Karachi, November 17, 2023 – The Federal Board of Revenue (FBR) has unveiled the stringent consequences awaiting registered taxpayers engaging in the issuance of fake invoices, as outlined in the updated Sales Tax Act, 1990 for the tax year 2024.
Under Section 21 of the Sales Tax Act, 1990, the FBR has articulated a comprehensive set of measures aimed at curbing the menace of fake invoices and tax fraud within the registered taxpayer community.
De-registration, Blocklisting, and Suspension of Registration
The revamped Section 21 empowers the Board or any authorized officer to de-register a registered person or a class of registered persons not mandated to be registered under the Act. In cases where the Commissioner is convinced that a registered individual has issued fake invoices or committed tax fraud, the Commissioner may proceed to blocklist the offender or suspend their registration. This is to be done in accordance with the procedural guidelines prescribed by the Board through an official Gazette notification.
During the suspension period, invoices issued by the individual in question will not be considered for Sales Tax refund or input tax credit. Once blocklisted, any refund or input tax credit claimed against the blocklisted individual’s invoices, whether issued before or after blocklisting, shall be rejected through a self-explanatory appealable order. This will be done only after providing an opportunity for the accused party to present their case.
Fraudulent Activity and Investigation
Moreover, the Section empowers the Board, concerned Commissioner, or any authorized officer to block refunds or input tax adjustments if there is a reasonable belief that a registered person is involved in issuing fake or flying invoices, making fraudulent claims for input tax or refunds, maintaining a non-existent physical presence or conducting fictitious business, or engaging in any other fraudulent activity.
Upon blocking the refunds or input tax adjustments, the concerned Commissioner with jurisdiction is directed to initiate a thorough investigation and pursue appropriate legal action against the suspected individual. This provision is intended to swiftly address instances of fraudulent activities within the taxation framework.
The FBR’s move to strengthen penalties for the issuance of fake invoices underscores its commitment to maintaining the integrity of the tax system and ensuring that registered taxpayers adhere to ethical practices. The updated Sales Tax Act, 1990, with its enhanced measures, is set to reinforce the FBR’s efforts in curbing tax evasion and promoting a transparent and accountable tax environment.
