The Federal Board of Revenue (FBR) has reportedly stopped its investigation into an alleged Rs11 billion tax fraud involving a prominent cement manufacturer and three other companies. The decision followed the sudden transfer of key investigating officers from the Internal Audit department to different cities.
According to a news report, the case initially gained traction after investigators claimed to have recovered Rs1 billion from the primary accused cement company. Encouraged by this progress, the Directorate of Internal Audit expanded the probe, requesting the Large Taxpayers Office (LTO) Karachi to audit three additional cement manufacturers.
The investigation uncovered a fraudulent scheme involving input tax adjustments based on fake coal purchase invoices. The fraud reportedly spanned 12 blacklisted companies and utilized FBR’s online portal to exploit their “active” status.
Investigators also revealed the use of “withholding adjustments” and “fake credit notes” to create fraudulent input tax claims.
Despite multiple opportunities since December 2023 to present supporting documentation, including purchase invoices, delivery challans, and bank payment proofs, the companies failed to provide evidence linking imported coal to their manufacturing processes. This violates Section 73 of the Sales Tax Act, 1990, which mandates payments to be made through proper banking channels.
Sources confirmed that the case has been shelved without official explanation, despite the serious allegations and substantial progress in the investigation. The sudden suspension of the probe has raised concerns about transparency and the potential influence of powerful industry players over regulatory processes.
The abrupt transfer of the investigating officers is being viewed as a setback in addressing large-scale tax fraud, sparking questions about accountability within the FBR.
