FBR asked to take action on fake refund cases

January 30, 2020: The Federal Tax Ombudsman (FTO) has recommended the Federal Board of Revenue (FBR) to direct the concerned Chief Commissioner Inland Revenue (IR) to investigate and identify the officials involved in registration of fake Registered Person (RP) and initiate disciplinary/criminal action against those involved.

According to an FTO order issued here Thursday, the FTO on its own motion had investigated irregularities committed by the FBR field formations in processing and sanctioning of bogus sales tax refund during period 2011-14, identified by the Directorate of Intelligence and Investigation-Inland Revenue (I&I-IR).

According to the order, “Red Alerts” were issued to the field formations concerned, but neither any action was initiated against the fake claimants and their connivers in the department, who were involved in bogus registration, processing and sanctioning of fraudulent refund and issuance of refund cheques, nor was any action proposed against the related officers/officials of bank branches concerned and PRAL management.

It observed that a country-wide investigation against the issuance of bogus refunds was carried out by the Directorate General I&I-IR FBR.

After painstaking exercise, the I&R-IR unsearched copious cases, where fake RPs registered with the connivance of the staff, claimed on the basis of fake and flying vouchers, refund and in many cases get away with a fraudulent refund, causing colossal loss to already cash-starved exchequer.

The FTO in its finding observed failure of the department to initiate action against the person(s) and officials involved in registration of fake RP and retrieval of refund already issued prior to issuance of Red Alert, is tantamount to maladministration in terms of FTO ordinance.

It recommended FBR to identify the officers/officials involved in processing on the basis of fake and flying vouchers and issuing a refund of sales tax pertaining to tax period September and take appropriate criminal/disciplinary action against them.

The FBR was also recommended to take appropriate action including criminal proceedings leading to the prosecution of RP and recovery of the refund amount, swindled from public exchequer.

It has been asked to submit a report of compliance within 45 days.

APP