The Directorate of Intelligence & Investigation - Inland Revenue, Faisalabad has carried out raids on manufacturing/businesses premises of two unregistered units involved in sales tax evasion.

In continuation of a drive against unregistered businesses involved in making taxable supplies who are liable to be registered under the Sales Tax Act, 1990, the Directorate of Intelligence & Investigation- Inland Revenue, Faisalabad carried out action under Section 38 of the Sales Tax Act, 1990 after obtaining search warrants from the Area Magistrate against manufacturing/businesses premises of two un-registered units in Faisalabad and Jhang.

The un-registered business concern located at Jhang Road, Faisalabad was involved in manufacture and supply of food products: Vermicelli, Ketchup etc. under the brand name of Country Plus without charging/paying sales tax. Similarly, another unregistered unit located at Jhang Sadar, Jhang was involved in manufacture and supply of footwear without charging/paying sales tax.

The authorized team completed raids under the supervision of Imran Zafar, Deputy Director and resumed substantive available records including sales/purchase record and ledgers, laptop/computers, bank related record including counter folios of cheque books, bill books, etc.

Making taxable supplies without registration is a criminal offence under section 2(37) of the Sales Tax Act, 1990 and persons committing such an offence are liable to prosecution under section 37A of the Sales Tax Act, 1990.

The record resumed is under scrutiny. Apparently, these are cases of massive sales tax evasion and may also result in detection of considerable income tax evasion.

Needless to mention that the registered businesses find it difficult to better compete in the market due to higher prices inclusive of sales tax as non-registered suppliers commonly offer inputs of similar quality for lower tax-exclusive prices. Therefore, unregistered businesses discourage registered persons to operate under sales tax net. The businesses intentionally keep turnover below mandatory sales tax registration threshold. This could be the possible reason for extremely narrow sales tax base in the country and sales tax evasion and tax fraud leading to sizeable sales tax gap.