In pursuance of the FIR No 04/2011 dated 26.03.2011, registered by the Directorate of Intelligence & Investigation-FBR, Lahore, in a mega tax fraud of more than Rs 7.5 billion, the Directorate has arrested two more accused, Muhammad Azam Qadri and Ikhlaq Ahmad, allegedly involved in issuance of fake sales tax invoices for generating illegal input tax adjustment/refund.
The court of Special Judge Customs, Taxation and Anti-Smuggling, Lahore, on Friday granted seven days physical remand of the accused for further investigation. It may be recalled that the Directorate had already arrested accused Khalid Mehmood, Khalil, Rana Saqeem and Rana Shahzad on the same charges, who are presently in the custody of the agency on physical remand.
More arrests are likely to be made in the case. DI&I sources told Business Recorder here on Friday that it had come to surface that arrested accused, along with a cartel of other gangsters, were involved in issuance of fake sales tax invoices, for generating illegal input tax adjustment/refund, on behalf of 144 dummy supplier, registered persons making dummy transactions with recipient registered persons, primarily located in Lahore, Faisalabad, Gujranwala and Karachi but generally spread all over the country.
The new revelation has brought the till date detected total taxes evasion to the tune of more than Rs 10 billion (approximately). The accused, who, earlier issued fake sales tax invoices to recipient registered persons for claiming illegal input tax adjustments, included Muhammad Azam, Ejaz Latif, Asif Hanif, Iftikhar Ali, Muhammad Fayyaz and others. Muhammad Azam had already been arrested in FIRs No 14/2010, 18/2010 & 04/2010, during previous investigations while new principal accused Ejaz Latif, involved in an earlier detected sales tax evasion to the tune of Rs 613 million, was arrested in the FIR No 25/2010 dated 30.11.2010. The arrest warrants of the absconding accused have already been issued by the Special Judge Customs, Lahore.
Sources said that in pursuance of the probe, conducted in respect of 144 dummy registered persons, the Directorate of Intelligence & Investigation-FBR, Lahore, brought the matter to the knowledge of Muhammad Riaz, Director General, Intelligence & Investigation-FBR, Islamabad, who in view of the sensitivity of the matter, discussed the issue with Salman Siddique, the Chairman FBR and Dr Abdul Hafeez Sheikh, Federal Minister for Finance and Revenue and it was decided to register FIR.
About Rs 10 billion tax evasion scam has raised serious questions in the circles of fiscal policy/tax regulators about the facility of web portal self-filing, self-assessment and self-deposition of due taxes in the national exchequer, allowed to sales tax registered persons in the category of commercial importers, wholesalers, dealers, manufacturers and other such like categories. The intent of the Government/FBR was to allow the registered persons to work in interference/harassment free environment without having any interaction with tax authorities. However, the said facility has been criminally exploited to cause huge damage to the national exchequer as well as creating distortions and difficult environments in creating level playing field for conducting lawful business in formal sector of the national economy.