DRI Busts 2000 Crore Surat SEZ Diamond Hawala Scam The Blunt Times
The DRI busted a ₹2,000 crore hawala scam involving diamond firms in Surat SEZ, utilizing fraudulent ITC claims.
A massive ₹2,000 crore hawala scam has been unearthed by the Directorate of Revenue Intelligence (DRI) in Surat Special Economic Zone (SEZ), implicating several diamond companies. The scam involves fraudulent availment and utilization of Input Tax Credit (ITC) on zero-rated supplies. Investigations revealed that these firms were involved in overvalued or bogus import-export transactions to generate undue ITC. The modus operandi included creating shell companies to route transactions and inflate the value of goods. Authorities are now scrutinizing the documentation and digital evidence seized during the raids to identify all the individuals and entities involved. Provisional attachments of properties are expected as the investigation progresses, potentially leading to prosecution under Section 69 of the CGST Act.
Section 69 of the CGST Act empowers authorities to arrest individuals involved in offenses where the amount of tax evaded exceeds a specified threshold. The fraudulent availment and utilization of ITC can trigger prosecution under this section. Non-compliance can lead to imprisonment and penalties, depending on the severity of the offense.
The scale of this scam indicates a systemic issue with ITC verification processes within SEZs. CAs and CFOs should conduct thorough due diligence on all transactions, especially those involving zero-rated supplies, to mitigate the risk of inadvertently participating in fraudulent schemes. Tax authorities are likely to increase scrutiny on SEZ transactions, potentially leading to more audits and investigations.
This scam highlights the vulnerabilities in the GST system regarding ITC claims and the potential for misuse in SEZs, requiring stricter compliance measures.