Inland Revenue Intelligence raids office, mill of M/s Premier Paper Mills Ltd

KARACHI: The Directorate General Intelligence and Investigation Inland Revenue (I&I-IR) raided business premises as well as manufacturing premises of M/s Premier Paper Mills Limited and assumed all data, records etc as the company faces investigations regarding sales tax evasion.[the_ad id=”31605″]There was information that M/s Premier Paper Mills Ltd, Lahore is engaged in manufacturing of paper and paper products and is committing a massive evasion of tax by suppressing its actual value of supplies.

Inland Revenue Preliminary inquiry in the matter revealed that the declared average price per metric ton of paper and paperboard being produced and cleared by the company is drastically lower than the actual value of supply on which the goods are being sold.

The Intelligence gathered & quotations obtained from the market revealed that presently the price of paper manufactured by the company in open market is Rs. 93000 per metric ton whereas analysis of declarations made by the registered person depicted that during the period January 2011 to December 2015, the declared average price of per metric ton of the same product is around Rs 65000.

The profit margin of wholesaler/dealer in this business is normally up to 5% which, thus, indicated a huge difference in the price value of supply per metric ton being declared by the M/s Premier Paper Mills and actual value on which sales are being made.

It was further noticed that during the period under reference the company produced and supplied exercise books. Supplies of ‘Exercise books” declared by the registered person was actually required to be declared as “Exempt Supply” instead of “Zero rated” with effect from 04/2014. In this regard, the company was required to claim input tax as per Sales Tax Rules, 2006 against the “Exempt supply”, whereas the company has violated the Rules and provisions of the Law.

Further, analysis of Sales Tax declarations of the company and cross matching of the data revealed that for the period January 2011 to December 2015 the total declared sales/value of supply of the company excluding sales tax comes to the tune of Rs7.533 billion out of which 75 percent i.e. Rs5.615 billion comprises or sales made to un-registered persons.

Inland Revenue Moreover, a major buyer of the company as declared in the sales tax returns is M/s Premier Trading Corporation. Investigations have revealed that M/s Premier Trading Corporation was just created as a business concern on paper only and that too in the name of an employee of M/s Premier Paper Mills Ltd with a meager capital of Rs20,000.

M/s Premier Paper Mills Ltd declared supply of taxable goods valuing Rs232 million to M/s Premier Trading Corporation which subsequently declared supply of same goods without any value addition to the un-registered buyers meaning thereby that most of the declared sales to unregistered persons by the registered person are un-identifiable.

It was also noticed that while quantity of goods produced and subsequent quantity of supplies of said goods in a tax period remains almost the same but the consumption of electricity varies to a greater extent on the both accounts viz-a-viz number of electricity units consumed for per metric ton of production and cost/value of electricity utilized for per metric ton of production.

This variation ranges from 1.0 percent to 64 percent, which is un-justifiable. The part of electricity cost in production and supplies is much higher than the cost of other variables/raw materials for production. This is how M/s Premier Paper Mills Ltd had managed to under invoice/under declare the value of its taxable supply resulting in evasion of due Sales Tax

Accordingly the legal action of searching the premises of the aforementioned business  was carried out and necessary records including personal computers, servers, laptops, private record documents, cheque books and record of Premier Trading Corporation were resumed to proceed in investigation/inquiry in the case.

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