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Bogus refund scam continues to haunt FBR | #phishing | #scams | #hacking | #aihp

ISLAMABAD: An alleged tax fraud scam, involving refunding of Rs123 million to a foreign company against bogus claims, continues to haunt the revenue authorities, which has been blowing hot and cold to cover up the culprits who were still on Federal Board of Revenue’s (FBR) payroll, The News learnt on Saturday .

The FBR, even under its former chairman Dr Mohammad Ashfaque, blatantly and knowingly misled the President of Pakistan by assuring him no wrongdoing was committed despite the fact its own internal inquiry found senior officers guilty.

Ironically, the officer, who played a key role in the issuance of bogus refunds, has been appointed at the Corporate Taxpayer Office Lahore.

The question is who will be responsible if the accused officer alters or destroys the official record to protect himself from any severe legal actions?

From official documents and background interviews, The News learnt that one foreign firm entered the country’s power generation sector and was declared as a resident company by the FBR.

However, its status was changed from resident into non-resident with the alleged connivance of FBR officials in Lahore and its status got changed mainly because of generating refunds claims. So the refunds of Rs123 million were paid out to the company. The tax refunds were issued for tax year 2006-07, 2007-08, 20008-09 and 2009-10, 2010-11, 2011-12, and 2013-14.

The FBR’s Intelligence & Investigation (I & 1) issued a Red Alert following which measures were taken to remand back [the order] and the issuance of refunds decision was reversed. No appeal was filed and the decision was finalised. Till 2019 nothing happened on this front. In the meanwhile, those officers, who were working as Deputy Commissioner or Commissioner in Lahore got promoted in 2019 and became Member Inland Revenue Policy.

The Federal Tax Ombudsman (FTO) took suo moto action to assess the progress of the case. Now the FBR has again changed its statement and vehemently championed its earlier decision as correct.

The FTO took strong exception and recommended stern action against the officers, who had been continuously changing their stances to protect their cronies, causing losses to the national exchequer.

The FBR then approached the President of Pakistan against these FTO orders and remanded the issue.

The President was told that a clean chit was granted to those FBR officers, which was totally contrary to the findings of the inquiry.

According to inquiry committee members, the determination of tax residency was the pivotal point in determining whether the tax deducted is adjustable or final on the basis of which refund claimed was to become due or otherwise. This exercise has not been done. In its findings, the inquiry committee stated that the required propriety before issuance of refunds had not been followed/adhered to in the instance case. None of the standards/procedures/SOPs had been followed.

The refund claimed and issued was in excess of tax deposit in the name of taxpayer. The very basic fact whether the taxpayer is an AOP (or an individual) or a company or a permanent establishment of a nonresident was not conclusively established.

In the same refund order, despite stating that taxpayer is an AOP, it was held that taxpayer is PE (permanent establishment) of a nonresident corporation and member of AOP, which entitled it to refund and its issuance and that too when taxpayer itself admitted in writing that it is not a PE of the nonresident and also declared itself in the return as an AOP.

The nature of receipts is also disputed and no attempt was made to determine whether the same fall under technical service or other business income.

Even the tax residential status was held to be otherwise what was stated in the returns and taxpayer’s own registration profile.

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