FTO directs DG I&I-IR to dig out cybercriminals who used IP addresses for introduction of fake supplies in supply chain

ISLAMABAD: Federal Tax Ombudsman (FTO) has strictly directed the Director General Intelligence and Investigation (I&I) Inland Revenue to dig out the cybercriminals who used the IP addresses for introduction of fake supplies in the supply chain and also find the original subscriber/criminal using VPNs.

According to another order of the FTO on cyber criminals, the FTO observed that the illegal misuse of password ID and fraudulent filing of the sales tax return, introducing fake supplies of Rs 133.125 million through Annexure-C with sales tax impact of Rs 23.962 million, resulting in multiple issues in filing of sales tax returns of subsequent tax periods, tantamount to maladministration.

The FBR should direct Chief Commissioners -IR, RTO Quetta, to ensure legal proceedings for conviction against the crime of tax fraud. Director General I & I must find the cybercriminals either within or outside the company who used the IP addresses for the introduction of fake supplies in the supply chain for conviction under the law, including building capacity to find the original subscriber/criminal using VPN.

FTO unearths tax fraud case involving cyber criminals

Briefly, the complainant is a senior citizen, 68 years old, registered in sales tax w.e.f August 5, 2008 as a commercial importer. This incident of huge tax fraud came to light when the complainant tried to file his sales tax return for April 2025. It was found that some cyber criminals illegally misused his password ID and fraudulently updated Form and filed the sales tax return for the tax period April 2025 introducing fake supplies of Rs 133.125 million through Annexure C with GST impact of Rs 23.962 million.

The immediate/ prompt action by the Commissioner Quetta is highly appreciable in protecting the loss of Govt revenue in the supply chain. However, the concerned Commissioner of RTO Quetta is required to take further action, including registration of FIR as per Standard Operating Procedures (SOPs) to deal with Cases Involving Fake/Flying Invoices outlined in Sales Tax General Order No.12 of 2023.

The beneficiary of the fake transactions M/s Rafi Enterprises, a taxpayer of RTO Quetta knowingly and deliberately purchased fake invoices, without any actual physical movement/transaction of goods and without payment as prescribed under section 73 of the Act, to evade sales tax.

The beneficiary was fully aware of the purchase of fake/flying invoices, without the physical transfer of any goods, with the intent to evade payment of tax. The present loose and liberal enforcement regime has emboldened these unscrupulous registered persons to indulge, without the fear of being caught, in the lucrative business of the use of fake/flying invoices.

The edifice of sales tax law is erected on the glorious principle of self-assessment where complete trust is reposed in the taxpayers for submitting true & faithful declarations. To deter misutilization of such trust, the law also has an in-built penal & prosecution mechanism.

Therefore, the Department after having established the case of tax fraud against all the ultimate beneficiaries in using fake/flying invoices, shall not stop short of registering an FIR against the perpetrators of such tax fraud under the relevant legal provisions but should vigorously pursue their cases during the prosecution stage, FTO order added.

Copyright Business Recorder, 2025