Inland Revenue internal audit detects major tax fraud

Pawan Kumar
KARACHI: The Directorate of Internal Audit-Inland Revenue in Karachi has submitted an interim challan in a significant tax fraud case involving Al-Junaid Impex. The company, identified as a domestic “shell” entity, allegedly secured its registration with the Federal Board of Revenue (FBR) through fraudulent misrepresentation.
Al-Junaid Impex, led by Muhammad Junaid, is accused of evading substantial sales tax by selling coal (HS Code: 2701) without legitimate purchases or making substantial payments to the national exchequer. The initial First Information Report (FIR), dated August 1, 2024, estimates the revenue implicated in this fraud at approximately PKR 11,312,755,174, with further default surcharges and penalties yet to be assessed.
Tax fraud under the Sales Tax Act 1990 is a complex and technically challenging offense, often perpetrated by organized crime networks. These fraudulent entities exploit statutory loopholes to create a web of fake firms, generating “fake input sales tax” in an attempt to minimize their sales tax liabilities. Such transactions typically involve fabricated paper trails rather than the actual movement of goods, misleading tax authorities.
The Directorate’s ongoing investigation is currently focused on the alleged bogus purchases made by Al-Junaid Impex from M/S Trader Zone. This case not only highlights the abuse of legal processes but also underscores the need for heightened vigilance in broadening the tax base while maintaining the integrity of the system.