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II&P cell submits FIR against M/s Shah & Co in sales tax fraud scam

KARACHI: The Customs Court directed investigation officer to complete investigation and submit progress report against Abdul Karim Shah Hashmi, owner of M/s Shah & Co and others in committing tax fraud by claiming illegal input/ obtaining sales tax refund on strength of fake and flying invoices and false zero-rated supplies without having any manufacturing facility.

On 24 October 2020, investigation officer of II&P Cell, Zone-I Regional Tax Office-III, Karachi submitted first information report and informed that during the investigation, it was revealed that accused person fraudulently got the sales tax registration as manufacturer whereas the said person does not have any manufacturing facility and does not at declared business address and claimed and got sales tax refund fraudulently on strength of fake/ flying invoices where the description of goods does not match with the nature of business of the accused persons.

He further stated that said suspect with connivance with co-called suppliers obtained illegal sales tax refunds and had no investment to carry out such a huge volume of business, there was no business on ground but only paper arrangements were made to claim illegal sales tax refunds. The accused persons did not make any zero-rated supplies but declared fake supplies to dummy persons who are not genuine business concerns they also connived with the accused in claiming illegal sales tax refunds.

Investigation officer argued that based on these facts, it is concluded that the sole objective of the said accused person was to claim illegal sales tax refunds on local supplies, which directly comes under the scope of tax fraud as defined in section 2 (37) of the sales tax act, 1990.

After the hearing, the court took the first information report (FIR) on court record and directed him to complete investigation and submit progress report on the next date of hearing.

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