ISLAMABAD: Directorate of Intelligence & Investigation (IR) Lahore has detected a tax fraud committed by a company during the drive against the registered persons involved in tax fraud by claiming/adjusting inadmissible/illegal input tax on the strength of fake/flying invoices.

Scrutiny of data for the tax period from July 2019 to December, 2022 revealed that M/s Saeed & Co. involved in claiming inadmissible input tax credit by way of showing debit & credit notes in Annexure-I of the sales tax return without making any purchase and created inadmissible input tax in its sales tax returns and issued fake sales tax invoices on the strength of that inadmissible input tax to various registered persons enabling them to claim input tax credit.

The Directorate issued notices under section 38 of the Sales Tax Act, 1990 to buyers of M/s Saeed & Co. who were found fake/dummy and being used for layering of fake/inadmissible input tax. The fraudsters used these fake/dummy units to issue further fake sale tax invoices to registered person/beneficiaries. The fraudsters managed to create fake input tax through the said company and other fake/dummy units.

The Directorate issued notices to the end beneficiaries who have claimed/adjusted inadmissible/fake input tax on the strength of fake/flying invoices. In response to the said notice, one of the beneficiary has deposited the evaded amount of sales tax Rs.96,908,516, default surcharge Rs.10,092,565 and penalty Rs.4,845,426 on account of inadmissible input tax against fake/flying invoices of M/s Aazan Enterprises, Al-Junaid Impex and China Impex – all fake/dummy units.

Copyright Business Recorder, 2023