LAHORE: The Directorate of Intelligence & Investigation (Inland Revenue) Lahore has detected sales tax evasion worth billions of rupees by a reputed company. The 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 from due tax revenue.

The team of 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 default surcharge.

Thus, timely intervention by the Directorate has led to recovery of sales tax amounting to Rs.1358 Million and default surcharge of Rs.26 Million on 20th June, 2023.

The Federal Board of Revenue is committed to eradicate the menace of tax evasion and tax frauds in order to provide 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.