Karachi, September 12, 2023 – The Regional Tax Office (RTO) Karachi has taken a significant step in the fight against tax fraud by registering a First Information Report (FIR) to initiate formal legal proceedings against individuals involved in a massive fake sales tax invoice scam, which has led to a staggering loss of approximately Rs 312 billion to the national exchequer.
The FIR, registered by RTO-I Karachi, targets those accused of tax fraud through the falsification of sales tax invoices and their subsequent adjustment, as outlined in section 2(37) of the Sales Tax Act, 1990. The scam is estimated to involve a sum of approximately Rs 312 billion.
Official sources within RTO Karachi revealed that credible information had been received from the Commissioner-Inland Revenue, Zone IV RTO Karachi, regarding the involvement of M/s. KH & Sons, based in Saddar, Karachi, in tax fraud activities. The company was suspected of engaging in dubious transactions utilizing fake and flying invoices.
Upon further examination, electronically filed sales tax returns by the company unveiled its engagement in tax fraud through the issuance of counterfeit and flying invoices, with no actual transfer of goods taking place.
What raised suspicions even further was the fact that the registered person involved in this case was registered in March 2023. However, their sales tax return, filed in April 2023, declared an extraordinarily high domestic purchase amounting to Rs 1.732 trillion, involving sales tax of Rs 311.84 billion from M/s. Mohson Traders in Karachi.
Of note is that both the supplier and buyer were registered on the same date, March 2, 2023. Yet, in contradiction, the suppliers, M/s. Mohson Traders, filed a null return in April 2023, raising significant red flags.
As a result of these discrepancies, M/s. KH & Sons Karachi fraudulently claimed or adjusted a substantial amount of Rs 311.84 billion as inadmissible input tax, going beyond the bounds of the law.
Tax personnel were dispatched for physical verification of the premises of both the supplier and buyer, and their reports indicated the non-existence of these businesses at their registered addresses. Subsequently, RTO Karachi suspended the sales tax registration of the taxpayers involved.
This FIR marks a significant step forward in the pursuit of justice against tax fraud, as authorities aim to rectify the substantial loss incurred by the national exchequer due to fraudulent activities.