FBR to recover Rs7 billion tax refunds

KARACHI: Federal Board of Revenue (FBR) has initiated recovery of Rs7 billion disbursed to fraudulent sale tax refund claimants with Nadra’s help, sources said on Tuesday.
Sources said Nadra had provided details of 42 bank accounts to the Regional Tax Office (RTO)–II of those people involved in the refund scam. “Those people have several accounts in various banks across the country,” one source said.
An official at RTO-II on condition of anonymity said the office had constituted a team for recovering the amount.
The scam was unearthed about two and half years ago by the RTO-II.
The office had detected that M/s Western International, in connivance with other 151 companies, incurred over Rs7 billion losses to the national exchequer through obtaining refunds on fake invoices.
The RTO officials during the investigation identified a bank branch where refund cheques issued to Western International were deposited. Interestingly, an official of the bank denied any such account ever maintained with the bank, but admitted that those cheques were deposited in accounts with other titles.
“No such account in the name of M/s Western International, Karachi has ever been opened and operated in our branch,” according to the statement submitted by the bank manager. “The reported financial instruments (refund cheques) issued to the company were deposited to different accounts.”
The FBR sources, however, declined to reveal the bank’s name.
An official of RTO – II said the Investigation and Prosecution (IP) wing of the FBR in 2012 detected that the M/s Western International obtained illegal refunds. The IP wing blacklisted the firm in December 2012 on sufficient evidences of frauds.
M/s Western International obtained Rs386 million as refunds. But it managed to get refunds to the tune of Rs7.2 billion with the help of other companies. The other fraudulent companies in the scam have also been either blacklisted or suspended by the concerned tax offices.
In the pursuit of detailed investigation, the FBR officials recorded statements of bankers who were involved in clearance of the cheques issued to the Western International.
The branch manager stated that the cheques of the company were deposited to four different accounts, which were mainly operated by a person named Ali Asghar. “… the clearance of cheques of M/s Western International, Karachi which were deposited in the aforementioned accounts on the part of unintentional negligence / overlook by the officers / officials against banking Rules and Laws,” the bank said in its statement to the FBR.
The RTO-II officials said the branch managers, however, submitted the entire details of the fraudulent entities.
“Further investigation in the case will also expose the corruption of tax officials,” a source said.