FTO asks FBR to form experts’ team to eliminate fake/flying invoices

ISLAMABAD: Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to constitute a team of sales tax/IT experts to implement an IT based system to eliminate the menace of fake/flying invoices.

According to an order of the FTO issued on Thursday, the complaint was filed under section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against FBR, regarding issuance of fake/flying sales tax invoices by misusing Complainant’s STRN and other particulars.

The neglect, inattention and inefficiency in timely detection of misuse of STRN of the Complainant for a long time and thus allowing evasion of sales tax to enormous quantum and also delay in promptly responding to the request of the Complainant tantamount to maladministration in terms of Section 2(3)(ii) of the FTO Ordinance, FTO order.

Brief facts of the case are that the complainant’s STRN was being illegally used for fake and flying invoices. The complainant stated that respondents were practically involved in cheating and deception in issuing fake/flying sales tax invoices and that complainant was seriously aggrieved due to patently illegal, void ab initio, acts of omission and commission against long silence on the part of the FBR for not initiating lawful proceedings against main culprits responsible for misuse of his STRN.

The complainant further stated that tax department was communicated through written requests vide letter dated 28.04.2023 followed by personal visits about serious tax scam, however, he did not receive any response except a homeopathic dose vide letter dated 22.05.2023.

FTO has recommended the FBR to examine the issue of fake/flying invoices and misuse of STRNs by constituting a team of Sales Tax experts and IT experts and chalk out a viable strategy to be translated into a foolproof IT based system with comprehensive checks and balances, and capable of issuing of red alerts to the tax mangers/ administrators with the objective to eliminate the menace of fake/flying invoices.

The FBR to direct the Commissioner-IR, Zone-IV, RTO Lahore for taking and completing legal actions for recovery of loss of sales tax amounting to Rs156.335 million involved in misuse of fake/flying invoices.

The FTO should also complete action regarding blacklisting of STRNs of all suppliers and buyers involved in fake/flying invoices in the instant case and complete the chain audit till the end.

The FBR should initiate appropriate action as provided under the law against the misusers of STRN and involved in tax fraud in the instant case, inclusive of any tax officials as per facts of the case, FBR added.

Copyright Business Recorder, 2023