An intelligence wing of the Federal Board of Revenue (FBR) was caught in an embarrassing situation because of lack of physical verification for sales tax registration when it detained an office boy and a driver on charges of evading taxes worth Rs 72.92 million through 44 fake registered companies.
Preliminary reports suggested that the office boy named Muhammad Ismail, son of Abdur Rasheed, and driver named Asif Iqbal, son of Noor Bux, had been detained by FBR's Directorate-General of Intelligence and Investigation (DGI&I) along with 15-20 persons. Flaws in the Federal Board of Revenue's (FBR) sales tax registration process is costing not only a loss of billions of rupees to the national exchequer but also making the lives of common man miserable.
Sources said that the Directorate had lodged an FIR 693-DCI/S Tax/Fake Input/2011 in the court of special judge (custom & taxation) against 164 companies involved in unlawful adjustment of input tax on the basis of fake invoices issued to different companies.
They said that M/s Amin Enterprise, having the registration No1750-999993-446, had also been nominated in the said FIR. The firm is cited as a supplier and is supposedly involved in issuing fake invoices to various companies for unlawful adjustment of input tax and refund.
The profile of the firm's owner Muhammad Ismail was arrested on March 5. During investigation, the accused Ismail said that he had been working in M/s Cezanne Naqsh & Associates as an office boy since 2008 and getting a salary of just Rs 7,000 per month.
Moreover, the sources said Ismail had categorically disowned the said company, saying that he had got nothing to do with it. Meanwhile, M/s Cezanne Naqsh & Associates verified Ismail's statement.
Keeping huge transactions worth Rs 51.44 million in view, the firm's bank account was declared to be a fake one. The sources said that fake transactions had been made in the name of said company between 2008 and 2009, when Muhammad Ismail was working as a mere office boy since 2008.
Source said that the department had verified that the accused Ismail belonged to poor segment of the society and he had been brought up by one of his uncles since childhood. Similarly, Asif Iqbal, son of Noor Bux, was said to own a fake registered company 'Sunrise Traders'.
They said Asif had also disowned the company which was said to be involved in tax fraud worth Rs 21.48 million. He said that he had been working as a driver of a cargo vehicle. Officials confirmed the arrests and said that copies of CNICs of 15-20 persons had been misused to get fake registrations of several units. They said the board's facilitation policy to broaden the tax base without any physical verification was causing irreparable damage to the national exchequer. The board's avoidance to physically verify sales tax registration was providing ample opportunity for wrongdoers. Bogus units, they said, were being registered on mere photocopies of CNICs. They also urged the authorities to drop the facilitation policy, especially in registration process, to avoid the recurrence of such embarrassing episodes.