Tuesday April 23, 2024

FBR detects 100 dummy firms in massive flying invoices scam

Classic cases that demonstrates how efforts were made in connivance with others to cheat system by using all kinds of forum

By Mehtab Haider
January 19, 2024
Image of the FBRs building in Islamabad. — X/@FBRSpokesperson
Image of the FBR's building in Islamabad. — X/@FBRSpokesperson

ISLAMABAD: The Federal Board of Revenue (FBR) has found the alleged involvement of over 100 dummy companies in an organised racket for generating multibillion rupees fake/flying invoices of sales tax and in one instance, the tax authorities have registered an FIR for the revenue loss of over Rs10 billion.

It was one of the classic cases that demonstrates how efforts were made in connivance with others to cheat the system by using all kinds of forums. Now, the question arises as to how the sales tax refunds system was misused and why the PRAL failed to comprehend those involved in such alleged mega scams. Without the connivance of the department and especially this kind of ring barons cannot exploit the system. The culprits, who were allegedly involved in the tax frauds, were operating under the canopy of a law firm in the posh area of Karachi and one of the main accused was dismissed from the service by the FBR on corruption and misconduct charges in 2022.

The FBR sources said that the main accused was also nominated in two NAB references on account of corruption charges and reportedly, these were still pending in the courts. His appeal against dismissal from the service has also been rejected by the concerned appellate forum.

During the recent past, investigations into many criminal/tax fraud cases showed his strong alleged connection with fake/flying invoices.

During the service of FBR, this person managed to get licensed as an advocate from Punjab and now, while taking advantage of the legal fraternity, he had also filed an application of 22-A before the additional sessions judge in Karachi against the FBR’s officials for registering an FIR against them but the court has turned down his plea.

Official documents available with ‘The News’ disclosed that the FBR’s Intelligence and Investigation -IR Hyderabad found and registered an FIR that the accused Muhammad Ameen, having CNIC 3310487063263, Proprietor M/s Rehman Enterprises, having STR#3277876294785 & NTN 9133569-0 in connivance with other accused persons, is involved in claiming illegal input tax adjustment as well as issuing fake/flying invoices. This accused person e-filed a sales tax return for the tax period January 2023 and declared nil purchases, but huge sales valuing Rs33,200,658,915/- involving output tax Rs5,644,112,016/- of the sales tax return were declared without making any payment of sales tax, the FIR said.

Similarly, in the e-filed sales tax return for the tax period February 2023, the said person declared huge sales valuing Rs2,014,439,787/- involving output tax Rs342,454,766/- in annex-C of the sales tax return without making any payment of sales tax. The sales tax returns for both tax periods were filed as null without declaring any sales and purchases. The fake sales were declared in annex-C of the sales tax return fraudulently without making the actual transfer of finished goods.

The accused person in the tax period March 2023 e-filed annex-C of the sales tax return and the main return has not been filed to date. The accused declared supplies valuing Rs23,670,479,700/- involving output tax Rs4,023,981,549. The four persons, including Mohammad Majid, Hassan, Mohammad Adnan and Saba Aslam, allegedly showed fake declarations of Rs58 billion and collectively showed value of tax amount of Rs10 billion.

The interim challan submitted by the FBR before the court states that the FBR sent out a request to the Chief Pakistan Revenue Authority Limited (PRAL) for the provision of IP addresses of alleged companies involved to ascertain their exact location, from where the sales tax returns were filed. The PRAL provided IPs/login details of the alleged companies involved. The investigators sent out a request to the Cyber Internet Services Pakistan and the same was sent to PTCL to re-confirm the location where the ST returns were filed.

All the records confirmed that the MS/Top End Metal Industries Pvt Ltd and Harbour Metal Industries Pvt Ltd were allegedly involved in this whole scam. Their bank accounts were scrutinised and the bank record showed that heavy cash amounts for withdrawal from bank accounts were also found to establish this nexus.

The FBR raided the office of the location and found a lot of records allegedly showing the involvement of key players in this racket along with the owner of the tax law firm.

The FBR I&I-IR Hyderabad got a search warrant from the judicial magistrate and conducted a raid and secured such significant evidence/documents in the shape of laptops, internet devices of PTCL, mobile phones, and DVR were taken into custody.

The tax fraud has been allegedly committed at the cost of the national exchequer but now in the grab of tax consultants, deliberate efforts were underway to drag the concerned officers into different FIRs. When the police refused to register any case against the FBR investigators, the accused person filed a writ petition under 22A for directing the police to register an FIR but the additional session judge in Karachi dismissed his plea.