FBR unearths multimillion rupees sales tax evasion

ISLAMABAD: The Federal Board of Revenue (FBR) has unearthed multimillion rupees of sales tax evasion by Peshawar-based traders found involved in filing fake invoices to duck their tax liabilities, it emerged on Thursday.

The details, available with The News, showed that the FBR’s Directorate of Intelligence and Investigation Inland Revenue, Peshawar initiated sales tax audit and inquiry on basis of credible information of tax evasion by the companies. 

The authorities, through initial findings, found that the registered persons are, prima facie, involved in tax fraud as defined in section 2(37) of the Sales Tax Act 1990.  The investigation is underway to determine the actual tax losses.

They are commercial importers of consumer goods like battery, bulbs, cloth buttons, glass beads, padlock and school bags. Despite making huge purchases, they declare low sales. Most of their sale invoices are split into less than Rs50,000/invoice to avoid compliance of section 73 of the Sales Tax Act 1990. They didn’t not exist at the business premises, registered with the FBR.

The suspicion of fraud was strengthened by a fact that some of their buyers from different cities had already been blacklisted. Further scrutiny revealed that their business capitals are also not commensurate with the volume of declared closing stocks.

The nature of goods, imported by the registered individuals, was unrelated to the business of buyers and undoubtedly buyers were claiming illegal input tax on the basis of flying invoices. On the recommendations of the tax department, the Chief Commissioner of Inland Revenue, Regional Tax Office Peshawar suspended sales tax registration of the taxpayers in March till completion of the pending audit and inquiry.

The Peshawar directorate found buyers of flying invoices, located in jurisdictions of different tax offices, who have, prima facie, claimed unlawful input tax adjustments on the invoices of tax fraudsters. Apparently, these are big cases of sales tax evasion.