.06.2019 and 18.06.2019 only 1,436 Shipping Bills filed by total 925 exporters have been interdicted. Considering that about 20,000 Shipping Bills are filed by roughly 9,000 exporters on a daily basis, the intervention is negligible.  Even for these risky exporters, the exports are allowed immediately. However, the refund would be released after verification of ITC within a maximum of 30 days.

The new verification exercise is aimed at preventing unscrupulous exporters from defrauding the exchequer and bringing a bad name to the larger exporting community.  CBIC would like to assure all genuine exporters that they would continue to get their IGST refunds in a timely manner in a fully automated environment.

IGST refund verification: targeted manual checks delay refunds pending ITC verification but exports continue for risky exporters. Targeted manual verification requires assessment of correct availment of input tax credit for exporters flagged as higher risk under pre-defined parameters. Identified risky exporters have their refund claims held pending ITC verification while exports are allowed to proceed immediately; refunds for these cases are released only after verification within a defined verification timeframe. The measure is framed as an anti-fraud safeguard with assurance that genuine exporters will continue to receive IGST refunds via the automated system.