A GST credit of approx INR 40,000 crore has been iced-up by the Central Board of Indirect Taxes and Customs (CBIC) on the grounds of GST returns mismatch 
At an event, John Joseph, Chairman, CBIC told that the indirect tax wing of the revenue department clogged the tax credits within four hours.
Government of India (GOI) has entrusted rights to the companies to claim the credits on tax which they paid on inputs or raw materials in the production process to avert the cascading effect of taxes, however, big disparities in returns and cases of an extensive number of frauds made the government to hold this right of companies.
Fraudulent practices have been executed in multiple ways. According to the sources, the department had encountered mismatches of above 20% in the lead-in filing of GST Return 1 for the month and the finishing filing of GSTR-3B returns.
However, the percentage of discrepancies was reduced to 10% and the GOI adopted many measures to discover such fraudulent companies. This time, no tax inspectors were sent to the business premises to dig out the books and only data-based inspection was done.
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The Revenue Department has formed a standard operating process, according to which the data has to be shared with the state government, this seeks correction or pays up in the initial stage.
The benefits were misused by the various fly-by-night operators, as disclosed when the data was scrutinized. Many companies established with an intention to claim bogus input claims by showing fake turnover and forged documents. These entities relied on an array of shell companies and suddenly went out of the picture, in the wake of which the GOI made the GST registration process
“In many cases, it has been found that traders purchased iron and steel scrap but raised GST bills for garments to exporters, who in turn claimed refund of IGST (integrated GST) paid on export,” stated a tax lawyer.
