Fake exports to Afghanistan: FBR unable to identify officials involved in illegal refunds

The Federal Board of Revenue is unable to identify tax officials involved in fake exports to Afghanistan for claiming fraudulent refunds and rebates worth billions of rupees. Sources told Business Recorder on Tuesday that the National Accountability Bureau (NAB) has taken the record of fake cases of Kabir Aluminium and Faqir Food Grain.
The FBR wanted to determine the role of officials of refund section of sales tax collectorate, Peshawar by clearly fixing responsibility for issuing illegal sales tax refunds to these units. An inquiry committee was constituted to submit the fact-finding report to the board. The inquiry committee was requested to obtain relevant record from the concerned quarters.
However, the chairman of the inquiry committee indicated non-availability of relevant record as the same has already been acquired by the NAB authority for future investigation. The bureau has also shown interest in both these cases related to fake exports to Afghanistan.
The chairman of the inquiry committee has suggested awaiting the outcome of NAB investigation and then taking up proceedings against these units. However, board has conducted its own investigation for completion of adjudication proceedings against these companies. Besides these two cases, 10 other big cases are under investigation for which audit is being done to check fake exports to Afghanistan.
Sources said that sales tax officials may be suspended during ongoing investigation pertaining to exports made upto 2005-2006. During thorough checking of suppliers involved in the entire chain, it was detected that 90 percent of the supplies made by these companies were fake for claiming wrong refunds and rebates.
It has been investigated that fake companies were made to claim bogus refunds and rebates in connivance with the sales tax officials in the past. 'Input suppliers' from whom the exporters have purchased the goods have been probed as well. It was observed that fraudulent refunds and rebates were claimed without actual exports of plastic crockery, aluminium products, toffees, bubble gum and other items to Afghanistan.
Directorate General of Inspection and Internal Audit had investigated two cases where a company dealing in aluminium products and a food grain dealer claimed huge amount of refunds and rebates on the exports of certain items to Afghanistan. Both the units have abnormal tax profiles based on the record available with the department. Refunds were usually claimed on the exports of plastic crockery, toffees, vegetable ghee, bubble gum and other items, which were comparatively consumed less in Afghanistan.
Sources said that a company dealing in aluminium products had wrongly claimed huge amount of sales tax refund. Secondly, a food grain dealer of Peshawar claimed sales tax refund of Rs 41.5 million on the exports of plastic crockery, aluminium products, toffees, bubble gum, soap, paint, water tank and vegetable ghee to Afghanistan through Torkham border.
The investigations revealed that most of the suppliers have denied supplying these items to the food grain dealer. It is a case of 'paper shipment' where refunds were claimed on mere paper transactions without actually exporting goods to Afghanistan. Input claims were made on the documents of blacklisted companies.
The company claimed refunds of Rs 45.2 million on the exports made during 2003-2005. Of the total amount, refund amounting to Rs 41.5 million was sanctioned to the claimant. The company showed a turnover of Rs 370.5 million besides purchases of Rs 303 million during the period under review, sources added.