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ISLAMABAD: On the recommendations of the Federal Tax Ombudsman (FTO), the Federal Board of Revenue (FBR) has directed the Directorate General of Intelligence & Investigation–Inland Revenue to investigate a case of fake supplies where the declared purchaser is totally unaware of any supplies and never ordered any goods for purchases.

According to an order issued by the FTO, in the instant case, the complainant voluntarily filed his return of total income for the tax year 2021 declaring taxable income Rs745,254 and showing withholding tax deduction Rs263,201. Reportedly the return was filed by a tax practitioner on his behalf. Then he came to know that M/s Nadeem Corporation had shown supplies in his name amounting to Rs26,319,955 on which tax @ one per cent under Section 236H of The Ordinance, 2001 was deducted.

He sent an application to the chairman FBR and requested to initiate action against the corporation for recording fake supplies against his name. When the complainant received no response from the FBR, he approached the FTO.

The FTO recommended FBR for a detailed investigation of the sales tax of the said corporation. The sales tax returns, as well as, comprising details of domestic supplies of this corporation revealed that the registered person did not pay tax against its supplies to unregistered persons under section 3(1A) of the Sales Tax Act,1990.

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The aforementioned position clearly depicts that the corporation had committed tax fraud, as they knowingly, dishonestly, and without any lawful excuse made taxable supplies to the unregistered persons without paying further tax and with deliberate and malafide intent evaded the further tax which they were required to deposit in the government exchequer.

The FTO directed the FBR to co-opt the complainant. The concerned officer contacted Ghulam Dastageer (complainant) and to verify the stance of this corporation regarding supply of goods and also asked to provide certain documents. One of the partners in AOP of this corporation submitted his reply wherein he stated that he had supplied goods to the complainant and provided sales invoices, sales register.

However, he failed to produce purchase order of the complainant, delivery challan and other major documents necessary for proving the supply of goods. As per the FTO’s directions to the FBR, the case of this corporation had been referred to Intelligence & Investigation–IR for a detailed investigation. As soon as an investigation is completed, the fate of fake declaration shall be decided as per facts of the case, the FTO added.

Copyright Business Recorder, 2022

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