FBR Registers FIR Against Top Cement Company for Alleged Tax Fraud

The Federal Board of Revenue’s (FBR) Directorate of Internal Audit, Inland Revenue, Karachi has registered an FIR against a leading cement company on allegations of tax fraud worth Rs. 316 million. According to the document, the directorate of the Internal audit team visited offices of M/s Al Junaid Impex in different areas of Karachi but the team came to know that offices of said company do not exist there. Neither any godown or vehicles, nor office staff of M/s Al Junaid Impex (RTO-1) Karachi was found which is a necessary requirement for any genuine business concern for coal or other items. Hence M/s Junaid Impex lacked the normal characteristics which are required for a normal supplier and receiver of goods as per FBR’s portal data. Hence, it transpired that M/s Junaid Impex is involved in getting fake invoices/fake input of sales tax and passing it on to others. It also emerged in a further investigation that M/s Trader Zone, a fake and fraudulent unit, is also supplying goods to suppliers of M/s Junaid Implex. Interestingly, Trade Zone registered the name of a former WAPDA employee who was getting less than Rs. 10,000 pension, however, the company showed bogus sales of Rs. 66 billion. During the investigation, the name of cement company M/s Power Cement Limited also surfaced whose jurisdiction lies with LTO Karachi as they are the ultimate beneficiaries of this tax fraud as they have shown fake purchases from the fraudulent units. The document states that M/s Power Cement Limited has shown fake purchases from M/s Al Junaid impex  RTO-I Karachi during the tax period 2022-23. A number of units also involved in supplies to M/s Power Cement Limited have failed to produce any evidence of the deduction/deposit of withholding tax at the time of his purchases from relevant fraudulent units as he was also a prescribed person in terms of section 153 7 b of income tax ordinance 2001. A company representative said that Power Cement Limited has no involvement in any such tax fraud. The Company has procured local coal from multiple vendors, with all payments being conducted through formal banking channels and all input sales tax has been claimed through the FBR’s portal, which indicates that sales were duly declared by the coal vendors associated with the Company. The current investigation revolves around the suspicion that some parties involved in the transactions have utilized fake invoices solely to reduce their sales tax liabilities without any physical transfer of goods. Any such assertion is fundamentally flawed about Power Cement Limited. The quantities of domestic and export sales, for which federal excise duty and output sales tax have been duly discharged by the Company, are reconciled and clearly substantiate the quantities of both local and imported coal purchased. The Company shall provide all necessary documentation and transaction trails to the appropriate authorities, and we are committed to full cooperation in this process, the representative added.