KARACHI: While investigating a complaint, FTO has unearthed a mega scam of billions in the form of fake sales tax supplies in cement sector.

Accordingly Tax Ombudsman has directed FBR to conduct comprehensive investigation not only in cement sector but also in other high turnover sectors like cement, sugar, steel, cigarettes, beverages and fertilizers.

Briefly, the complainant was a cement retailer who had disowned huge supply of cement from two suppliers who shown huge supplies to the complainant at the time of filing their sales tax return.

Complainant reported the case to RTO Abbottabad, however, no action was taken to remove his entries from MIS record, IRIS. Therefore the complainant took up the matter with Federal Tax Ombudsman. During the investigation, Chief Commissioner IR, reported the following facts of FTO:

1. Sales Tax return of complainee company were examined which revealed that registered person has made Sales to the complainant as un-registered buyer since Registered person is dealing in Third Schedule item therefore, no sales tax or further tax is involved in the instant case.

2. Tax profile of complainee company has been scrutinized and it is found that during the complaint period i.e July 2019 to July 2O2lthe registered person has made Sales amounting to Rs. 6.8 billion and Sales Tax involved is amounting to Rs. 1.22 billion Registered Person deals in Cement Sale which is third Schedule item.

3. As per IRIS record the complainee company, was selected for audit under Section 177 of the Income Tax ordinance, 2001 for the tax year 2016 and 2019. Audit proceedings for the Tax Year 2016 have been finalized under Section 122 (1) of the Income Tax ordinance, 2001 and tax demand amounting to Rs. 694 million has been created. However, audit proceedings for the tax year 2019 are pending. Therefore, during the audit proceedings content of complaint shall be kept in mind and will be finalized under the relevant provisions of law”.

In view of the above stated Tax Ombudsman has made the following recommendations to FBR:

1) Director General l&l-IR to conduct incisive investigation regarding allegations leveled & surfaced during the instant complaint; especially with reference to conduct of the complainee companies.

ii) Directorates of I&I-IR to conduct similar exercises in their respective jurisdictions with reference to high turnover sectors like Cement, Sugar, Steel, Cigarette, Beverages and Fertilizers

iii) RTO, Abbottabad to take corrective measures, as deemed appropriate, in complainant’s MIS record of IRIS in light of the findings of the investigation.