Fake company evades millions in taxes

Customs initiates legal proceedings against suspicious activities

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KARACHI:

The Directorate of Customs Post-Clearance Audit (PCA) South has unearthed tax evasion of millions of rupees through a fake company and has initiated legal proceedings by registering a case against Suleman Industries.

According to Director of Customs PCA South Shiraz Ahmed, suspicious activities of the company were noted during the investigation of business operations.

PCA DG Dr Zulfiqar Ali Chaudhry had given directives to investigate the misuse of manufacturing status of the company. Later, in the context of available data of Customs, Sales Tax and Income Tax departments, the audit team found several discrepancies during initial investigation.

A physical inspection of the company's registered manufacturing site revealed that no machinery was present at the given address and the company lacked the required manufacturing facilities. However, the firm was falsely claiming tax exemptions and concessional tax rates based on its manufacturing status.

The investigation also revealed that the company was involved in selling imported embroidery machinery and other items locally with concessional tariffs. The volume of imported goods was inconsistent with the company's financial standing, raising suspicions of potential money laundering.

The investigation revealed that the company's irregularities led to illegal financing of imports and evasion of duties and taxes of Rs218 million by importing embroidery machinery worth Rs2.4 billion with 135 goods declarations.

Inspection showed that Suleman Industries never operated at the manufacturing address given in its documents. Instead, the location housed fake rented units without embroidery machinery and electricity bills indicated no manufacturing activity at the site.

The PCA South has registered a case under the Customs Act, 1969, while the bogus entity is also facing possible charges of trade-related financial crimes under the Anti-Money Laundering Act, 2010.

Shiraz Ahmed stated that PCA's special teams were actively investigating the matter and were determined to bring all offenders to justice. Teams are also working to locate the company's owner, Syed Suleman Jafri, and his associates.