KARACHI: The Large Taxpayers Office (LTO) Karachi has detected sales tax evasion scheme, amounting to a loss of Rs5 billion to the national kitty through issuance of fake and flying invoices.
The arrested individuals were produced before the court, where authorities obtained remand for further investigation.
The investigation focused on M/s A.H Impex, with the LTO Karachi gaining jurisdiction for tax assessment in December 2023. Upon examining the company’s input and output over the past two years, authorities revealed a web of paper transactions amounting to approximately Rs30 billion.
This marks the first-ever FIR registered against a significant corporate entity by the LTO Karachi. The scrutiny of tax profiles led to the identification of Nawab Khan, allegedly involved in the issuance and receipt of fake invoices. These invoices were utilized to claim refunds or adjust input tax by other registered entities.
An investigation into Nawab Khan’s tax profile unveiled abnormal activity, including the submission of fraudulent sales tax returns, declaration of fake bank accounts, and the issuance of counterfeit sales tax invoices totaling Rs 14.529 billion. This evasion deprived the national exchequer of Rs 2.471 billion.
Analysis of data from sales tax returns between December 2021 and February 2023 exposed local purchase values of Rs 13.88 billion, with input tax claims reaching Rs 2.36 billion from fake or unrelated suppliers.
Further revelations indicated that A.H Impex issued fake or flying invoices to facilitate beneficiaries in claiming input tax. The company also engaged in transactions with irrelevant or undescribed products, aimed at evading sales tax and securing bogus refunds. Despite significant transactions, A.H Impex failed to pay any sales tax since registration.
Additionally, Aftab Ahmed, a relative of Nawab Khan, was implicated in the issuance of fake and flying invoices. The investigation spanned the period from December 2021 to April 2023, during which Nawab Khan and Aftab Ahmed conducted business from the same office.
Further investigations are still underway till the filing of this report.
