ISLAMABAD: Large Taxpayers Unit (LTU), Karachi is contemplating to initiate criminal proceedings against one of the leading cigarette manufacturers in customs court, due to massive tax evasion, sources say.
The cigarette manufacturer, which paid Rs 25 billion tax in last fiscal year, has deposited only Rs 12 billion in current financial year, sources said.
LTU Karachi has posted its officials at the premises of the said leading cigarette manufacturer in March under section 40B of the Sales Tax Act 1990 to monitor its production, sales of taxable goods and the stock position.
The Tobacco squad established by the Federal Board of Revenue (FBR) has also kicked off crackdown against this leading cigarette manufacturer in Rawalpindi and detected massive tax evasion that led to a contravention report with a penalty of Rs 500 million.
LTU, Karachi has finalized its proceedings and imposed a hefty penalty of Rs 3 billion and raised a FED demand of Rs 700 million against the said cigarette manufacturer.
The department was expecting to generate Rs 4-5 billion additional revenue after finalizing the findings on section 40B of the Sales Tax Act 1990.
LTU, Karachi was contemplating to initiate criminal proceedings against the said cigarette manufacturer in customs court and the FIR in this regard was likely to be lodged in couple of days.
Sources said that the modus operandi for duty and tax evasion was the said company marketed its products with wrong serial numbers in order to avoid legal proceedings over tax evasion and added that the said tactics were also confirmed through stock inventory where the raw material was shown ascended, instead of in-production.