The Federal Board of Revenue’s (FBR) Directorate of Internal Audit, Inland Revenue, Karachi, has filed a First Information Report (FIR) against a prominent cement company, alleging involvement in a tax fraud scheme amounting to Rs. 316 million.
The investigation began when the Internal Audit team attempted to visit the offices of M/s Al Junaid Impex in various locations across Karachi, only to discover that the company had no physical presence. The absence of offices, warehouses, vehicles, and staff raised suspicions about the legitimacy of M/s Al Junaid Impex, which appeared to lack the typical characteristics of a genuine business entity involved in the supply and receipt of goods, according to FBR’s portal data.
Further inquiries revealed that M/s Junaid Impex was allegedly engaged in generating fake invoices and fraudulent input sales tax claims, which were then passed on to other entities. The investigation also uncovered that M/s Trader Zone, another fraudulent entity, was supplying goods to M/s Junaid Impex. Notably, Trader Zone was registered under the name of a former WAPDA employee with a pension of less than Rs. 10,000, yet the company reported fictitious sales of Rs. 66 billion.
The investigation implicated M/s Power Cement Limited, whose jurisdiction falls under LTO Karachi, as a beneficiary of the tax fraud. The company reportedly showed fake purchases from M/s Al Junaid Impex during the 2022-23 tax period. Several units supplying to M/s Power Cement Limited failed to provide evidence of withholding tax deductions or deposits, as required under section 153 7 b of the Income Tax Ordinance 2001.
In response, a representative from Power Cement Limited denied any involvement in the alleged tax fraud. The company stated that it procured local coal from multiple vendors, with all transactions conducted through formal banking channels. The input sales tax was claimed via the FBR’s portal, indicating that sales were properly declared by the coal vendors.
The ongoing investigation suggests that some parties may have used fake invoices to reduce their sales tax liabilities without any actual transfer of goods. Power Cement Limited refuted these claims, asserting that the quantities of domestic and export sales, for which federal excise duty and output sales tax were paid, align with the quantities of coal purchased.
The company has pledged full cooperation with the authorities, offering to provide all necessary documentation and transaction records to support its case.
