Islamabad, November 30, 2023 – The Federal Board of Revenue (FBR) has delivered a stern warning to sugar millers, cautioning them against sales tax evasion and emphasizing the potential consequences, including a three-year jail sentence.
In an announcement on Thursday, the FBR disclosed that monitoring teams from its field formations have been deployed to sugar mills nationwide as part of intensified efforts to curb tax evasion in the sugar industry.
Sugar holds a significant position among notified products subject to rigorous monitoring of production, sales, clearances, stocks, and related activities. The FBR has mandated the affixation of tax stamps on every bag of sugar produced or supplied. Violation of this requirement constitutes a punishable offense under section 33(23) of the Act, and offenders are liable to face product confiscation.
The gravity of the situation is underscored by the FBR’s announcement that defaulters, upon conviction, may face imprisonment for up to three years. The FBR’s uncompromising stance serves as a clear message that any attempt at sales tax evasion on sugar will be met with severe consequences, and mill owners will be prosecuted for their offenses.
This warning comes against the backdrop of recent actions by the Large Taxpayers Office (LTO) Karachi, a crucial revenue collection arm of the FBR. The LTO Karachi has escalated its investigation into sales tax fraud within the sugar industry, summoning sugar millers to appear before an inquiry related to the issuance of fake and flying invoices.
The LTO Karachi initiated the investigation in response to complaints from various stakeholders who expressed concerns about the issuance of false invoices. These complaints raised red flags about the payment of advance tax under sections 236G and 236H of the Income Tax Ordinance, 2001. Of particular concern was the false attribution of transactions to individuals with no legitimate business ties to the sugar mills.
Furthermore, reports emerged of fake invoices being included in Sales Tax Returns submitted by sugar mills on behalf of various taxpayers. Such fraudulent practices not only undermine the integrity of the taxation system but also have far-reaching implications for revenue collection and financial transparency.
The FBR’s proactive measures and the LTO Karachi’s intensified investigation highlight the government’s commitment to tackling tax evasion head-on and ensuring compliance within the sugar industry. The repercussions for those found guilty of evasion, including the potential for imprisonment, send a strong signal that tax authorities are determined to hold wrongdoers accountable.
As the investigation unfolds, it is anticipated that greater scrutiny will be placed on the practices of sugar millers, with a focus on eradicating fraudulent activities and fostering a tax-compliant environment within the industry. The FBR’s decisive actions aim to safeguard the integrity of the tax system, protect revenue streams, and reinforce the principle that tax evasion will not be tolerated in Pakistan’s business landscape.
