2 Companies Allegedly Involved in Rs. 6 Billion Mega Tax Fraud

Public Accounts Committee (PAC) has referred two mega tax fraud scams involving over Rs. 6 billion to the National Accountability Bureau (NAB) for investigation of tax evasion and illegal exemptions/concessions availed by two companies.

On Thursday, Rana Tanveer Hussain, Chairman of the PAC, decided after declaring the Federal Board of Revenue’s (FBR) response as unsatisfactory in the matter of the Chahat Food Industries Limited.


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The team of the Auditor General of Pakistan (AGP) visited the head office and factory’s premises in Lahore and Vehari for verification and found no manufacturing activity. The company availed illegal exemption under section 65D of the Income Tax Ordinance 2001, inadmissible input tax, and tax credits.

On the basis of physical verification and available record, this is an established fact that the said company does not carry out any manufacturing activity. AGP suggested that a detailed probe needs to be carried out for exactly determining the cause of revenue loss to the government exchequer, AGP survey added.

Members of the committee asked the FBR Chairman, FBR Member Inland Revenue (Operations), and FBR Member Audit and Accounting to disclose the names of the directors of the Chahat Food Industries Limited. However, tax authorities did not disclose the names before the committee.

MNA Sardar Ayaz Sadiq stated that if the FBR can disclose the income tax return of Justice Qazi Faez Isa, then why the names of the directors of a company involved in tax fraud cannot be disclosed?


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Chairman Federal Board of Revenue (FBR), Asim Ahmad, on Thursday informed the Public Accounts Committee (PAC) that the FBR has no objection to sending two tax fraud cases to the National Accountability Bureau (NAB) for investigation. If the committee thinks that the NAB can investigate the cases in a more appropriate manner, then we have no objection in this regard.

Briefing the committee, Chairman FBR said that the FBR has already started an investigation in the case of Chahat Food Industries Limited and selected the case for audit. The High Court granted stay against the audit proceedings in the matter. The FBR will resume pending audit proceedings after getting favorable order from the court. The FBR had selected the case for audit but cannot continue audit proceedings due to a court order.

Chairman FBR requested the committee to grant 30 days for completion of the investigation. Due to the court order, we cannot directly approach the taxpayer but conduct an investigation on the basis of third-party information, which needs time, he said.

Asim Ahmad added that the amount of tax evasion in the second case of Multan is Rs. 992 million and not Rs. 6 billion.


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FBR Member Inland Revenue (Operations) categorically informed the committee that the Universal Self-Assessment Scheme (USAS) has been approved by the Parliament. Every taxpayer has the right to file an income tax return under the USAS, which is accepted under the law unless we have evidence of concealment of income. Every taxpayer enjoys the USAS and files their returns. The same self-assessment scheme is applicable on the sales tax side.

FBR Member IR Operations admitted that the FBR has no mechanism to check each and every filed income tax return under the self-assessment scheme. The FBR has limited manpower and resources and cannot conduct an audit of each and every return filed. If the FBR receives a complaint or evidence, the risk-based audit is being conducted.

“These units are on our radar and we will recover each and every penny from them”, FBR Member Operations added.


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Two PAC members, Senator Mushahid Hussain Sayed and Senator Talha Mahmood, were of the view that the FBR is the competent authority to investigate such matters, and FBR should be provided an opportunity to complete the investigation in the said case.

PAC Members, Noor Alam Khan, Raja Riaz Ahmad, and MNA Raja Pervaiz Ashraf, asked the Chairman PAC to refer both the cases to the NAB for investigation.