Fake companies still active to give benefit registered persons under sales tax concessionary regime

KARACHI: Though the Federal Board of Revenue (FBR) has prevented the leakage of illegal refunds through taking stern measures yet many companies having registrations on fake documents are still active for misusing the concessionary regime allowed through statutory provisions.
SRO 1125(I)/2011 is the most attractive notification for unscrupulous persons who are still dodging the authorities by availing the concessionary regime and some of the big companies are getting benefits by making supplies to registered companies on fake documents for availing relief of five percent sales tax.
Under the notification, registered persons making supplies of goods under five zero-rating sectors to another registered persons the tax rate will be zero percent otherwise the rate is prescribed at five percent, which has to paid by the supplier.
Mumtaz and Sons having Sales Tax Registration Number 1700358498018 is one of the example of fake companies, which is active on the basis of address that is used by someone else, yet the company is showing 100 percent compliance in filing sales tax on monthly basis. The record of monthly returns of the company showed that it purchases from leading textile manufacturers or units in the sector, included:
Moon Light Washing and Dying;
Rehman Kareem Industries;
Ali Raza Textile Mills (Pvt) Limited;
M/s Chawala Enterprises;
M/s Rizwan Ali;
SMS & Company Gujranwala;
M/s Hafiz Dyeing (Pvt) Limited;
Master Dyeing Industries;
Al-Kareem Dyeing (Pvt) Limited;
M/s Umer Dyeing (Pvt) Limited;
M/s Al Abid Industries (Private) Limited
Siddiqui Dyeing;
N P Spinning Mills Limited;
Z H Garment;
M/s Surgical World;
Alpha Trading International;
Indigo Moon;
Sami Enterprises;
Brilliant Corporation;
G. M. International;
M/s IA Enterprises;
Adaptive Solutions
A K Links;
Ahmed Smelter Company (Pvt) Limited;
M/s S G Impex;
Tanveer Traders;
Al Hamd Traders;
China Imporium;
Dua Garments;
Al Tawakal Traders;
M/s International;
Transcom Tech;
Hattar Woolen Mills (Pvt) Limited;
Zubair Weaving Factory;
Three Star Cottex;
Imran Impex;
Tariq Weaving Factory;
Mahmood Saeed Weaving Factory;
M S B Weaving;
Asghar Ali Weaving Factory;
Mohammad Yaqoob Weaving Factory;
Amjad Hussain Power Looms Own;
Ali Weaving Factory;
Kaleem Khan Weaving Factory;
Muhammad Afzal Weaving Factory;
Riasat Hussain Weaving Factory;
Bilal Silk Factory;
In the above mentioned units those are also included that have been blacklisted by Inland Revenue offices for obtaining illegal refunds through fake and flying invoices.
Surprisingly, Mumtaz and Sons is still active despite the unit was detected by Regional Tax Office (RTO) II Karachi for its fake address and sent recommendations to RTO I Karachi for its blacklisting/suspension but no action take so far.
Mumtaz and Sons is also mentioned in a complaint made by Transparency International Pakistan in issuance of illegal refunds in the cases of Ahmed Smelter and Transcom Tech – the above mentioned companies – and alleged two auditors Munirul Haq and Gulrez for their involvement in establishing fake companies.
Sources in FBR said that the benefit of five percent is distributed between manufacturers and persons established fake companies at the ratio of 3:2.
The sources said that high officials above the rank of chief commissioners are also involved in such scam that is why no corrective measures have been taken so far.

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