ISLAMABAD: The Intelligence and Investigative Department of the Federal Board of Revenue (FBR) has detained five people engaged in the issue of fake and flying invoices, which caused billions of rupees in losses to the national exchequer.

The top tax authority has intensified its crackdown on the organised mafia and beneficiaries involved in sales tax fraud in accordance with the FBR’s enforcement initiatives to improve tax compliance.

Last week, FBR Chairman Rashid Mahmood Lang­rial stated that over Rs3 trillion in sales tax fraud occu­rred yearly, with the chief financial officers of large corporations conniving in this massive financial crime.

An official announcement said that regional Directorates of Intelligence & Investigations Inland Revenue arrested five accused on Monday across the country, including one of the leading fraudsters engaged in creating chains of dummy businesses and four members of top management of end users/beneficiaries—chief financial officers (CFOs)—responsible for the tax fraud involving billions of sales tax loss to the national exchequer.

The Directorate of Intelligence and Investigation, Inland Revenue, Hyderabad has arrested the CFO and purchase officer of a leading Lahore-based battery manufacturer on charges of abetment/connivance in sales tax fraud by claiming fake input tax on lead. The revenue loss caused by the arrested accused alone is more than Rs1 billion to the national exchequer.

Separately, the Faisalabad Directorate arrested CFOs of two sister concerns and leading Faisalabad-based textile unit for claiming fake input tax on coal.

The revenue loss caused by the fraudulent practices involving a gang of fraudsters runs hundreds of millions of rupees to the national exchequer. An FIR had already been registered against the suppliers, beneficiaries, connivers, and others.

In another development, the court rejected the pre-arrest bail of accused Taswar Shahid, who was nominated in several FIRs.

Subsequently, he was arrested from outside the courtroom. He is a leading gang member, operating fake and dummy units to generate fake sales tax input, which is used by the end users/beneficiaries and causes billions of rupees in losses to the exchequer.

Published in Dawn, October 15th, 2024