NAB asked to initiate criminal proceedings against two firms for committing tax 'fraud'

ISLAMABAD: The Public Accounts Committee (PAC) has asked the National Accountability Bureau (NAB) to initiate criminal proceedings against all including tax officials involved in two mega tax scams, involving over Rs6 billion of tax evasion and illegal exemptions/concessions availed by the two companies.

In this connection, the PAC has issued a letter to the NAB for starting investigation against the concerned persons, as well as, the tax officials involved in the said scam.

The PAC has also directed the Federal Board of Revenue (FBR) to take measures to stop such grant of illegal concessions of tax credit, as the M/s Chahat Food Industries Limited was found to have no manufacturing or other facility to justify the import to avail tax concessions.

According to the communication of the PAC to the NAB, the PAC has concluded that the case of M/s Chahat Food Industries Limited constituted criminal offences, fraud, and misrepresentation. The departmental proceedings may also be initiated against all those tax officials who participated at any stage in any manner in the said offence.

The FBR should ensure to stop such unlawful activities.

The PAC further said that the pendency of the civil matter in court relating to the audit of the said company does not restrain the PAC from referring the matter to the NAB for initiating criminal proceedings for committing criminal offences based on the findings of the AGP report, the PAC letter to the NAB added.

The Auditor General of Pakistan (AGP) team visited head office and factory's premises at Lahore and Vehari for verification and found no any manufacturing activity.

The company availed illegal exemption under Section 65D of the Income Tax Ordinance 2001, inadmissible input tax and tax credits.

On the basis of physical verification and available record, this is an established fact that the said company does not carry out any manufacturing activity.

The AGP suggested that the detailed probe needs to be carried out for exact determination of revenue loss cause to the government exchequer, the AGP survey added.

Sources said that the FBR has also started the process of blacklisting the company involved in tax fraud.

The FBR has already started investigation in the case of the Chahat Food Industries Limited and selected the case for audit. The High Court granted stay against the audit proceedings in the matter.

The FBR will resume pending audit proceedings after getting favourable order from the court.

The FBR had selected case for audit but cannot continue audit proceedings due to the court order.

The PAC has also referred the case of Usman Trade Linkers Multan to the NAB for initiation of criminal proceedings against all involved in the issuance of refunds of Rs6 billion.

Copyright Business Recorder, 2021