Directorate Intelligence and Investigation (DI&I)-Inland Revenue (IR), Hyderabad has caught a registered company involved in sales tax fraud. According to details, the action was taken on a tip-off, which revealed that M/s Azmi Plastic Works located Kali Mori, Hyderabad was registered in RTO, Hyderabad as a manufacturer/importer for the manufacturing of plastic products but was involved in selling imported items such as end core paper waste, printed paper waste, aluminum, iron and steel remeltable scrape, self adhesive tricker paper copper thread RCC pipe, brass copper, display boards, etc. directly to the market to the unregistered persons.
Therefore, the Directorate has initiated legal action against it and in order to verify the veracity of the information, they visited the premises and found that business activities were being done in the name of M/s Naeem Plastic instead of M/s Azmi Plastic Works.
When the field formation of the Directorate inquired from the owner namely Muhammad Naeem regarding the existence of the business entity in the name of M/s Azmi Plastic Works, he in his statement denied such businesses in the name of M/s Azmi Plastic Works and also provided evidence in his support.
The Directorate staff during physical verification also found bags of local plastic waste and a dilapidated machine installed in the premises for only crushing of plastic wastage into pieces and no imported material was stocked there.
Keeping the said in view the Directorate established that these circumstantial evidence sufficiently led to believe that the registered person M/s Azmi Plastic Works was making huge imports since registration and work as commercial importers instead of manufacturer by selling it directly in open market without going in to any manufacturing process and evaded value addition tax of Rs 13.72 million.
Further scrutiny revealed that the said company has manipulated its sales by declaring it to registered person deliberately to avoid compliance of relevant sections of Sales Tax Act 1990.
Moreover, the company declared many invoices of below Rs 50,000 to one buyer, which clearly established that the company had actually made sales to unregistered person and declared fake sales tax invoices in sales tax returns.
Therefore, it has been established without any doubt that the said registered company has made actual sales as commercial importer to the unregistered persons and evaded further tax. The case has been registered and further investigation was underway.