- FTO finds blatant case of organized tax fraud
- Fake transactions worth Rs 84 billion were made.
- Taxes worth Rs 14 billion were evaded in just a few months.
ISLAMABAD: A glaring example of tax fraud that occurred through alleged manipulation and breach of taxpayer data security has caused huge fake transactions worth Rs84 billion and led to tax evasion worth Rs14 billion in just a few months.
Official records and background interviews revealed that based on a complaint filed by a retired army officer, the Office of the Federal Tax Ombudsman (FTO) conducted a thorough investigation and found a blatant case of organized tax fraud with the active connivance of the Federal Board of Revenue (FBR). IT guards.
During the investigation of the complaint, it was found that a company in Zone III, RTO-II, Annexure C of Karachi had filed sales tax returns for the tax periods from September 2023 to January 2024 which reflected false supplies worth Rs 81.434 billion with GST of Rs 81.434 billion . 14.658 billion rupees.
Later, many buyers demanded huge input tax for those counterfeit supplies during the same tax periods. The Sales Tax Registration Number (STRN) has been summarily blacklisted without investigation being conducted against the fraudster/scammer/cyber criminals who are misusing the identity of the complainant.
When FBR and PRAL officials were called, they failed to provide copies of Annexure C as stipulated in STR-7 (Annexure C- Domestic Sales Invoices.
Even Pakistan Revenue Authority Limited (PRAL), FBR’s IT solutions subsidiary, admitted the non-availability of Appendix C.
When a more in-depth investigation was conducted, it was found that there were alleged front-end and back-end transactions leading to the alleged beneficiaries of organized tax fraud.
At the end of the tunnel, the refund was received or adjusted by the manufacturer at multiple field formations of Inland Revenue, such as Regional Taxpayer Office (RTO)-I Karachi, RTO-II Karachi, Large Taxpayer Office (LTO) Lahore, Corporate Tax Office (CTO) Lahore, RTO Lahore, and RTO Faisalabad.
The alleged fraudsters introduced Rs 1.625 trillion worth of fake supplies into the supply chain by misusing the sales tax account of a 79-year-old woman living abroad and filing zero sales tax returns.
Checks and balances against fake transactions listed in the portal were disabled/deactivated by Rule 18(5) of the Sales Tax Rules, 2006, resulting in loss of revenue to the government.
“The investigation reveals that this tax fraud was carried out by a gang of cyber criminals facilitated by employees (current and/or former) of PRAL & FBR who have direct or indirect access to the entire computerized system,” the investigation revealed.
Operating in networks, this gang initially spotted inactive sales tax registered persons and extracted them from the FBR website and used their password for fake/fake transactions for the benefit of end consumers/manufacturers.
Further details showed that the complaint was lodged against the Commissioner of Zone III, RTO-II Karachi in terms of Section 10(1) of the Federal Tax Ombudsman Act, 2000 (FTO Ordinance) to charge the complainant with allegedly declaring “tax fraud” a transaction worth Rs 81.434 billion with effect GST of Rs 14.658 billion against ‘blank’ sales tax returns filed for tax periods from September 2023 to January 2024 and consequent illegal inclusion in blacklisting of Sales Tax Registration Number (STRN) of the complainant by the Commissioner’s Review Order dated 27.03 .2024.
The complainant registered for sales tax on August 20, 2010 under a business address. As per the complaint, the Commissioner of Region-III, RTO-II, Karachi, vide ex-parte order dated 27.03.2024 blacklisted the complainant’s Sales Tax Registration (STRN) for filing Appendix C of Sales Tax Returns for tax periods from September 2023 to January 2024 and announcement of fake supplies worth Rs 81.434 billion with GST of Rs 14.658 billion.
The complainant also alleged that STRN was blacklisted without proper notice of any show cause or suspension order.
The Pre-Suspension Notice, Suspension Order and Notice were received after the due date by UMS or at all have not yet been received; Hence this complaint is for investigation against the fraudster/scammer/cyber criminals who are misusing the identity of the complainant and directing the Commissioner to cancel the blacklisting order and all other subsequent actions.
In response to the complaint, the Revenue Department filed an Excel sheet of Annexure C for the tax periods from September 2023 to January 2024 and disclosed the huge fake supplies declared by the complainant through ‘Annexure C’ and hence the huge input tax claimed by various buyers against such bogus supplies during the tax periods. mentioned. However, FBR and PRAL failed to provide copies of Appendix C.
The FTO has instructed the FBR to direct the Principal Commissioner of IR, LTO Lahore to ensure initiation of legal proceedings for conviction on merit under the law against the crime of tax fraud committed by alleged persons.
Originally published in The News