New Delhi, June 11 : In a major crackdown, the Central Goods and Services Tax (CGST) department has launched an in-depth investigation into multiple manufacturing firms operating in Sikkim over alleged fraudulent claims amounting to ₹1,032 crore under the Budgetary Support Scheme of 2017. These companies are accused of inflating their GST refund claims by manipulating the value addition criteria, a core requirement under the scheme.
The Budgetary Support Scheme was designed to encourage industrial growth in states like Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, and other parts of the northeastern region.
Misuse of the Budgetary Support Scheme, 2017
The scheme was introduced after the implementation of the Goods and Services Tax (GST) to partially compensate industries in remote and economically backward regions like Sikkim. Previously, such companies benefitted from full tax exemptions under the Central Excise Area-Based Exemption Scheme. Post-GST, the government shifted to a refund-based approach, where eligible firms could claim partial tax reimbursement based on the value they added during the manufacturing process.
However, the CGST department has found that several firms significantly overstated their value addition figures to wrongfully claim higher refunds than permitted. This misrepresentation violates the scheme’s conditions and points to systemic misuse by both large and medium-scale enterprises.
Admissions and Ongoing Audits
According to the CGST Commissionerate in Siliguri, the scam came to light through intelligence-based surveillance. Subsequent inquiries revealed that some of the companies— including notable names— had indeed accepted to overclaiming refunds beyond government-notified rates. The department is currently auditing financial records with increased scrutiny.
Possible Repercussions and Legal Actions
If the allegations are confirmed, the companies involved may be required to repay the excess amount and could face substantial penalties under GST law. Legal proceedings may also follow, depending on the severity of the violations uncovered during the audits.
Call for Stronger Compliance Frameworks
Tax experts have stressed the need for tighter enforcement mechanisms and better transparency in refund processing to prevent abuse of government support programs. The Budgetary Support Scheme was envisioned as a lifeline for businesses in underdeveloped regions, and its exploitation undermines both policy objectives and fiscal discipline.
The CGST department has affirmed its commitment to pursuing all violators and reinforcing compliance checks to safeguard public revenue.
