Directorate of Intelligence and Investigation of Federal Board of Revenue (FBR) has arrested the top administration of M/s Orient Electronics (Pvt) Ltd over the charges of alleged tax fraud of Rs 4.03 billion.
Documents indicate that the tax department, on credible information pertaining to massive sales tax evasion committed by M/s Orient Electronics (Pvt) Ltd by way of under declaration of the value of supply of its taxable goods and parking of additional amount of consideration received against actual value of supply in a bank account titled M/s Bismillah Trading Corporation (M/s BTC), bank account No. 02011477019 at Soneri Bank Ltd, Main Branch, the Mall Lahore. Furthermore, the Directorate of Intelligence & Investigation, Inland Revenue, Lahore initiated investigations against M/s Orient Electronics (Pvt) Ltd & M/s Bismillah Trading Corporation (M/s BTC) and their connivers under section 38 read with proviso to section 25(2) of the Sales Tax Act, 1990 with the approval of the competent authority.
The investigation revealed that the above-said bank account was maintained in the name of two employees of M/s Orient Electronics (Pvt) Ltd (STRN: 0305850028655), but was actually operated by Talat Mehmood, Managing Director, M/s Orient Electronics (Pvt) Ltd, 26 KM Multan Road Lahore, the documents stated.
It was further revealed that more bank accounts in the name of dummy businesses & employees of the Company were also opened & maintained which are actually operated by Talat Mehmood, Managing Director, M/s Orient Electronics (Pvt) Ltd, 26 KM Multan Road Lahore.
Documents also revealed that M/s. Orient Electronics (Pvt) Ltd Lahore is engaged in the suppression of value of supply/under declaration of value of supply of its goods during the period from July 2008 to June 2013, and is involved in tax evasion by making payment of sales tax, extra tax and special excise duty thereon on suppressed prices of its goods /articles without mentioning the trade discount.
Talat Mahmood CEO/MD of M/s Orient Electronics (Pvt) Ltd has been involved in maintaining and operating five Benami bank accounts wherein suppressed sale proceeds amounting to Rs 6,610,560,917 were parked.
M/s Orient Electronics (Pvt) Ltd, during the period 01-07-2008 to 30-06-2013, has declared the value of supply amounting to Rs 33,617,059,899/- in the sales tax returns, against the actual value of supply amounting to Rs 56,299,214,332/ worked out on the basis of the available price lists of its products, thus, M/s Orient Electronics (Pvt) Ltd has suppressed the sale price/value of supply amounting to Rs 22,682,154,433/-, on which sales tax and extra tax is Rs 3,882,153,009/- as per the provisions of section 2(46) (a) & 2(46)(b) read with section 2(28) and section 3 of the Sales Tax Act, 1990 and chapter-XIII of the Special Procedure Rules, 2007 besides special excise duty amounting to Rs 150,296,736/- comes in terms of section 3A of the Federal Excise Act, 2005. Assessment order # 03/2016 dated 16.03.2016 has been passed by the DCIR LTU Lahore wherein M/s. Orient Electronics (Pvt.) Ltd. has been directed to pay evaded amount of sales tax amounting to Rs 3,710,295,446/-extra tax amounting to Rs 171,857,553/- and special excise duty Rs 150,296,736/-(Total Rs 4,032,449,744/-) under section 11(2) &11(3) of the Sales Tax Act, 1990 and section 14 of the Federal Excise Act, 2005 along with default surcharge under section 34 of the Sales Tax Act, 1990 and section 8 of the Federal Excise Act, 2005 (calculated at the time of recovery).
A penalty of 100pc of the amount of sales tax involved was also imposed in terms of section 33(13) of the Sales Tax Act, 1990 and five times duty under section 3(c) of the Federal Excise Act, 2005 being involved in the commission of tax fraud. Substantial material evidence collected during the course of investigations, in the shape of chain of evidence which beyond any shadow of doubt confirms that the management of M/s Orient Electronics (Pvt) Ltd, 26 KM Multan Road Lahore, in connivance with their buyers, abettors/connivers and others etc., have suppressed the value of supply/under-declared the value of supply of its goods during the period July 2008 to June 2013, committing a tax fraud as defined under section 2(37) of the Sales Tax Act, 1990. According to the policy devised by Khawaja Tanveer Ahmed, the Director General, that tax evaders should be sent to the court for a trial, FIR No. 01/2017 dated 08.05.2017 has been registered against Talat Mehmood, Managing Director, Ahmed Fazil, and Mian Abdul Rehman Talat , Directors, M/s Orient Electronics (Pvt) Ltd, 26 KM Multan Road Lahore, Aleem Amin, Chief Financial Officer/Head of Finance of the company, Muhammad Tariq Khokhar S/o Khair Muhammad, Lahore, Nazim ud Din Qamar S/o Qamar ud Din Assistant Manager Sales, M/s Orient Electronics (Pvt) Ltd, Lahore Adeel Khokhar S/o Muhammad Tariq Khokhar Lahore and their buyers, abettors/connivers and others etc.
On the same day i.e 08.05.2017, Talat Mehmood, Managing Director, Abdul Rehman Talat, Director, and Chief Financial Officer M/s Orient Electronics (Pvt) Ltd, 26 KM Multan Road Lahore have been arrested, by the Lahore Directorate, being involved in the subject case. Facts of arrest have accordingly been served to the accused persons. The above said accused person were produced before the honourable Court of Special judge Customs Excise and Taxation, Lahore, where the Court had granted physical remand for three days for recovery of material evidence. The investigations are under way.
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