FTO Recommends FBR To Take Criminal Action Against Officials Involved In Fake Tax Refund Claims Cases

The Federal Tax Ombudsman (FTO) has recommended the FBR to direct the Chief Commissioner- Inland Revenue (IR), Corporate Regional Tax Office (RTO) Karachi to investigate and identify the officials involved in registration of fake registered persons of the companies and initiate disciplinary/criminal action against those found involved

ISLAMABAD, (UrduPoint / Pakistan Point News - 21st Feb, 2020 ) :The Federal Tax Ombudsman (FTO) has recommended the FBR to direct the Chief Commissioner- Inland Revenue (IR), Corporate Regional Tax Office (RTO) Karachi to investigate and identify the officials involved in registration of fake registered persons of the companies and initiate disciplinary/criminal action against those found involved.

After investigating irregularities committed by the Federal board of Revenue (FBR) fled formation in processing and sanctioning of bogus sales tax refund during the period 2011-14, the FTO has recommended the FBR to initiate appropriate action including criminal proceedings leading to prosecution of the registered persons for retrieval of loss of revenue swindled from public exchequer and report compliance within 45 days.

According to notifications issued here on Friday, the FTO found that the departments concerned had failed to initiate action against the persons of officials involved in claiming, processing and sanctioning of refund claims as retrieval of inadmissible input tax was tantamount to maladministration in terms of Section 2(3)(i)(d) and (ii) of the FTO Ordinance.

According to details, in the case of M/s Hico Manufacturer, a registered person engaged in manufacturing of basic iron and steel, the investigation conducted by the I&I-IR.

It was revealed that the registered person claimed sales tax refund pertaining to period March, April, and June to August 2012 amounting to Rs 67 million although it was a small concern involved in repair of water pump and machines. Moreover, the ratio of sales disclosed viz a viz refund claim was very high as compared to a genuine claimant. Further during the tax period March-September 2012, its average electric bills were Rs 570 and Rs 7,740 respectively.

The supplies were also made to unregistered person on zero rate. No input tax on utilities was claimed through the registered person claimed to be a manufacturer.