Federal Board of Revenue’s Directorate of Intelligence & Investigation (Inland Revenue) Lahore has recovered Sales Tax evasion worth Rs. 1.358 billion by a reputed company.
According to FBR, the ‘unnamed’ company had issued illegal credit notes of huge amounts in Annexure-C of the sales tax returns without corresponding debit notes from the buyers.
In this way, the company suppressed output tax to reduce its sales tax liability for the tax periods in which illegal credit notes were issued and thus deprived the national exchequer of due tax revenue.
The Directorate of Intelligence & Investigation (Inland Revenue) Lahore has detected tax evasion by a reputed company which led to recovery of sales tax amounting to Rs. 1358 Million and default surcharge of Rs. 26 Million on 20th June, 2023. 1/5
— FBR (@FBRSpokesperson) June 21, 2023
The team of the Directorate gathered information meticulously without disturbing the business activity of the company and initiated proceedings under section 38 of the Sales Tax Act, 1990, and retrieved the record and documents from the business premises. Thereafter, the company management agreed to deposit the amount of sales tax involved in the credit note issued/claimed in the return of March 2023 along with the default surcharge.
Thus, timely intervention by the Directorate led to the recovery of sales tax amounting to Rs. 1358 million and a default surcharge of Rs. 26 million on June 20, 2023.
In a statement, FBR said that it is committed to eradicating the menace of tax evasion and tax fraud in order to provide a level playing field to the businesses that are tax-compliant and contributing to the national exchequer.
Accordingly, to place a system check on such fake credit notes, the sales tax return has been amended to disallow suppliers of goods to issue/claim credit notes in the returns without first issuance of debit notes by the corresponding buyers.
