Several manufacturing units in Sikkim have come under the scanner of the CGST department for allegedly misusing the Scheme of Budgetary Support, 2017, a financial incentive introduced under the GST regime to promote industrial activity in hilly and backward regions.
According to a press release issued by the Siliguri CGST Commissionerate, investigations were launched based on credible intelligence inputs suggesting that multiple units, including large corporate entities, were claiming undue GST refunds far exceeding the permissible limits under the scheme.
What is the Scheme of Budgetary Support, 2017?
The scheme was introduced post-GST to compensate industrial units that earlier enjoyed tax exemptions under the Central Excise Area-Based Exemption Scheme. It offers partial tax exemption based on a prescribed rate of value addition, aiming to promote continued industrial growth in special category states like Sikkim.
However, CGST officials have stated that many firms in the region have manipulated the value addition rate, claiming refunds at inflated rates not sanctioned under the rules.
Rs 1,032 Crore in Suspect Refunds
Preliminary investigations have revealed that the excess refund claims may amount to Rs 1,032 crore. Several companies, during summons proceedings, have reportedly admitted to claiming GST refunds at rates higher than those officially notified.
The department emphasized that only businesses previously eligible under the Central Excise scheme qualify for the new GST-linked support, and any deviation in value addition calculation violates the terms of the 2017 scheme.
Ongoing Investigation
The Siliguri CGST Commissionerate confirmed that detailed audits and inquiries are ongoing and further action will be taken based on findings. If irregularities are conclusively established, the entities involved could face recovery proceedings, penalties, and potential prosecution under the GST Act.
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