ISLAMABAD, March 18: The intelligence wing of the Federal Board of Revenue has unearthed a fraud of Rs9.8 billion in sales tax, which was done by issuing fake invoices for obtaining input adjustments and refunds. A source in the FBR told Dawn that the amount involved in the biggest tax fraud in the country’s history could go up because the investigation was still in progress. No arrest has been made so far.

FBR spokesperson Riffat Shaheen confirmed to Dawn the detection of the sales tax scam.

The investigation to identity the fraudsters, who had used fictitious companies for claiming refunds or input tax adjustments, was in progress, she said. The authorities had been instructed to trace out possible links of fraudsters with tax officials across the country.

According to the source, a team of investigators had detected 146 dummy sales fake/flying invoices involving more than Rs7.7 billion.

The source said the fraud had been unearthed on the basis of a lead received from an ongoing investigation into a similar Rs2.1 billion sales tax fraud detected last month against 98 dummy registered persons.

The government has lodged three FIRs and eight people, including an officer of the FBR, have been arrested so far and an amount of Rs745 million has been recovered from them.

The number of dummy sales tax registered persons has now gone up to 244.Under the law, a registered person can deduct the amount of sales tax mentioned on the purchase invoice from the tax payable. As a result, 3,500 recipients of fake invoices, a majority of them located in Lahore, Gujranwala, Faisalabad and Karachi, have defrauded the government of Rs9.8 billion.

Meanwhile, the FBR said in a statement that the directorate general intelligence and investigation, Gujranwala, had arrested two persons accused of evading duty/taxes worth millions of rupees.

On receipt of a lead regarding sales tax evasion of Rs29 million by M/s Gujrat Precasting Industries, the investigation team carried out a raid on the unregistered entity, making taxable supplies without the payment of sales tax and federal excise duty.

The accused identified as Marghoob Shakir Izhar and Muhammad Muzaffar Iqbal had been arrested and the evaded amount was recovered from them, the statement said.