ST, FED evasion by cigarette-maker detected

Directorate General of Intelligence and Investigation Inland Revenue (IR) has detected evasion of sales tax and federal excise duty (FED) amounting to Rs 41,954,102 by a cigarette manufacturer in Swabi.
According to the sources, the action has been taken under the ongoing drive against the illicit trade and recovery of evaded amount of taxes from cigarette manufactures evading taxes. The intelligence network of the directorate has intensified efforts for detection of such cases of tax evasion within the tobacco sector. Besides, analysis of tax records, inspections on the ground, interception of suspected businesses and research of data has resulted in recovery of the evaded amount of taxes in the tobacco industry.
The report of the agency said that information collected by I&I-IR revealed that M/s Falcon Cigarettes Industry (registered person) was involved in evasion of tax. In order to find out the facts, action under section 38 of the Sales Tax Act, 1990 and under Rule 62 of the Federal Excise Rules, 2005 was invoked and business premises situated in Faisalabad were raided. Resultantly, 91 cigarette cartons (each containing 500 packets of 20 cigarettes) and registers of supplies, stock and ledgers were impounded. The said person is a manufacturer of cigarettes who himself acts as distributor through his general manager in Faisalabad.
During investigation, the general manager attended the proceeding and provided duty/taxes paid invoices in respect of 37 cartons only. But he could not produce any evidence of tax payment for the remaining 54 cartons and immediately deposited the evaded Sales Tax/FED amounting to Rs 850,000. From scrutiny of the impounded registers, substantial suppressed supplies of cigarettes were detected.
Therefore, certain documents under section 23 of the Federal Excise Act were requisitioned from the said employee of registered person but he did not turn up. However evasion of tax on the basis of suppressed supplies has been worked. The intelligence arm of the directorate has sent the contravention report for recovery of the evaded tax amounting to Rs 41,954,102 to chief commissioner-IR, Regional Tax Office (RTO), Peshawar, the report added.