During the drive against the registered persons involved in tax fraud by claiming/adjusting inadmissible/illegal input tax on the strength of fake/flying invoices, the Directorate of Intelligence & Investigation (IR) Lahore detected a tax fraud committed by M/s Saeed & Co.
Scrutiny of data for the tax period from July 2019 to December 2022 revealed that M/s Saeed & Co. was involved in claiming inadmissible input tax credit by way of showing debit & credit notes in Annexure-I of the sales tax return without making any purchase and creating inadmissible input tax in its sales tax returns.
It issued fake sales tax invoices on the strength of that inadmissible input tax to various registered persons enabling them to claim input tax credits.
The Directorate issued notices under section 38 of the Sales Tax Act, 1990 to buyers of M/s Saeed & Co. who were found fake/dummies and being used for layering of fake/inadmissible input tax. The fraudsters used these fake/dummy units to issue further fake sale tax invoices to registered persons/beneficiaries. The fraudsters managed to create fake input tax through M/s Saeed & Co. and other fake/dummy units.
Then the Directorate issued notices to the end beneficiaries who have claimed/adjusted inadmissible/fake input tax on the strength of fake/flying invoices.
In response to the said notice, one of the beneficiaries has deposited the evaded amount of sales tax Rs. 96,908,516, default surcharge Rs. 10,092,565, and penalty Rs. 4,845,426 on account of inadmissible input tax against fake/flying invoices of M/s Aazan Enterprises, Al-JunaidImpex, and China Impex – all fake/dummy units.
The Federal Board of Revenue is committed to eradicating the use of fake/flying invoices in order to create equal opportunities for businesses to grow under perfect competition and contribute to national economic growth and development.
