The investigation jointly conducted by the Directorate General Intelligence and Investigation, Customs and Excise and FBR Sales Tax Department confirmed that 14 companies from Punjab had claimed sales tax refunds on fake invoices/documents.
Sources told Business Recorder on Friday that the Federal Board of Revenue (FBR) has asked the concerned collectoartes to verify the report of DG intelligence, particularly the involvement of sales tax staff in processing illegal sales tax refund claims of physically non-existent companies.
According to sources, the collectorates of sales tax, particularly of Gujranwala, have handed over the record of these cases to the Directorate. In Punjab, most of the cases were detected in the jurisdiction of the Collectorate of Sales Tax and Federal Excise, Gujranwala a few years ago. On the board''s instructions, the regional offices could only submit information available in the computers.
The tax officials responsible for processing and sanctioning of refund claims could be identified with the available database. The registration record of these companies would also be submitted to the agency. However, manual record of claims is under the custody of the concerned directorate.
The agency has detected serious violations of FBR''s different instructions issued from time to time. The scam covers two types of registered units--commercial exporters, and those involved in issuing fake invoices.
The refunds were issued to the ''commercial exporters'' without obtaining prior approval of additional collectors. This was a clear violation of the FBR Sales Tax Wing''s directive that approval of additional collector is required for sanctioning refund claim exceeding rupees one million to the commercial exporters. The sanctioning authorities also ignored important FBR instructions on procedure for overruling system objections for issuance of sales tax refunds.
Under the ruling, the aspect of excess declared output tax and scrutiny for verification of input tax etc were not adhered to by the staff. Further investigation showed that the sales tax officials did not carry out profile analysis of the ''suppliers'' in cases of refund claims sanctioned to commercial exporters under Refund Rules 2006 (SRO.555(I)/2006).