Regional Tax Office (RTO)-II, Karachi has detected a massive sales tax refund "fraud" amounting to around Rs 230 million, purportedly committed through three fake companies against flying invoices in connivance with FBR officials.
According to an FIR, these companies had committed tax fraud as defined under section 2(37) of the Sales Tax Act, 1990 by obtaining illegal sales tax refund amounting to around Rs. 230 million on their business registered with FBR.
It said that during the tax period between April 2011 to May 2012, the sales tax refunds were claimed and got sanctioned against flying invoices for fake zero rated supplies of chemical goods under SRO 283(I)/2011 and SRO 1125(I)/2011.
During initial course of investigation, it was revealed that nature of goods purchased by these companies had no usage in chemical industry and they were involved in issuing invoices to facilitate others in claiming undue sales tax refunds, it said and added that the department did not find any evidence regarding the payment against the said invoices under section 73 of the Act.
Moreover, FIR said that during physical verification the department had not witnessed declared business at the registered addresses, which were being utilized by other companies since 2011.
It said that the accused persons got manufacturing status, despite having no manufacturing activity but showed the same on paper just to claim illegal sales tax refunds.
It said that these accused persons were dummy buyers and only doing paper transactions and zero-rated supplies were just parked on their names and no further disposal was made.
These accused persons were also involved in generating flying invoices to facilitate other registered persons in claiming illegal sales tax refunds or adjustment, it said and added that these accused persons did not make any zero rated supplies but declared fake supplies to dummy persons who were not genuine business concerns and claimed illegal sales tax refunds.
Furthermore, these accused persons had no proof of payment of purchases and supplies to justify huge volume of purchases and fake supplies.
Talking to Business Recorder, Badaruddin Qureshi, chief commissioner RTO-II, Karachi said that department on the basis of aforesaid facts, lodged FIRs and nominated the proprietors of all three companies.
He said that the owners of these "fake" were absconders and the raids were being conducted to nab these accused persons.
Replying to a question, he ruled out the possibilities of their escape aboard, saying that their names had now been put on Exit Control List (ECL) and the department had also frozen their bank accounts. They will be taken to task soon, Qureshi maintained.
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