Multi-million rupee scam: Audit exposes tax evasion by Midas Ltd
Principal accused, CEO of ad agency still at large.
A letter submitted by the FBR and issued by Commissioner Inland Revenue, titled “Bogus payment of Rs16.997 million on account of GST [general sales tax] for making documentary films”, revealed additional frauds committed by Midas. DESIGN: FAIZAN DAWOOD
LAHORE:
Advertising and media company Midas Private Limited allegedly misappropriated Rs632.59 million and failed to pay sales tax on numerous occasions, official documents of a special audit team of the Auditor General of Pakistan available reveal.
According to documents submitted by the Federal Board of Revenue (FBR) in the Supreme Court – pertaining to a petition filed by Hamid Mir, Absar Alam, and a reporter of The Express Tribune – it was revealed that Midas only deposited Rs26,199 between July 2007 and January 2008, while the company received Rs137.387 million in sales tax by the director general public relations (DGPR).
After scrutiny of Midas Ltd’s sales tax return, FBR records show that the company failed to pay a single penny between July and October in 2007, while an amount of Rs15,651 was deposited by the company in November 2011 and Rs10, 548 in December 2007 as sales tax. The documents also revealed that the company had not paid sales tax in January 2008.
Moreover, a letter submitted by the FBR and issued by Commissioner Inland Revenue, titled “Bogus payment of Rs16.997 million on account of GST [general sales tax] for making documentary films”, revealed additional frauds committed by Midas.
According to the content of this letter, Rs137.387 million was paid to Midas (Pvt) Ltd by the DGPR on account of a 15% sales tax against advertisement bills in the electronic media for the period between March 2007 and January 2008, but the amount was never deposited in the government’s coffers. Furthermore, it was later revealed that information received from the Punjab government was incomplete and insufficient to initiate any proceedings against Midas.
The DGPR provided a partial record for the period between September 24, 2007, and January 30, 2008, comprising bills and sales tax invoices issued by Midas and electronic media organisations. After scrutiny of the record received from DGPR Punjab, it was revealed that the government of Punjab had not deducted 1/5th of the sales tax amount – required under the sales tax special procedure (withholding) Rules,2007 – while making payments to the advertising agency .
As envisaged in Rule 37 of the sales tax special procedure Rules, 2007 and sales tax Ruling No25/2003, the service providers instead of the advertising agency was given responsibility for the payment of tax. The invoices issued by the advertising agency were without any authorisation, according to the documents.
The FBR reply was submitted in compliance with the orders of a two-member bench of the Supreme Court, headed by Justice Jawad S Khawaja, who had directed the FBR to submit details pertaining to the business transactions and taxes of Midas.
On the other hand, the Anti-Corruption Establishment (ACE) Punjab has yet to arrest any of the accused, including main accused Inam Akbar, Midas CEO Farrukh Shah, former DGPR Punjab and former DGPR Punjab director coordination Abdul Majeed Shahid.
Despite having their names on the Exit Control List (ECL) and being declared proclaimed offenders by the court, Akbar and Shahid have reportedly fled the country. The ACE has also failed to recover the liable amount from the accused, while their assets have not been confiscated as of yet, sources familiar with the case told The Express Tribune.
Published in The Express Tribune, January 15th, 2013.
Advertising and media company Midas Private Limited allegedly misappropriated Rs632.59 million and failed to pay sales tax on numerous occasions, official documents of a special audit team of the Auditor General of Pakistan available reveal.
According to documents submitted by the Federal Board of Revenue (FBR) in the Supreme Court – pertaining to a petition filed by Hamid Mir, Absar Alam, and a reporter of The Express Tribune – it was revealed that Midas only deposited Rs26,199 between July 2007 and January 2008, while the company received Rs137.387 million in sales tax by the director general public relations (DGPR).
After scrutiny of Midas Ltd’s sales tax return, FBR records show that the company failed to pay a single penny between July and October in 2007, while an amount of Rs15,651 was deposited by the company in November 2011 and Rs10, 548 in December 2007 as sales tax. The documents also revealed that the company had not paid sales tax in January 2008.
Moreover, a letter submitted by the FBR and issued by Commissioner Inland Revenue, titled “Bogus payment of Rs16.997 million on account of GST [general sales tax] for making documentary films”, revealed additional frauds committed by Midas.
According to the content of this letter, Rs137.387 million was paid to Midas (Pvt) Ltd by the DGPR on account of a 15% sales tax against advertisement bills in the electronic media for the period between March 2007 and January 2008, but the amount was never deposited in the government’s coffers. Furthermore, it was later revealed that information received from the Punjab government was incomplete and insufficient to initiate any proceedings against Midas.
The DGPR provided a partial record for the period between September 24, 2007, and January 30, 2008, comprising bills and sales tax invoices issued by Midas and electronic media organisations. After scrutiny of the record received from DGPR Punjab, it was revealed that the government of Punjab had not deducted 1/5th of the sales tax amount – required under the sales tax special procedure (withholding) Rules,2007 – while making payments to the advertising agency .
As envisaged in Rule 37 of the sales tax special procedure Rules, 2007 and sales tax Ruling No25/2003, the service providers instead of the advertising agency was given responsibility for the payment of tax. The invoices issued by the advertising agency were without any authorisation, according to the documents.
The FBR reply was submitted in compliance with the orders of a two-member bench of the Supreme Court, headed by Justice Jawad S Khawaja, who had directed the FBR to submit details pertaining to the business transactions and taxes of Midas.
On the other hand, the Anti-Corruption Establishment (ACE) Punjab has yet to arrest any of the accused, including main accused Inam Akbar, Midas CEO Farrukh Shah, former DGPR Punjab and former DGPR Punjab director coordination Abdul Majeed Shahid.
Despite having their names on the Exit Control List (ECL) and being declared proclaimed offenders by the court, Akbar and Shahid have reportedly fled the country. The ACE has also failed to recover the liable amount from the accused, while their assets have not been confiscated as of yet, sources familiar with the case told The Express Tribune.
Published in The Express Tribune, January 15th, 2013.