ISLAMABAD: Special Judge Customs & Excise Taxation Karachi will take up the matter of alleged tax fraud on fake/ flying sales tax invoices being committed by a Lahore-based leading tractor manufacturing company on next date of hearing, i.e.; August 27, 2024.
The CEO of the said company is accused in the FIR Number 1 of 2022 lodged before Customs & Taxation Court Karachi over an application filed by Sindh Chamber of Agriculture Karachi. The prosecution was directed to receive copy against the accused Chairman/ Director.
It has been alleged by complainant Nabi Bux Sehto from Sindh Agriculture Chamber of Commerce that the CEO of the said tractor manufacturing company has committed tax fraud with farmers worth of billion of rupees as he has not allowed the benefit of SRO 1248 (I) 2020 & SRO 563 (I) 2022.
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Exemption Application of accused CEO has also been challenged in the Court.
According to the order sheet of Special Judge Customs & Excise Taxation Karachi, on the request of SPP, case was adjourned to August 27, 2024 for framing charges, recording statements of Investigating Officer (IO) report regarding NBWs against absconding accused and confirmation of bail or otherwise of accused persons and hearing of applications filed by Nabi Bux, it added.
Meanwhile, there are multiple issues involved in the said tractor manufacturing company (MTL).
On the directions of the President of Pakistan, the Large Taxpayer Office (LTO), Lahore has concluded the audit of this tractor manufacturing company, detecting serious sales tax discrepancies to the tune of Rs13.286 billion.
According to the audit report submitted by the LTO Lahore to the Federal Tax Ombudsman (FTO), the LTO has also calculated a penalty of Rs5.414 billion besides sales tax involved of 13.286 billion.
The applicant before the Special Judge Customs & Excise Taxation Karachi accused that the case mainly related to the CEO of the tractor manufacturing company has demonstrated the propensity for tax fraud as sales tax invoices of sales tax from the fraudulent units involved in the chain of supply for adjustment of input sales tax to understate its sales tax liability.
The final challan was submitted by the IO of the case before the Special Judge Customs & Excise Taxation Karachi under FIR Number 1 of 2022 Karachi.
The challan/ report revealed that a scheme of massive sales tax fraud was unearthed under a collusive arrangement involving fictitious transactions between a number of buyer companies.
The alleged beneficiaries of the mega sales tax fraud of Tamna Industries included a number of companies including a Lahore-based company in which its Director has been implicated in Challan in connection with FIR No 01/2022 lodged at Karachi which was submitted before Trial Court at Karachi.
It has been alleged in the interim Challan that a number of other persons/ companies have taken benefit from the scam.
It was discovered that a domestic “shell” company with name & style of Tamna Industries which was involved in paper transactions with number of big corporate entities to evade to claim inadmissible tax adjustment.
In this connection, an interim challan before the special judge (customs, taxation and anti-smuggling) Karachi was submitted in connection with the ongoing investigation pertaining to FIR No:01/ 2022 in terms of section 2(37) of Sales Tax Act 1990 against fake & fraudulent unit/firm which was working with name & style of this firm. This firm had only existence on “paper- and it was not doing any genuine physical operations. Hence, it could also be called as a domestic “shell” company- which got registration with FBR by fraudulent means on basis of mis-representation. The registration was given bonafidely by the Department for purpose of broadening of tax base keeping in view the low tax to GDP ratio in the Country.
The said FIR initially involved government revenue of nearly Rs 1,202,744,754.
The civil liability is determined under Section 11 of Sales Tax Act 1990 while in cases of tax fraud criminal law is brought into motion without any delay.
Copyright Business Recorder, 2024