FTO recommends FBR to take criminal action against officials involved in fake tax refund claims cases
ISLAMABAD: The Federal Tax Ombudsman 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 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 a notification, the FTO found that the concerned departments had failed to initiate action against the persons or 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 Friends Enterprises, Karachi a registered person engaged in the manufacturing of other textile NEC, the investigation conducted by the Directorate of l&I-IR Karachi revealed that the claim of sales tax refund of Rs13.631 million was bogus as it was initially rejected by the ERS.
The registered person was de-blocked on April 11, 2012 to process bogus refunds; the refunds were sanctioned against exports and local sales but upon examination of the data of exports maintain in revealed that no exports were made by the registered person RP during the period June 01, 2010 to December 31, 2011 which includes the tax periods related to sanctioned refunds.
In another case of M/S Sajida Enterprises, a registered person engaged in the manufacturing of paper and paperboard, the investigation conducted by I&I-IR Karachi, revealed that the person was registered on March 12, 2012 and filed refund claim of Rs4.082 million for the tax period March 2012 and the input tax claimed by the registered person from M/S Sajid and Brothers and M S Knit Com for the tax period March 2012 was bogus and the refund created on this basis was also fake. – APP