The Federal Board of Revenue (FBR) has decided to give legal cover to the cases of sales tax and federal excise mega tax frauds detected by the Directorate General of Customs Intelligence for completion of investigation and prosecution by June 30, 2012.
Sources told Business Recorder here on Tuesday that the FBR had taken the decision during the last Board-in-Council meeting to deal with the cases of the tax frauds (sales tax and federal excise) detected by Directorate General of Customs Intelligence. The Board-in-Council also directed the DG Customs Intelligence to finalise all cases of tax frauds of sales tax and federal excise by June 30, 2012.
Sources said that the matter of the tax frauds cases unearthed by the DG Customs Intelligence was discussed at length and it was decided that FBR Member (Legal) should prepare a proposal wherein legal coverage is given to those cases of sales tax and federal excise which have been uncovered and detected by DG I&I (Customs) so that these are finalised by June 30, 2012 under the supervision of DG (I&I) Customs, Board-in-Council added. The decision of the Board-in-Council clearly indicates that the Directorate General of Intelligence and Investigation, Inland Revenue would be the competent authority to detect and prosecute tax frauds cases of sales tax and federal excise in future. The newly created intelligence arm of the FBR would have the legal authority to deal with all such cases of tax frauds in sales tax and federal excise. However, the past cases framed by the DG Customs have to be finalised by June 30, 2012.
The Directorate of Customs Intelligence had focused on fiscal frauds and organised financial crimes and unearthed mega sales tax scam of billions in Karachi and Lahore involving 155 dummy/fictitious firms/companies who issued fake/flying invoices to registered persons. The fraudulent claims of the input tax adjustments involving billions through fake/flying sales tax invoices are still taking place which had been detected in Karachi following a recent scam in Lahore. The organised gangs detected by Customs Intelligence have misused the existing schemes for availing illegal input tax adjustments/refunds. The directorate has detected biggest sales tax fraud involving phenomenon of fake/flying invoices by dummy firms involved in mega scam. The directorate has obtained complete details and profiles of the companies involved in the tax fraud and FIRs were registered against the involved firms. The agency has also evidence and record which would form basis for arresting the culprits involved in the mega scam.
During the tenure of existing Director General Intelligence and Investigation Mohammad Riaz, this was the one of the major detections made by the agency in sales tax fraud. The agency has focused on fiscal frauds and organised financial crimes which remained undetected by the relevant tax departments or internal audit systems. In the past cases, the Directorate General Customs Intelligence had initiated investigative audit and criminal proceedings against rest of the dummy firms, the cartels of fraudsters who are operating these firms and the recipients of fake/flying invoices so as to bring them to book and to recover the evaded amount of revenue.