ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to initiate disciplinary action against tax officials involved in sanctioning bogus sales tax refunds.
According to the FTO report, the FBR’s Directorate General of Intelligence and Investigation (DG I&I) had identified different field formations issuing Rs64.041 million worth bogus sales tax refunds to various companies.
A sum of Rs46.916 million sales tax refund was issued to M/S Crescent and Yasdan Traders International, while M/S AZ International received sales tax refund amounting to Rs7.507 million. Similarly, M/S Silicon International and M/s Amharic Traders were issued Rs5.458 million and Rs4.120 million, respectively, in sales tax refunds.
The FTO noted that although the DG I&I had issued “red alerts” to the concerned field formations in this regard, no action was initiated against the fake claimants as well as their connivers in FBR and Pakistan Revenue Automation Ltd (PRAL). “Also, there was no action proposed against the related bank officers who opened the bank accounts through which refund cheques were drawn.”
As per the FTO report, “FBR’s failure to sleep over such an important anti-tax evasion exercise carried out by the I&I led to serious instances of maladministration on account of certain acts of omission and commission, reflecting improper motives, jeopardizing good governance and transparency in tax administration.”
FTO findings further revealed that fake persons were registered in connivance with the FBR staff; refunds were claimed on the basis of fake and flying vouchers that led to a massive loss to the already cash-starved exchequer.
“This is evidently a case of gross maladministration, where, except blacklisting the registered persons, FBR had failed to initiate proceedings for retrieval of bogus refunds. It also sounds strange that the Directorate General I&I, after conducting such laudable effort of detecting fraudulent activities and issuing letters of red alerts to the filed formations, did not pursue the matter to its fruition,” the report added.
