Amount worked out by FTO is Rs292.549bn: DGI&I IR probe confirms Rs380m GST fraud

ISLAMABAD: The Directorate General of Intelligence and Investigation Inland Revenue has investigated three similar nature of sales tax cases decided by the Federal Tax Ombudsman (FTO), which confirmed sales tax fraud of Rs 380 million against amount of Rs.292.549 billion worked out by the Ombudsman Office.

Details of the cases revealed that Federal Tax Ombudsman (FTO) claimed to be found illegal use of dormant account of a retired armed forces personnel where fictitious supply of worth Rs. 1.625 trillion were made causing sales tax loss of Rs.292.549 billion and further tax of Rs235.340 billion.

However, the investigation confirmed that actually fake inputs of only Rs 380 million was made which was stopped by the tax department. The culprits have been arrested in the said cases. One of the cases disclosed shocking details that the authorized representatives before the FTO were those who committed tax fraud.

During the last few days, Directorate General of Intelligence and Investigation Inland Revenue worked day and night on this specific case and finally arrested the involved culprits.

Interestingly, the agency’s officials have silently investigated these cases of fake inputs and brought facts into the limelight.

The facts of the case are that the FBR’s internal scrutiny and data analysis team detected the Instant significant tax fraud in March 2024, which was promptly communicated to all relevant field formations by Ajaz Hussain, Chief (IR Analysis) FBR prior to complaint lodged in the matter before the FTO.

The cases are related to three different complaints filed with the FTO.

Failure to submit comments in a case: FTO directs FBR to take disciplinary action

The RTO-I Karachi on aforesaid report had already taken cognizance of the matter agitated in complaint and an FIR No. 01/2024 was registered.

The two accused persons were nominated in FIR on the basis of the fact that fraudulent sales tax returns have been filed from internet connections installed in their names.

In his findings, the FTO has found the accused as innocent on flimsy grounds which is immature as the investigation are still carrying and their innocence is not verified till now.

Another complaint was filed by a 79 years old lady living in Dubai) on account of misuse of her login ID/password to file fraudulent sales tax declaration in her name is also connected with the aforementioned FIR No. 01/2024 dated 26-03-2024 registered by RTO-I, Karachi. It is alleged in the FIR that fake input of Rs. 238.334 billion has been utilized/declared by accused footwear firm on account of purchases from M/s Safa International and Gravity Traders.

It has been confirmed from supply chain data provided by PRAL, fake input tax of only Rs. 381.698 million passed on in both supply chains to end users out of total Rs252.992 billion, 99.9% fake input deterred/blocked through enforcement measures.

The investigators found that the figures of Rs 520 billion reported in media by the FTO spokesman is highly exaggerated and factually incorrect. Further Tax of Rs. 235 billion, although shown in FTO order in complaint no. 1 based on fake declarations of the complainant but question of passing on of its incidence in supply chain does not arise as 99.9 % fake input tax blocked/deterred by FBR authorities.

The FTO’s findings/recommendations in the instant Complaint are that no maladministration has been found on the part of the FBR. Further, the FTO has recommended to restore registration of the complainant as per law. Again, investigation is still going on and the said comments have yet to be finalized.

On the basis of technical data/evidence and statement of witness, the accused Sheraz was finally arrested by the Directorate General Intelligence and Investigation Inland Revenue Karachi and after taking remand ample evidence has been collected which shows the whole has been committed by said Shiraz.

In the third case, the inquiry in the instant matter has also been initiated by Directorate of I&I-IR, Karachi to identify culprits in the instant scam of Rs. 7.75 Billion. Scrutiny of data provided by PRAL is underway and there exists strong likelihood of similar breakthrough in this case as well.

Copyright Business Recorder, 2024