Lahore, June 22, 2023: The Directorate of Intelligence & Investigation (Inland Revenue) Lahore has unearthed a staggering case of sales tax evasion worth billions of rupees by a highly regarded company.
The company in question has been found guilty of issuing illegal credit notes, amounting to substantial sums, in Annexure-C of its sales tax returns. Shockingly, these credit notes were issued without any corresponding debit notes from the buyers. By employing this deceptive tactic, the company managed to suppress its output tax, significantly reducing its sales tax liability for the respective tax periods. Consequently, the national exchequer suffered a considerable loss in terms of tax revenue.
With utmost diligence and precision, the Directorate’s team collected vital information without causing any disruption to the company’s day-to-day operations. Subsequently, proceedings were initiated against the company under section 38 of the Sales Tax Act, 1990. In a commendable turn of events, the authorities successfully retrieved relevant records and documents from the company’s premises. Following this, the company’s management agreed to deposit the sales tax amount associated with the fraudulent credit notes claimed in the March 2023 return, along with the applicable default surcharge.
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Thanks to the timely intervention by the Directorate, a substantial recovery of sales tax totaling Rs. 1358 million, along with a default surcharge amounting to Rs. 26 million, was made on June 20, 2023.
The Federal Board of Revenue remains steadfast in its commitment to eliminate the scourge of tax evasion and fraudulent practices. This endeavor aims to create a level playing field for tax-compliant businesses that contribute to the nation’s exchequer.
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To ensure a robust system that guards against fake credit notes, amendments have been made to the sales tax return process. Suppliers of goods are now disallowed from issuing or claiming credit notes in their returns without the prior issuance of corresponding debit notes by the respective buyers.
This landmark case serves as a stern warning to those attempting to circumvent tax obligations. The authorities stand prepared to enforce stringent measures and crack down on any such fraudulent activities, thereby safeguarding the integrity of the taxation system and promoting fair competition within the business landscape.
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