Introduction
No Export But Claim GST Refund is the latest GST scam making headlines in Jaigaon, West Bengal. Local traders allegedly faked exports to Bhutan to claim illegal GST refunds. This blog explains how the fraud works, what the law says, and how businesses can stay compliant.
How Did Jaigaon Traders Fake Bhutan Exports?
- Jaigaon is a key trade town bordering Bhutan.
- Certain supplies to Bhutan are treated as zero-rated exports under GST.
- Unscrupulous traders used fake invoices and bogus transport documents.
- Goods never crossed the border, but refund claims were filed with fake export proofs.
- The government lost crores due to such fraudulent Input Tax Credit (ITC) refunds.
Legal Framework: Export Refund Rules
Relevant Law:
- Section 16 of IGST Act, 2017 — Zero-rated supply includes export of goods/services.
- Refund claims must comply with Rule 96 of CGST Rules — Shipping Bill, EGM (Export General Manifest) and customs clearance mandatory.
- Bhutan trade misuse flagged in multiple CBIC circulars and local customs alerts.
Case Law Reference:
In similar scams, courts have upheld cancellation of GST registrations and prosecution under Section 132 of CGST Act for fake invoicing.
What Are The Penalties For Fake Export Refunds?
If caught:
- Registration cancelled
- Refund amount recovered with interest
- Penalty equal to the wrongful claim
- Possible jail under fraud provisions
Expert Tip:
Never rely on agents promising easy refunds. Always verify that goods physically move across the border. Maintain proper customs documents.
How To Safeguard Against Such Frauds?
- Double-check transport documents.
- Cross-verify customs clearance at border posts.
- Use ICEGATE portal to track shipping bills.
- Engage only registered customs brokers.
- Consult your CA or GST expert for refund documentation.
FAQ: No Export But Claim GST Refund
Q1. Can I claim GST refund without actual export?
No. Physical export is mandatory for refund. Fake export is punishable fraud.
Q2. How does the government verify exports?
Through customs EDI, shipping bills, and matching with EGM data.
Q3. Is Bhutan trade zero-rated under GST?
Yes, but subject to actual physical export and customs clearance.
Key Takeaway
Fake export refunds not only invite heavy penalties but damage business credibility. If you deal in exports — especially border trade like Jaigaon-Bhutan — follow all customs formalities honestly.
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Summary
Jaigaon traders faked Bhutan exports to claim illegal GST refunds, causing huge revenue loss. Learn how fake exports work, legal penalties, and how to stay compliant with proper customs paperwork.