President stressed recovery of the embezzled money

The President lauded the Directorate General of I&I-IR (Intelligence & Investigation and Inland Revenue) for issuing Red Alerts and detecting fraudulent activities in FBR, and regretted that the "national exchequer was made to suffer colossal loss

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President Dr Arif Alvi on Friday rejected a representation, filed by Federal Board of Revenue (FBR) against the order of Federal Tax Ombudsman (FTO), in a case of bogus tax refunds worth over Rs 14 million made to a fake Registered Person (RP). The President directed FBR to recover the amount paid on the basis of fake/flying invoices. The President upheld the decision of Federal Tax Ombudsman (FTO) following its suo-moto action against the irregularities committed by the FBR field formations in registering, processing, and sanctioning and issuing sales tax refunds to fake RPs during the period 2012-13. President Alvi in his decision wrote that “it was surprising and shocking that FBR failed to investigate fake claims where refund had already been made in full connivance with FBR officials”. Expressing strong displeasure over the scam, he said, “How can we afford not to recover and criminally charge the fraudsters”. The President stressed recovery of the embezzled money, saying that “instead of resistance by FBR to the suo-moto action by FTO, they should recover the precious money of the people of Pakistan”. It is worth-stating that FBR has filed 74 similar representations with the office of the President against the orders of FTO. Out of 74 representations, 22 cases have been decided while 52 are still awaiting adjudication. Furthermore, according to the relevant record, FBR had allowed Rs 875.277 million to be paid to fake RPs, of which a payment of Rs 223.312 Million has already been made. The FTO in its verdict, dated 27.04.2020, had directed the Chief Commissioner-Inland Revenue and Corporate Regional Tax Office (RTO), Karachi “to investigate and identify the officials involved in registration of fake RPs and initiate disciplinary/criminal action against those found involved and report compliance within 45 days.”. The FTO in its decision further directed FBR to initiate appropriate action including criminal proceedings leading to recovery of amount swindled from public exchequer through claiming inadmissible input tax and bogus refund. Instead of implementing the directives of FTO, the FBR challenged its jurisdiction and filed a representation with the President taking plea that it could not issue such orders and rely on ‘interdepartmental correspondence of FBR’. The President rejected FBR’s representation and made it clear that the body could exercise its power conferred under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 to investigate irregularities in the department. It is to be mentioned here that the investigations conducted by Directorate General of I&I-IR (Intelligence & Investigation and Inland Revenue), Karachi in case of M/s Z.A. Exports — a fake RP with principal activity as manufacturer of iron and steel — revealed that bogus claims worth Rs 18.519 million were made in tax period 2012-13 against irrelevant invoices. The President lauded the Directorate General of I&I-IR (Intelligence & Investigation and Inland Revenue) for issuing Red Alerts and detecting fraudulent activities in FBR, and regretted that the “national exchequer was made to suffer colossal loss of revenue”.

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