DGI&I IR identifies key areas: FBR to expedite recoveries, plug revenue leakages

The Directorate General of Intelligence and Investigation Inland Revenue (IR) Karachi has identified key areas to be focused on under the future work plan, including recovery of sales tax and withholding tax from ship breakers, Federal Excise Duty on franchise fees paid by pharmaceutical companies/educational institutions, possibility of tax evasion by Karachi Port Trust (KPT) contractors and plugging leakage of revenue through issuance of "Red Alerts".
Sources told Business Recorder here on Tuesday that the DG I&I IR Karachi has shared the future roadmap with the tax authorities during the first quarterly conference of Directorate General Intelligence and Investigation, Inland Revenue (IR) FBR. The future strategy focused on major areas where tax evasion is taking place with measures to prevent revenue leakage in Karachi.
The primary focus of Karachi-based intelligence agency is to check misuse of various FBR's notifications and bogus refunds. The deterrence created by the DG I&I IR Karachi shows that monthly refund issued under a single FBR's notification has drastically dropped from Rs 200 million to Rs 25 million.
According to sources, the directorate's future work plan included recovery of evaded sales tax from ship breakers and verification of sales tax data prior to June, 2011; monitoring of withholding tax of ship breakers; FED on franchise fee and plugging leakage of revenue through issuance of 'Red Alerts' in suspected refund cases.
The administrative issues of the regional directorate IR Karachi included shortage of officers/officials in the Directorate and acute shortage of operational vehicles for conducting surveillance through raids/arrests. The regional directorate also wanted approval for declaration of future office premises as sub-jail for confinement of arrested suspects and appointment of a panel of lawyers for complying with legal formalities. It has also been proposed to have provision of rewards during the year to incentivise recovery; provision of licensed arms and ammunition to armed guards and training in investigative audit techniques.
Sources said that the remarkable performance of the DG I&I IR Karachi was evident from the fact that a number of actions have been taken by the directorate in different sectors during 2011-12. The total number of cases wherein approval sought from Board by the Directorate for investigative audit stood at 35; number of investigative audit assigned by the board is 12 whereas total cases approved by the board for investigative audit are 47. The investigative audit covered areas of Fake goods declarations (GDs); fake/flying invoices; complaints; fake refunds and sectoral misuse of SRO283(I)2011.
During 2011-12, the regional directorate has registered 14 FIRs and arrested 5 persons. The directorate has forwarded 15 contravention reports to RTOs/ LTUs and the amount involved in contravention reports (excluding penalty and default surcharge) which stood at Rs 1 billion whereas recovery amounted to Rs 171 million.
Sources said that the DG I&I IR Karachi has also unearthed misuse of SRO.575 and detected loss of nearly Rs 2 billion. The agency has proposed modification in customs software and realised additional revenue of Rs 800 million. The agency has also checked misuse of SRO 68(I)/2009 read with SRO 549(I)/2008. It has conduced investigative audit of units for checking violation of the said SROs. Out of 23 investigations conducted, the Board granted 23 approvals for registration of the FIRs and stay granted by the Court in 11 cases. The FIRs were lodged in eight cases and one person was arrested. The deterrent effect of investigation is visible as the average monthly refund has been dropped from Rs 200 million per month to Rs 25 million.
Sources said that the DG I&I IR Karachi has also detected misuse of SRO.283(I)2008. A total of 10 investigations were conducted whereas stay was granted by the court in four cases. A total of five units were recommended by the agency to the FBR for suspension/blacklisting. The regional directorate has also detected cases of fake computerised payment receipt numbers (CPRNs). Through the fake CPRNs, the sales tax was not deposited in connivance with the bank staff and recovery of Rs 20 million has been made in these cases. The matter is under investigation by the Federal Investigation Agency (FIA) and arrests were made in cases of fake CPRNs. During 2011-12, the regional directorate has issued 'Red Alerts' in a total of 26 cases and blocked bogus/dubious refund claims/cheques to the tune of Rs 644 million.