Input tax adjustment: DGI&I IR Islamabad unearths organised tax fraud

The Directorate General (Intelligence & Investigation - Inland Revenue) Islamabad has unearthed an organised tax fraud committed by a sales tax registered importer/exporter for fraudulently claiming input tax adjustment, causing huge loss to the national exchequer. Sources told Business Recorder here on Wednesday that the FIR has been registered against the accused person and others involved in tax fraud as defined u/s 2(37) of the Sales Tax Act, 1990 and related provisions.
According to the details of the case, a credible information was received by the Directorate General (Intelligence & Investigation - Inland Revenue) Islamabad that Kashif Irshad owner of M/s Black Diamond Group, resident of Wah Cantt and others are involved in tax fraud as defined under section 2(37) of the Sales Tax Act, 1990.
Preliminary investigation in the matter has revealed that the said Group is registered as importer/exporter/service provider with Sales Tax Department. The Group is engaged in supplies of coal to different cement manufacturers; however, in order to evade payment of sales tax against supplies of coal, the said firm has fraudulently claimed input tax against import of onions and fake invoices thus causing huge loss to national exchequer.
In order to obtain material evidence purchase/import data and Sales Tax returns of this group were scrutinised in the light of relevant provisions of law, wherein it has been observed that the said firm made imports of onions during the month of Novemeber-2014, involving sales tax amounting to Rs 2,586,982, however said input tax was fraudulently adjusted against supplies of coal to three cement companies. Moreover, the said group made adjustment of input tax amounting to Rs 32,701,996 from tax period December-2013 to September-2014 against fake invoices.
Thus, it is evident from record that Kashif Irshad, owner of the said group, and others are evading sales tax knowingly, fraudulently and dishonestly. In the light of evidence on record and the facts depicted above, there are reasons to believe that Kashif Irshad owner of M/s Black Diamond Group and others have committed tax fraud in terms of section 2(37) punishable under sections 33(11) & 33(13) of the Sales Tax Act, 1990 read with Sections 37A and 37B of ibid, sources added.