A network of cybercriminals allegedly used the dormant account of a retired armed forces officer to conduct fake transactions worth Rs1.625 trillion, resulting in a massive Rs 528 billion sales tax loss, BR reported.
During a press conference at the Federal Tax Ombudsman’s (FTO) office, Almas Jovindah, Advisor for Legal & Media, disclosed that the operation involved insiders from the Federal Board of Revenue (FBR) and its IT support agency, Pakistan Revenue Automation (Pvt) Ltd (PRAL), who allegedly assisted the gang.
According to Jovindah, the gang accessed dormant tax accounts on the FBR website, particularly targeting the account of Mrs. Firdous Anwar, a 79-year-old woman who has been filing “null” returns for over four years.
The criminals filed bogus transactions under her account, declaring Rs1.625 trillion in sales of iron and steel scrap, triggering a tax liability of Rs 292.549 billion and an additional tax of Rs 235.340 billion.
These fictitious transactions were then directed to various accounts in the supply chain, with Rs81.434 billion routed to an account linked to a retired armed forces member. Ultimately, these transactions benefited manufacturers in Lahore and Faisalabad.
The gang reportedly changed the original account passwords and email addresses, preventing the real account holders from accessing their profiles. Jovindah noted that these were “paper transactions” involving no actual goods movement or financial transactions, violating Section 73 of the Sales Tax Act. The scheme highlights flaws in the enforcement and monitoring systems, allowing for fraudulent activities with little fear of detection.
The FTO’s office revealed that security checks on the FBR portal—meant to prevent such fraud under Rule 18(5) of the Sales Tax Rules 2006—had been disabled during the time of the fraudulent transactions. This allowed the gang to bypass standard safeguards.
In a related incident, Sultan Ali, a deceased taxpayer registered as a proprietor of M/s New Metro Footwear Co., was used by the gang to file fake returns six years after his death in 2017.
The FTO called the misuse of taxpayer information and the breach of data security by unauthorized parties a serious administrative failure, which constitutes maladministration under Section 2(3) of the FTO Ordinance.
