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Wednesday October 04, 2023

FBR unearths racket involved in fake/flying ST invoices worth billions of rupees

May 28, 2023

ISLAMABAD: The FBR has unearthed a racket involved in producing fake/flying invoices of sales tax (ST) of billions of rupees with the help of a tax consultant during the ongoing nationwide crackdown on suspected businesses.

During the last week, the FBR’s Directorate I&I-IR Karachi lodged two FIRs in line with the nationwide crackdown on suspected business individuals on the above account, involving billions of rupees in revenue loss.

After an inquiry and monitoring of different persons, a primary suspect in one of the FIRs involved in the scam was arrested and produced in the court of special judge (Custom & Taxation), Karachi.

Seven-day remand of the accused was obtained from the court. On the basis of investigation, and on pointation of the arrested person, a search has been carried out by a team of Directorate at the office of an Advocate/ Tax consultant in a posh area of Karachi under a court search warrant.

“These premises were unearthed during the investigation which is used for issuance of fake /flying invoices and filing of dummy/bogus sales tax returns of various firms. During a search of the Advocate office, certain very significant records/evidence including pre-signed blank/unsigned chequebooks of various firms, a large number of rubber stamps of assorted companies, bank deposit slips of heavy cash amounts, sales tax returns, and invoices of firms involved in fake /flying invoices scam in the shape of hard copies and soft data were recovered from said office along with a laptop and computer,” the investigators found.

During the search, another suspect, who was in contact with the arrested accused and involved in the supply chain of fake/flying invoices in the instant crime of claiming bogus/fake/inadmissible tax credit was also taken into custody.

Later on, the second accused was also produced in the court and his five-day remand was obtained. Scrutiny of data/records of delinquent firms indicated that a large number of registered trades and businesses have taken undue benefit of such fake /flying invoices for claiming excessive credit of sales tax and to reduce their tax liability.

Interrogation of arrested accused further revealed that even big business entities and limited companies across the country had taken advantage of the fraudulent activity. The Directorate’s team of investigators was actively involved in the examination and scrutiny of records and assistance from other agencies had also been sought.

The scrutiny of technical data of FBR IRIS Portal users involved in the instant crime indicated that it’s a trans-province scam as a large number of firms registered in the jurisdiction of Karachi are not traceable on their initial declared local addresses, but their sales tax returns are regularly uploaded/filed on IRIS system from different cities in Punjab, specially Faisalabad, creating billions of rupees undue tax credit for organised business sectors without paying a single penny in the national exchequer. Forensic analysis of computer data is also under process, which would further reveal the role of other culprits involved in the scam.

The Directorate has already communicated a preliminary report to the FBR headquarters in Islamabad for similar action against such illegal fake/flying users across the country.