FBR to depute officials at all sugar mills

ISLAMABAD: Federal Board of Revenue (FBR) has decided to depute Inland Revenue (IR) officials at all sugar mills across the country to monitor production, sales, and stocks of the commodity during crushing season.

In this regard, FBR has communicated lists of sugar mills to the relevant Large Taxpayer Offices (LTOs) here on Thursday. The officers of the Inland Revenue Service (IRS) would be posted to monitor the production, sale, and stock position of sugar under section 40B of the Sales Tax Act, 1990, at the manufacturing/business premises. The crushing season of sugar starts in November and ends in March and earlier, the government relied on the industry’s statistics for sugar production. However, after the introduction of the Track and Trace system, the FBR is getting real-time data on the sugar production of each sugar mill.

The FBR said that initial stock taking shall be conducted by the officials deputed on each sugar mill. The data included opening stock of sugar and opening stock of molasses. The start and end date of production of each sugar mill shall be recorded.

Sugar mills: PM orders CCTV surveillance

“The number of trolleys, which enter the sugar mill, and the weight of sugar cane unloaded at each sugar mill will be recorded on daily basis,” FBR said.

“The IR officials would also record production of sugar and lifting of sugar on daily basis.

The IR officials would record the production capacity of sugar and storage capacity of each sugar mill. In this regard, proper affixation of track & trace stamps shall be ensured and invoices to be entered in “STRACK” portal on daily basis,“ FBR directed the LTOs.

The FBR has further directed the LTOs that an officer may be nominated as focal person who shall ensure presence of officials at each sugar mill within his jurisdiction; report production of sugar and lifting of sugar to the Board on daily basis; ensure proper filing of sales tax return including Annexure-J of sales tax return by each sugar mill and cross match sugar production and lifting data captured through 40B with sugar production and lifting reported by sugar mills in monthly sales tax returns.

“The IR officials are initially posted on sugar mills till November 30, 2024,” FBR’s instructions to the LTOs added.

Moreover, Prime Minister Shehbaz Sharif has ordered strict action against sugar mill owners and dealers along with CCTV surveillance to prevent hoarding and price manipulation.

With sugar crushing season scheduled to begin on November 21, the PM directed FBR, Federal Investigation Agency (FIA) and Intelligence Bureau (IB) to take joint action against sugar mills and dealers involved in tax evasion, undocumented sales, and price hikes in sugar sector.

Following the directives by the PM to tighten the noose around the sugar mafias, a notification was issued directing FBR, FIA and IB to ensure prevention of sales tax evasion in sugar industry.

The cameras will monitor the production process and stockpiling of sugar, ensuring GST payments are made and price hikes are prevented.

Details of the case revealed that Federal Tax Ombudsman (FTO) claimed to be found illegal use of dormant account of a retired armed forces personnel where fictitious supply of worth Rs. 1.625 trillion were made causing sales tax loss of Rs.292.549 billion and further tax of Rs235.340 billion.

However, the investigation confirmed that actually fake inputs of only Rs 380 million was made which was stopped by the tax department. The culprits have been arrested in the said case.

During the last few days, Directorate General of Intelligence and Investigation Inland Revenue worked day and night on this specific case and finally arrested the involved culprits.

The facts of the case are that the FBR’s internal scrutiny and data analysis team detected the Instant significant tax fraud in March 2024, which was promptly communicated to all relevant field formations by AJaz Hussain, Chief (IR Analysis) FBR prior to complaint lodged in the matter before FTO.

The cases are related to three different complaints filed with the FTO.

RTO-I Karachi on aforesaid report had already taken cognizance of the matter agitated in complaint and an FIR No. 01/2024 was registered.

The two accused persons were nominated in FIR on the basis of the fact that fraudulent sales tax returns have been filed from internet connections installed in their names.

In his findings, the FTO has found the accused as innocent on flimsy grounds which is immature as the investigation are still carrying and their innocence is not verified till now.

Another complaint was filed by a 79 years old lady living in Dubai) on account of misuse of her login ID/password to file fraudulent sales tax declaration in her name is also connected with the aforementioned FIR No. 01/2024 dated 26-03-2024 registered by RTO-I, Karachi. It is alleged in the FIR that fake input of Rs. 238.334 billion has been utilized/declared by accused footwear firm on account of purchases from M/s Safa International and Gravity Traders.

It has been confirmed from supply chain data provided by PRAL, fake input tax of only Rs. 381.698 million passed on in both supply chains to end users out of total 252.992 B i.e., 99.9% fake input deterred/blocked through enforcement measures.

Figures of Rs 520 billion reported in media by the FTO spokesman is highly exaggerated and factually incorrect. Further Tax of Rs. 235 billion, although shown in FTO order in complaint no. 1 based on fake declarations of the complainant but question of passing on of its incidence in supply chain does not arise as 99.9 % fake input tax blocked/deterred by FBR authorities.

FTO’s findings/ recommendations in the instant Complaint are that no maladministration has been found on the part of FBR. Further, the FTO has recommended to restore registration of the complainant as per law. Again, investigation is still going on and the said comments have yet to be finalized.

On the basis of technical data/ evidence and statement of witness, the accused Sheraz was finally arrested by the Directorate General Intelligence and Investigation Inland Revenue Karachi and after taking remand ample evidence has been collected which shows the whole has been committed by said Shiraz.

In the third case, the inquiry in the instant matter has also been initiated by Directorate of I&I-IR, Karachi to identify culprits in the instant scam of Rs. 7.75 Billion. Scrutiny of data provided by PRAL is underway and there exists strong likelihood of similar breakthrough in this case as well.

Copyright Business Recorder, 2024