Directorate of Intelligence and Investigation, FBR claims it has made issuance/availability of fake sales tax invoices a risky business for fraudsters through effective monitoring, investigative audit and registering criminal cases against the tax fraudsters and tax evaders, The said methodology/approach resulted in ensuring a culture of tax compliance/payment of due taxes and in the process, the culprits are also facing due process of law.
FBR sources told Business Recorder here on Wednesday, that due to arrest of substantial number of tax fraudsters, the phenomenon of claiming illegal input tax adjustment has suffered a serious jolt. As a number of registered persons, involved in claim of illegal input tax adjustment/refund have also been arrested by the Directorate, electronic filing/declaration/due tax payment by the registered persons have started behaving in a more responsible manner with regard to correct declaration.
They said during investigations by the Directorate, conducted on the basis of gathered intelligence, it was found that tax fraudsters/cyber criminals were causing huge damage to the national exchequer with their networks, operating at country level, by way of misusing user names/passwords/pin codes of dormant registered taxpayers.
These fraudsters/cyber criminals were also successful in getting registered fake registered persons by misusing CNIC/NTN of innocent citizens through electronic registration system of the web portal of the FBR. By using stated fraudulent techniques, cyber criminals were able to facilitate claim of illegal/inadmissible sales tax input tax adjustments/refund to the claimants to the tune of billions of rupees.
As a result of above stated intelligence gathering/investigations conducted, Directorate of Intelligence & Investigation-FBR, Lahore, during the year 2010-2011, was able to detect loss to the national exchequer to the tune of more than Rs 16 billion while, on similar grounds, the Directorate General of Intelligence & Investigation-FBR has detected sales tax evasion to the tune of more than Rs 30 billion.
It has been revealed that, in Lahore Region, said detection resulted in a trail of events including arrests of master minds/main culprits, registration of criminal cases, filing of challans in the special trial Courts, facing the writ petitioners in High Courts as well as Supreme Court of Pakistan.
In Lahore Region, in all, 50 tax fraudsters were arrested on the charge of sales tax fraud, while more than 100 tax claimants of illegal input adjustment got pre-arrest bail after joining investigation and satisfying the trial Court regarding their intent to objectively understand the issue and promise to pay what is due to the national exchequer.
Presently, arrested fraudsters/cyber criminals are under going different stages of trial proceedings. Simultaneously, detailed investigative audits are also under way against the illegal input tax adjustment/refund claimants. Presently, most of the cases are under adjudication process in respective RTOs for determination of payable liability including default surcharge and penalty.
In the process, a sizeable number of input tax adjustment claimants have already deposited/committed Rs 1696 million in the national exchequer for claiming conditional bail from trial court. Rests of the claimants are also following the same course they added.
The fiscal analysts are also of the view that due to the bold and transparent steps taken by the Directorate, the unorganised sectors of the economy are also feeling the heat of the action. They say that it has become almost impossible for non-duty paid/tax evaded/smuggled/transit goods to enter formal sector of the economy for claiming tax credit, as reflected from the market sentiments.
Due to the said aspect, there is a strong urge in the formal/organised business sector to ensure validity of transactions supported by valid goods declarations/valid sales tax invoice. It has also been revealed that genuine taxpayers have started online transaction verification and ensuring strong internal controls in conducting their business so as to avoid any action by the law enforcement agencies.
As a result of the afore-stated measures, informed circles reveal that a significant increase in taxes collected during the financial year 2010-2011 has been witnessed, substantially contributing in achieving the national revenue target for the financial year 2010-2011.
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