KARACHI: The Directorate of Post Clearance Audit & Internal Audit (South) has unearthed a major tax evasion scheme, filing a First Information Report (FIR) against a local textile importer for allegedly evading over Rs. 143 million in taxes by falsely claiming a “manufacturing status” to avail unlawful exemptions.
On the instructions of Director Genera PCA Yaqoob Mako, Director Afzal Wattoo has started lodging cases against wrong doers. Appraising Officer Imran Sethi detected this massive evasion.
The accused, identified as Syed Bilal Raza, proprietor of M/s Imperial Textile (NTN: B418633-7), is alleged to have systematically misused exemptions and concessionary tax rates reserved for bona fide manufacturing units over the course of nearly two years.
According to the FIR and related audit documents, the investigation was launched after authorities received credible information about the potential misuse of tax exemptions. A subsequent audit and physical verification of the firm’s registered addresses revealed a stark discrepancy between the claimed manufacturing operations and reality.
The Phantom Factory
A team from the directorate conducted verification visits on September 4, 2025, to two addresses provided by M/s Imperial Textile.
One location at Ground Floor, Plot No. 165/1, Block-C, Manzoor Colony, Karachi, was found to be merely a storage godown with no machinery or manufacturing activity present. During a telephonic conversation with the audit team, Syed Bilal Raza himself confirmed that this was his only business premises and that “he was not conducting any manufacturing process for the imported materials.”
The second address at Survey No. 57/3 654, Street No.2, Sector G, Ch Rehmat Ali Road, Manzoor Colony, was discovered to be a residential building with no connection to the importer, a fact corroborated by the building’s residents.
The Scale of the Fraud
Scrutiny of import data revealed that M/s Imperial Textile dealt in the import of assorted textile fabrics against 70 separate Goods Declarations (GDs) from October 2023 onwards. The total declared value of these imports was over Rs. 1.25 billion.
By falsely presenting itself as a manufacturing unit, the firm illegally claimed exemption from Additional Sales Tax (AST) and a reduced rate of Withholding Income Tax (WHT). The total evaded amount has been calculated as Rs. 143,334,575/-, which includes Rs. 94,460,733/- in evaded Income Tax.
Legal Repercussions and Ongoing Investigation
An audit observation was issued to the importer to justify its position and pay the evaded dues, but no response was received. The directorate has concluded that Syed Bilal Raza “has no defense to extend and thus is found involved in tax evasion and fiscal fraud.”
The FIR invokes a multitude of sections from the Customs Act, 1969, the Sales Tax Act, 1990, and the Income Tax Ordinance, 2001. The accused faces prosecution under severe penal clauses, which can include heavy fines and imprisonment.
The investigation is also examining the role of two clearing agents used by the firm: Najmi Zergham of M/s Junaid Qamar Enterprises and Abdul Wahtd of M/s S.S.S. Enterprises. Their responsibilities and potential involvement in the fraudulent filings will be scrutinized under relevant customs laws.
The case has been formally lodged with the court, and a detailed investigation report is expected to be submitted as the legal proceedings advance.