Regional Tax Office (RTO) Islamabad has unearthed a mega scam of fake/flying invoices at national level involving several units dealing in coal business and claiming adjustment against import of fruits and vegetables, besides using fake/flying invoices, causing revenue loss to the tune of billions of rupees to the kitty.
According to details of the case, one of the major efforts being undertaken by the RTO Islamabad is to identify cases of fraudsters where fake/flying transactions are involved and inadmissible input tax adjustments are being made by the tax dodgers present in the guise of registered persons.
During investigation carried out by Investigation & Prosecution Cell of RTO Islamabad, it was detected that several persons dealing in coal are involved in claiming adjustment against import of fruits and vegetables, besides using fake/flying invoices of the persons who are not involved in purchase or import of coal but are issuing sales tax invoices of coal. Further investigation led to a mega scam of fake/flying invoices being operated at national level.
Brief facts of the case are that during an inquiry of tax affairs of M/s Brand Star Trading (SMC-Pvt) Ltd, registered with RTO Islamabad, it was observed that registered person claimed input tax of millions of rupees and then carried forward this input tax for several months. In order to verify the genuineness of input tax adjustments, declarations filed by suppliers were scrutinized.
During the said exercise, it was found that suppliers are engaged in issuance of fake/flying invoices and caused huge loss to national exchequer. One of the suppliers namely M/s Ayub & Company, falling under the jurisdiction of RTO-II, Lahore, is engaged in import of plastic toys, adhesive tapes, LED bulb, plastic bags, absorbent polymer, plastic rings, plastic whistles, non-woven diaper material, badminton rackets, generators parts etc, while on the other hand is found involved in issuance of fake/flying invoices of multiple items relating to miscellaneous articles of base metals, ceramics items, knitted or crocheted fabrics, computer & office equipment, lead articles, chemical products, vehicles/carriages/trailers; vehicle parts, coal, lignite, coal gas, articles of paper, wallpaper, notebook registers, and boxes etc.
The said company made imports valuing Rs 1,225,954,160 involving sales tax of Rs 241,886,255, out of which the said registered person issued fake/flying invoices involving sales tax of Rs 74,012,023 to the beneficiaries. On identification of the pattern of fraud, similar investigations of other two suppliers of M/s Brand Star Trading (SMC-Pvt) Ltd were conducted and it was found out that the said suppliers registered with RTO-II Lahore are engaged in similar fraudulent activities and caused loss of Rs 86,644,688 to national exchequer by issuing fake/flying invoices. The investigations against coal dealers so far revealed tax fraud of billions of rupees at national level.
Registration status of these units dealing in the trade of coal, ie, M/s Brand Star (SMC-Pvt) Ltd, M/s Zircon Trading (SMC-Pvt) Ltd, M/s Tareen Trading (Pvt) Ltd and M/s Amania Trading (Pvt) Ltd has immediately been suspended to prevent further loss of revenue. Proceedings against these persons are underway to retrieve the loss of revenue and FIRs are being registered.
The information reports have been sent to the Member (IR-Operations), DG (I&I) and respective field formations to take immediate action against similar tax dodgers and for retrieval of loss of revenue.
The I&P Cell of RTO, Islamabad, unearthed the nexus of registered persons and their suppliers/buyers, back and forth, who are involved in mere paper transactions and issuing fake/flying invoices worth billions of rupees to deprive the government of its legitimate revenue and intimated the tax authorities in other parts of the country to initiate immediate thorough chain investigation against the persons operating at national level in order to arrest the real culprits and retrieve the revenue loss.