In a significant crackdown on tax evasion, the Directorate General of Intelligence and Investigation-Customs in Karachi has exposed a fraudulent scheme by tea importers. The operation, led by Director Engineer Habib Ahmed and Additional Director Afzaal Watto, has resulted in the filing of several First Information Reports (FIRs) against prominent tea companies.

The investigation, initiated by Assistant Collector Saud Hassan, revealed that a number of manufacturers and importers were exploiting an income tax exemption meant exclusively for industrial use by manufacturers in Azad Kashmir. These entities falsely declared their tea consignments for industrial use during customs clearance, thereby availing themselves of Withholding Tax (WHT) exemptions ranging from 5.5% to 6%. However, instead of using the black tea for manufacturing purposes, these companies were found to be selling it in the local markets of Pakistan, particularly in Karachi, bypassing the intended industrial process in Azad Kashmir.

The fraudulent activities came to light following a tip-off to the Director General, Intelligence and Investigation-Customs, Islamabad, Faiz Ahmed. The subsequent probe uncovered that the tea, ostensibly imported for blending, packing, and manufacturing in Azad Kashmir, was instead being de-stuffed at private warehouses in Karachi. From there, it was distributed and sold across the country, never reaching its declared destination in Azad Kashmir.

The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) had previously raised concerns with the Federal Board of Revenue regarding the misuse of the AJK-based income tax exemption. This prompted further investigation, which confirmed that thousands of black tea consignments had been diverted and sold locally, resulting in a substantial loss of revenue for the national exchequer.

The companies implicated in this scandal include M/s. MIK Industries (Pvt.) Ltd., M/s. KF Food Complex (Pvt.), M/s. Inqlab Enterprises (Pvt.) Ltd., M/s. Margina Tea (Pvt.) Ltd, M/s. Salam Food Industries (Pvt.) Ltd, and M/s. ZRM Foods (Pvt.) Ltd, all of which are based in Azad Kashmir. An official statement also implicated the Senior Vice Chairman and senior members of the Pakistan Tea Association in the evasion of customs duty taxes.

The authorities have taken decisive action to address this issue, and the investigation continues as they work to recover lost revenues and hold the responsible parties accountable.