Alvi lashes out at FBR, orders to recover over Rs.14mn in bogus tax refunds case

President Arif Alvi lashed out at the Federal Board of Revenue (FBR) for its failure to investigate in a case of bogus tax refunds worth over Rs 14 million.

The President on Friday rejected FBR's representation against the order of Federal Tax Ombudsman (FTO) in a case of bogus tax refunds worth over 14 million rupees made to a fake Registered Person.

Alvi upheld FTO's decision against the irregularities committed by FBR field formations in registering, processing, sanctioning and issuing sales tax refunds to fake RPs during the period 2012-13. President Alvi in his decision wrote that it is surprising and shocking that FBR failed to investigate fake claims where refund have already been made in full connivance with FBR officials".

Expressing strong displeasure over the scam, he said, "How can we afford not to recover and criminally charge the fraudsters".

It is worth-stating that FBR has filed 74 similar representations with the office of the President against the orders of FTO. Out of 74 representations, 22 cases have been decided while 52 are still awaiting adjudication. Furthermore, FBR had allowed 875.277 million rupees to be paid to fake RPs, of which a payment of 223.312 million rupees has already been made.

The FTO in its verdict, dated 27.04.2020, had directed the Chief Commissioner-Inland Revenue and Corporate Regional Tax Office (RTO), Karachi "to investigate and identify the officials involved in registration of fake RPs and initiate disciplinary and criminal action against those found involved and report compliance within 45 days."

The FTO in its decision further directed FBR to initiate appropriate action including criminal proceedings leading to recovery of amount swindled from public exchequer through claiming inadmissible input tax and bogus refund.

Instead of implementing the directives of FTO, the FBR challenged its jurisdiction and filed a representation with the President taking plea that it could not issue such orders and rely on 'interdepartmental correspondence of FBR'.