95 fraudulent claimants get Rs 1.435 billion refunds

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Economic Updates - Pak Major Financial News

Ninety-five fraudulent sales tax refund claimants successfully bypassed all electronic systems and checks of the Federal Board of Revenue (FBR) and obtained huge refunds of Rs 1.435 billion in 2011-2012 after obtaining registration status of 'manufacturers' despite sketchy profiles/history.

Sources told Business Recorder here on Sunday that the FBR has compiled a list of 95 dubious refund claimants, who obtained sales tax registration within the category of 'manufactures', and obtained sales tax refunds of Rs 1.435 billion under Expeditious Refund System (ERS). They also managed to bypass the refund verification system ie Sales Tax Automated Refund Repository computer system' (STARR).

Astonishingly, these units first managed to obtain sales tax registration as 'manufacturers' and later cheated all electronic systems of the FBR to obtain sales tax refunds of Rs 1.435 billion in 2011-2012. Thus, they were able to enter into the refund payment system by obtaining registrations and filing bogus claims which remained unchecked by electronic systems like ERS and STARR etc. Apparently, FBR's Central Registration Office and operators of ERS and STARR etc were unable to stop these 95 dubious refund claimants from obtaining sales tax refunds of Rs 1.435 billion. It is alarming to note that all of them obtained sales tax registration within the status of 'manufacturers' where physical verifications are necessary.

Sources said that the FBR has started full-fledged investigation against these 95 dubious refund claimants. The FBR is surprised to know that the suspicious refund claimants successfully obtained sales tax registration under category of 'manufactures'. The FBR is investigating that how such a large number of suspicious refund claimants obtained registration as 'manufacturers' despite the fact that the units were not genuine sales tax refund applicants with sketchy profiles and history.

During investigation, the FBR has asked all concerned departments including Central Registration Office and Pakistan Revenue Automation Limited to check the following shocking aspects of 95 dubious refund claimants:

Firstly, these are all non-corporate persons registered in Regional Tax Offices (not LTUs). Secondly, the refund in these cases was paid against local zero-rated supplies.

Thirdly, the total amount of refund paid to these claimants in 2011-12 is Rs 1.435 billion. Fourthly, though many of these claimants are same as in the list for 2012-13, many new names also appear. Fifthly, many of these refund claimants were registered quite recently (during 2011 and 2012).

Sixthly, some of these are known fraudulent claimants, which have been involved in Red Alerts, or were suspended/blacklisted by the RTOs.

The FBR was astonished to note that it seems as if some of these have received refunds both through ERS as well as STARR, resulting in double payment, FBR said. In order to prevent revenue loss, it is proposed that PRAL to immediately stop sanction of further refunds to these persons, whether through ERS or through STARR. The PRAL may also give reasons why such persons, who were just registered/suspended/blacklisted, were able to get refunds through ERS despite the claim of putting checks in the system. The CRO FBR may be asked to provide full history of the registration process of these persons, so that it can be determined how they got registered as 'manufacturer'. Further analysis of the data is being conducted, and findings would be submitted in due course, FBR's investigators added.

Following is the list of 95 refund claimants as compiled by FBR: AKS International, AA Industries, Abubakar Enterprises, ACRO Chemical, Ahmed Industries, Al Raheem Industries, Ali's Enterprises, Al Khair Enterprises, Archies Advertisers & Printers, Arif Traders, Ashraf Industries, Asif Traders, AZ and Brothers, BIZ TICE International, Clyde Chemicals, Data Industries, Desert Rose Enterprises, Everest Plastics, Fahad Impex, Farhan Exports, Fixit Enterprises,

Hanata Trading, Huzaifa Traders, Indus Enterprises, Insaf Chemical Store, Khyber PVC Pipe Factory, Kortet Trading Company, Luqman & Brothers, M Shoukat Corporation, MA International, MH Plastic Industries, M/s A.S Footwear, M/s AWS Trader, M/s Aftab Sons Writing Instruments Inds, M/s ASA International, M/s Ashfaq Traders, M/s Asif Textile Trading, M/s AVM Chemical Industries, M/s Calvin International, M/s Century International, M/s Crescent Dying & Textiles, M/s Dada Surfactants, M/s Dastagir Enterprises, M/s Fazeel Enterprises, M/s Four Enterprises, M/s IPP, M/s Ittehad Steel Industries, M/s Jillani Enterprises, M/s Karwan Packages, M/s Khanani Corporation, M/s Khawaja Enterprises. M/s Kohat Textile Mills, M/s M. Sadiq Textiles, M/s Master Pipe Industries, M/s Mehdi Corporation, M/s Multi Resin Industries, M/s National Silk & Rayon Mills, M/s National Tent House II. Retaining Reg_No, M/s New Prime Poly Pack, M/s Polyset Industries, M/s S.B. Textile Mills, M/s Samma Enterprises, M/s Shafi Reso-Chem, M/s Tariq And Sons, M/s Y Shoes, M/s Zeenat Impex, M/s Hico Manufacturer, M/s Imaging Paper Products, M/s Lucky Traders, M/s Paper Link, M/s Wakeel Enterprises, Mark Industries, Mark Unistar Industries, Mubeen Fiber Industries, Multan Spinning Mills, Naveed Cluf Industry, Omega International Trading Co, Pakistan Vinyl Industries, Paul Leather Industry, Premier Industries, Quality Traders, Rahid Plastic Industries, Rehman Chemicals, Riffai International Corporation, Royal International, Sigma Enterprises, Silicon International, Star Manufacturing Company, Steel Corporation, Tarqus Impex, Techno Bright Impex, Umeama Plastic Industries, Winner Safety Glass, Z.R. Enterprises and Zainab Enterprises, FBR added.

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