Intro Paragraph:
The recent ₹30 crore import/export fraud in Delhi has once again highlighted the growing scrutiny of cross-border trade under Indian tax laws. Understanding import export tax fraud risks is essential for traders and businesses involved in global trade to avoid severe penalties, GST issues, and arrest.
What Happened in the ₹30 Crore Delhi Fraud?
- Suspect used dummy directors and Aadhaar cards of low-income individuals
- The CBIC’s Directorate General of GST Intelligence (DGGI) cracked down using real-time data
Why Is Import Export Tax Fraud a Major Risk?
India’s tax system has tightened significantly, especially in the GST and customs space.
Here’s why:
| Trigger Point | Risk Under Law |
|---|---|
| Fake invoices or shipping bills | GST refund denial, penalty under Section 122 CGST Act |
| Wrongful ITC claim | Reversal with 24% interest and ₹10,000+ penalty |
| Dummy firm/directors | Prosecution under IPC, PMLA, and CGST Act |
| Misuse of IEC/Customs declaration | Action under Customs Act + alert to DGFT |
| Not matching with E-Way Bill data | Red flags during GST audit and refund processing |
| Bank account linked to fraud | Attachment under Section 83 of CGST Act |
| Aadhaar misuse for GST registration | Cancellation of GSTIN + criminal case under IPC |
Legal Provisions Referenced
- Section 122, CGST Act: Penalty for issuing invoices without supply
- Section 132, CGST Act: Imprisonment up to 5 years for fraud > ₹5 crore
- Section 83, CGST Act: Provisional attachment of property
- Section 11, Customs Act: Action on prohibited goods or false declarations
- PMLA, 2002: Money laundering charges in large-scale frauds
How Can Genuine Traders Avoid Trouble?
✔️ Register only with verified credentials (PAN, Aadhaar, address proof)
✔️ Use genuine invoices, no inflated values
✔️ Match shipping bills with ICEGATE and GST returns
✔️ Maintain a clean vendor and buyer list
✔️ File correct refund claims backed by shipping and banking evidence
✔️ Conduct due diligence before taking input credit
✔️ Hire experienced tax professionals to handle exports and GST
Expert Tip:
“Cross-verifying refund eligibility and matching GST filings with ICEGATE portal and EDI data is now non-negotiable for exporters.” — Efiletax Compliance Team
Summary
The case highlights rising DGGI scrutiny and the need for genuine traders to ensure clean documentation, correct GST refund claims, and IEC compliance to avoid severe penalties.
FAQs
Q1. What happens if GST refund is claimed on fake exports?
CBIC can reject the refund, initiate penalty under CGST Act Section 122, and prosecute under Section 132.
Q2. Can GST registration be cancelled for Aadhaar misuse?
Yes, if Aadhaar is fraudulently used for registration, the GSTIN can be cancelled and criminal charges filed.
CTA (Closing Line):
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