Sources said the agency has carried out an in-depth analysis of paper and paper board sector and detected different techniques used by manufacturers to evade sales tax. The sector study of paper and paper board sector would be instrumental in improving compliance by the manufacturers operating in the said industry. It has been found that the electricity bills of paper mill were also paid through these concealed/benami bank accounts. This has prompted authorities to check similar kind of trend in other manufacturing units.
Keeping in view the large scale of paper and paper board sector, the Directorate General of I&I-IR, Islamabad under the leadership Khawaja Tanveer Ahmed conducted a sector study which revealed that sales tax payments from this sector is very low. Most of the major manufacturers are showing very high input-output ratio which resulted in very meagre tax payments. Consequently, the director general of I&I, directed the directorates to initiate proceedings against the culprit units without damaging the good taxpayers.
In this context and on the basis of credible information that a paper & board mills located in Gujranwala is involved in income tax evasion, the Directorate of Intelligence & Investigation-IR, Lahore initiated investigations in the case. It was found that the subject taxpayer is involved in use of concealed/undeclared bank accounts of its director and major shareholder Muhammad Ayub, to park it's out of book sales and purchases as well as payment of company's electricity bill and evading its income.
Muhammad Ayub, registered in Income Tax as salaried person, has declared its total income at Rs 0.36 million each for tax years 2011 & 2012, whereas amount credited in his bank accounts was Rs 95.824 million in tax year 2011 and Rs 117.7 million in tax year 2012. Scrutiny of bank credit entries revealed that 80 parties, related to business of the paper mill, deposited money of more than Rs 90 million during each of tax years 2011 & 2012 in these undeclared/concealed bank accounts. Moreover, payments of huge amounts were made through these accounts to major suppliers of the paper mill. The electricity bills of said paper mill were also paid through these concealed/benami bank accounts.
On the basis of above facts, it was concluded that Paper and Board Mill located in Gujranwala has concealed the sales of Rs 95.824 million in tax year 2011 and Rs 117.70 million for the tax year 2012. Expected loss of revenue for tax year 2011 is Rs 63.77 million including Rs 31.88 million of penalty and for tax year 2012 is Rs 77.61 (M) including Rs 38.8 million of penalty. Accordingly, investigation reports have been sent to Chief Commissioner-IR, RTO Gujranwala for adjudication and consequent recovery.
Copyright Business Recorder, 2017