The Federal Board of Revenue (FBR) had temporarily closed the Centralised Sales Tax Refund Office (CSTRO) at the FBR House, following fraudulent payment of sales tax refund involving millions of rupees through the electronic refund payment system. Sources told Business Recorder here on Saturday that the CSTRO had been temporarily shut down, as a precautionary measure to prevent any possible misuse of the system.
This is first of its kind of tax fraud detected in the electronic system of the CSTRO which was set up for speedy payment of refund by eliminating all manual stages in printing of cheques to ensure refund payments on the spot. The biggest advantage of the CSTRO was that the cheques were immediately printed at the FBR for speedy handing over to the taxpayers. An amount of approximately Rs 51 million was wrongly paid to a registered unit, through the CSTRO, which has been fully scanned to complete investigation of the case.
The CSTRO at the FBR House was closed on August 19, 2011 and now the system would become fully operational from Monday. The system was temporarily closed to properly analyse the electronic data to ensure proper investigation of the case. As now all the involved persons have been arrested, the system would be resumed from Monday, without any interruption. It was just a precautionary step taken by the concerned authorities to place necessary checks in the system to avoid any kind of wrong payment of sales tax refund through the electronic system. There is no problem in the system, which is fully operational to ensure speedy payment of refund under the electronic system.
Sources said that the case was promptly detected and all involved persons have been arrested due to joint efforts of the PRAL, the IT arm of the FBR and the Directorate General of Intelligence and Investigation Inland Revenue, FBR. Following timely investigation by the PRAL/directorate IR, the FBR has not only promptly resolved the case, but the names of the involved persons would also be placed on the Exit Control List (ECL). The FBR is taking further steps to make the CSTRO foolproof to check any kind of manipulation of the electronic system originally designed to facilitate sales tax refund payments.
Details of the case showed that on August 19, 2011 through an investigative query triggered by a post-clearance audit report received from Regional Tax Office (RTO), Peshawar, Pakistan Revenue Automation Limited detected a fraudulent refund payment to a registered taxpayer of Rs 51,424,244 made on July 28, 2011. Immediately, this detection was communicated by the PRAL to FBR Member (Inland Revenue) and Director General Strategic Planning and Statistics (SP&R). On the instructions of Member (Inland Revenue), details of the case were then provided to Chief Commissioner at RTO-I, Lahore, under whose jurisdiction the case fell. Similarly, Chief Commissioner, Sargodha ,was notified at night because the concerned bank branch was in his jurisdiction. The following day ie August 20, 2011, Director General Intelligence IR was also brought in the loop and with his support, RTO, Lahore, was able to arrest one person from the registered office of the taxpayer. Subsequently, another arrest has been reported to have been made by RTO, Lahore, sources quoted report of the case.
At the same time, the PRAL and the Directorate General Intelligence IR are conducting a detailed internal investigation of the fraud. "We do not at this time have conclusive evidence because of the elaborate segregation of responsibilities which we have in place. As a matter of precaution, it is, however, recommended that the involved employees may immediately be placed on the ECL as we move forward with the investigation both within PRAL and by the field organisation", sources added.