ISLAMABAD, Nov 30: The National Accountability Bureau (NAB) has started investigations into a Rs20 billion tax refund scam in which some high-ups of the Central Board of Revenue (CBR) and M/s Bawan Shah Group of Companies are allegedly involved.
The CBR has nominated a number of its officials posted in the Sales Tax and Customs Collectorates in Karachi in the FIR of the case.
The officials allegedly approved phoney exports by the Bawan Group under the Duty on Tax Remission and Export (DTRE) scheme. They had also been placed under suspension.
CBR Chairman Abdullah Yousaf on Thursday informed the National Assembly Standing Committee on Finance and Revenue that no one involved in the scam would spared and that the case had been referred to NAB on Nov 8.
According to a report of the Directorate General of Intelligence, Investigations, Customs and Exports, Bawan Shah Group had allegedly obtained Rs2.06 billion on account of sales tax refunds, customs rebate, DTRE remission and exemption under SRO410(1)/2001 during the year 2001 to March 2006.
The amount included Rs1.219 billion of sales tax during 2001-05, customs rebate of Rs604 million from 2001-06, DTRE remission of Rs156 million from July 2005 to March 2006 and Rs81 million on exemption under the SRO.
The report said that Raja Mohammad Zarat, chairman of the Bawan Group, along with some of his other associates was allegedly involved in fraudulent/phoney exports and misuse of the DTRE scheme.
The CBR kept a vigil on the export consignments of the group and detained its three containers on March 29, 2006, at Karachi port. A joint re-examination of the containers revealed “gross misdeclaration of description, quantity and value”.
The investigations also found that another ‘misdeclared’ container of the group had been shipped to Dubai on March 28, 2006, which was recalled from the high seas and re-examined on the orders of the Sindh High Court on April 10, 2006, by the staff of the Directorate General and Export Collectorate. The container was confirmed ‘misdeclared’ in the “presence of the witnesses/representatives of the complainant”.
Following the events, the accused Raja Mohammad Zarat was arrested on May 2006 and interrogated. His bail had been rejected by all the courts, including the Supreme Court, and was currently in judicial custody and hospitalised at the National Institute of Cardio Vascular Diseases (NICVD) in Karachi. His main accomplices, had, however, fled the country.
The report said that investigations had been focused on shipping bills, identification and verification of major suppliers, analysis of banking transactions and correlated purchases, manufacturing facility availability and goods exported by the group. Verifications of some 480 shipping bills had already been received.
According to the report, there were 11 major suppliers, 10 based in Karachi and one in Lahore. Verification was in process in which a pattern was emerging that the suppliers units had been registered by the group.
So far, registered/declared owners of four major suppliers had been completely tracked down. They had given affidavits that they owned the companies. An amount of Rs328 million was obtained on the supplies from the four units.
Owners of the rest of the suppliers were being tracked down through Nadra and bank records. The directorate of investigations had also maintained a close liaison with various banks through which the group made payments to its so-called suppliers.
“On preliminary scrutiny, it is apparent that the bank accounts have also been opened by misusing CNICs similar to the position of registering suppliers units,” the report said. Investigations to almost 50 per cent fraudulent export under the DTRE scheme by the group had been completed.
