Directorate of Intelligence & Investigation, Inland Revenue, Lahore on Tuesday arrested managing director, chief financial officer and director of an electronics company allegedly involved in massive sales tax evasion/tax fraud.
It is learnt that acting upon a credible information pertaining to massive sales tax evasion/tax fraud tax committed by M/s Orient Electronics (Pvt) Ltd (company) by way of under-declaration of value of supply of its products/taxable goods and parking of additional amount (actual receipt - declared receipt) of consideration received against actual value of supply in a bank account titled M/s Bismillah Trading Corporation (M/s BTC), at a bank, the Directorate of Intelligence & Investigation, Inland Revenue, Lahore initiated investigations against the said companies and their connivers under section 38 read with proviso of section 25(2) of the Sales Tax Act, 1990 with the approval of the competent authority.
Investigation in the matter revealed that the above-said bank account was maintained in the name of two employees of company but actually operated by Talat Mehmood, Managing Director of the said company of Lahore. Further investigations in the matter revealed that more bank accounts in the name of dummy businesses & employees of the company were also opened & maintained which were / are actually operated by the managing director.
It was further revealed that the company is engaged in suppression of value of supply / under declaration of value of supply of its goods during the period from July 2008 to June 2013 and is involved in evasion of tax by making payment of sales tax & extra tax and special excise duty thereon suppressed prices of its goods / articles without mentioning the trade discount. The CEO/MD of company has been involved in maintaining and operation of five benami bank accounts wherein suppressed sale proceeds amounting to Rs 6,610,560,917 were parked.
The company during the period from 01-07-2008 to 30-06-2013 has declared value of supply amounting to Rs 33,617,059,899 in the sales tax returns against actual value of supply amounting to Rs 56,299,214,332 worked out on the basis of available price lists of its products, thus, company has suppressed sale prices/value of supply amounting to Rs 22,682,154,433, on which sales tax & extra tax come to Rs 3,882,153,009 as per the provisions of section 2(46) (a) & 2(46)(b) read with section 2(28) and section 3 of the Sales Tax Act, 1990 and chapter-XIII of the Special Procedure Rules, 2007 besides special excise duty amounting to Rs 150,296,736 comes in terms of section 3A of the Federal Excise Act, 2005. Assessment order No 03/2016 dated 16.03.2016 has been passed by the DCIR LTU Lahore wherein company has been directed to pay evaded amount of sales tax amounting to Rs 3,710,295,446, extra tax amounting to Rs 171,857,553 and special excise duty Rs 150,296,736 (total Rs 4,032,449,744) under section 11(2) &11(3) of the Sales Tax Act, 1990 and section 14 of the Federal Excise Act, 2005 along with default surcharge under section 34 of the Sales Tax Act, 1990 and section 8 of the Federal Excise Act, 2005 (calculated at the time of recovery).
A penalty of 100 percent of the amount of sales tax involved was also imposed in terms of section 33(13) of the Sales Tax Act, 1990 and five times duty under section 3(c) of the Federal Excise Act, 2005 being involved in commission of tax fraud. Substantial material evidence so collected during the course of investigations are in the shape of chain of evidence which beyond any shadow of doubt confirms that the management of company of Lahore in connivance with their buyers, abettors/connivers & others etc have suppressed value of supply/under declared value of supply of its goods during the period from July, 2008 to June, 2013 and is involved in evasion of tax by making payment of sales tax & extra tax and special excise duty thereon on suppressed prices of its goods/articles without mentioning the trade discount, if any, on sale invoices, hence, committed tax fraud as defined under section 2(37) of the Sales Tax Act, 1990.
According to the policy devised by Khawaja Tanveer Ahmed, the Director General, that tax evaders should be sent before the Court for trial, FIR No 01/2017 dated 08.05.2017 has been registered against Talat Mehmood, Managing Director, Ahmed Fazil, & Mian Abdul Rehman Talat , Directors, of company, Aleem Amin, Chief Financial Officer / Head of Finance of the Company, Muhammad Tariq Khokhar S/o Khair Muhammad Lahore, Nazimud Din Qamar S/o Qamar ud Din Assistant Manager Sales, of company, Adeel Khokhar S/o Muhammad Tariq Khokhar Lahore and their buyers, abettors / connivers & others etc.
On the same day, Talat Mehmood, Managing Director, Abdul Rehman Talat, Director, and Chief Financial Officer of company of Lahore have been arrested, by the Lahore Directorate, being involved in the subject case. Facts/Grounds of arrest have accordingly been served to the accused persons. The above said accused person were produced before the honorable Court of Special judge Customs Excise and Taxation Lahore where the Court has granted physical remand for three days for recovery of material evidence. The investigations are under way. The Director General applauded the efforts of Lahore Directorate and advised for early completion of investigations.
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