Inadmissible refunds: FBR initiates disciplinary proceedings against 14 officers

The Federal Board of Revenue (FBR) has initiated disciplinary proceedings against 14 departmental officers/officials for their negligence/inefficiency/connivance in issuance of illegal and inadmissible refunds to persons involves in issuing fake/flying invoices.
Sources told Business Recorder here on Thursday that FBR has submitted the details of tax frauds and action against involved officers in a report to the Senate Standing Committee on Finance. According to the FBR report, 156 cases involving sales tax of Rs 1.34 billion relate to Karachi, Lahore, Faisalabad and Multan. Proceedings in respect of these cases have been initiated in accordance with the relevant provisions of law, and are pending before different legal fora.
In respect of 23 cases, FIRs were lodged. The taxpayers or their representatives are contesting these FIRs in the courts. Criminal proceedings in respect of three cases being assessed to tax in RTO-I, Karachi have been taken up by the FIA vide inquiry No 8/2013 dated 16.06.2013. Show cause notices have been issued in respect of the remaining cases to affect the recovery of the illegally obtained refunds. Recovery of Rs 107 million has already been affected. It is worthwhile to mention here that disciplinary proceedings in respect of fourteen (14) departmental officers/officials have also been initiated for their negligence/inefficiency/connivance regarding these illegal and inadmissible refunds.
In case of M/s Universal Plastics (Pvt) Ltd, Peshawar, the inadmissible sales tax refund of 812 million was claimed. Refund of Rs 57 million only was issued, and further refund was blocked. Show cause notice has been issued to reject the refund claim. The FBR has on its own, been detecting cases of fraudulent tax refund claims and taking legal action against those involved, whether officials or private persons. Such refunds are usually claimed on the basis of weaknesses in the legal framework or system. As there is a need to expedite processing and payment of refunds to genuine exporters and businesses, unscrupulous persons tend to exploit the process.
The question of handing over cases to FIA had come up in an internal correspondence during investigation of a case detected by RTO-II, Karachi, where a bogus firm M/s Western International had claimed fraudulent input tax against invoices of blacklisted persons, fake imports and self-generated fake invoices. Assessment Order was passed for recovery of Rs 386 million and FIR was lodged against the culprits. However, the raiding team was threatened at gunpoint by some alleged political workers. This has delayed the arrest and prosecution of the culprits. However, all possible efforts are being made to recover the evaded amount of tax and prosecute the culprits involved.
The FBR field formations routinely carry out fiscal intelligence and investigation, and desk audit of the taxpayers. FBR has also employed automated systems (like CREST, SMART, STARR) that help in identifying dubious tax behaviour of the taxpayers and inadmissible refunds. Through this mechanism, detections of illegal refunds and input tax credit are made, the FBR added.