Honest tax officials: Claimants of bogus refunds begin smear campaign

RECORDER REPORT

ISLAMABAD: Claimants of bogus/fraudulent refunds worth Rs157 million and some officers of Inland Revenue in Karachi have launched a smear campaign against some senior and well-reputed/honest tax officials of the Directorate General of Intelligence and Investigation Karachi, creating a negative impression against anti-corruption investigators of the Federal Board of Revenue (FBR).

Sources told Business Recorder here on Sunday that some officials of the regional directorate of intelligence IR Karachi recently detected a large number of cases of bogus sales tax refunds where Rs157 million were issued in connivance with some unscrupulous Inland Revenue officials.

An organized campaign was launched against officials of the directorate of intelligence IR, Karachi, to malign them and stop these honest officials from taking action against such fraudulent groups.

Due to the involvement of huge amount in such scams, it has become an organized business involving bogus refund claimants, tax officers and a few lawyers who provide legal backing and help complete the required paperwork. In a recent case, FIRs were filed against such bogus companies which were not even registered with the Securities and Exchange Commission of Pakistan.

These groups in Karachi have been engaged in generating bogus sales tax invoices through FBR’s e-filing system. They have obtained sales tax registrations by opening dummy companies in connivance with certain tax officials. Some units have been registered as manufactures, commercial importers or other categories of businesses.

Such dummy companies carry out paper transactions and generate fake/flying sales tax invoices. As some officers of Inland Revenue are also involved, the powerful mafia has been able to obtain bogus sales tax refunds.

When the directorate communicated names of a few officers of Karachi to the Board for necessary action, these officers were transferred without any serious action against them.

The agency issued ‘Red Alerts’ in certain major cases of sales tax refunds and stopped the concerned tax officials from issuing of cheques in bogus refund claims.

Instead of approaching the Federal Tax Ombudsman Office, the Chairman FBR, Member FBR, Appeal/ Adjudication/ Tribunal and any other competent forum, members of this ‘mafia’ pressurised Karachi-based officials and started a campaign to defame them.

Despite false propaganda, the concerned officials are committed to take action against fraudsters under laid down rules and regulations and orders of the courts would be strictly followed, officials said.

Various investigations conducted by the Directorate of intelligence IR Karachi showed that fake/flying Invoices and bogus refunds of sales tax scam involved a revenue loss of Rs1,000-1,500 billion annually.

Fake refund and bogus /flying invoice mafia consists of so-called businessmen/ traders, officers and officials of field formations of the Inland Revenue Service of FBR. The field formations failed to detect the bogus/flying invoices and fake refunds that is why Directorate-General of Intelligence and Investigation, Inland Revenue was established to curb the trend.

Sources said that the mafia was so influential that it had certain officers on their ‘payroll’, besides patronising them inside and outside the department.

Reportedly, Directorate of I&I-IR, has lodged 13, FIRs in fake refunds cases and fake/ flying invoices cases. At present five accused persons involved in fake and flying invoices/fake Refunds have been arrested who are behind the bar at present. Courts have rejected bails in such cases.

On the recommendation of the Directorate of I&I-IR Karachi, bogus refunds worth Rs600 million (approximately) in 27 cases were stopped by the FBR. In some cases, bogus/dubious refunds of nearly Rs7.8 billion had already been sanctioned issued during the past year, sources concluded.

Meanwhile, documents of the directorate showed that in pursuance of approval granted by FBR, FIRs were lodged against fake refund claimants in cases of M/s Ahmed Industries, M/s Al Ubaid Enterprises and M/s Royal Industries after issuance of Notices u/s 37 of the Sales Tax Act, 1990.

In case of M/s Royal Industries, the revenue implication on account of fake refund claims is Rs.27.141 million. Accordingly, an FIR was filed on July 10 this year. In case of M/s Al Ubaid Enterprises, a revenue implication on account fake refund claims is Rs107.046 million; accordingly, an FIR was filed on July 10. In case of M/s Ahmed Industries, the revenue implication on account of fake refund claims is Rs2.437 million and an FIR was filed on July 6.

Copies of the stay orders granted by the Sindh High Court (Suit No782 of 2012 in case of Muhammad Zain Anees of M/s Royal Industries and Suit No774 of 2012 in case of Anees of M/s Al Ubaid Enterprises) were received in the Directorate of I&I-IR Karachi through the Bailiff on July 11 (Inward No52 dated July 11, 2012 and Inward No53 dated July 11, 2012 respectively) after FIRs were lodged on July 10.

In the case of Muhammad Affan Ahmed of M/s Ahmed Industries, FIR was lodged on July 6, and the Stay Order of the Sindh High Court in CP NoD-2525 of 2012 was received on July 12 vide Inward No58 dated July 12. The matter is, therefore, well settled and no order of the Sindh High Court has been violated. Furthermore, officers concerned enjoy unimpeachable reputation of honesty and integrity, sources added.