ISLAMABAD: The Enforcement Zone of Large Taxpayers’ Office (LTO) Islamabad on Thursday searched the premises of Metro Shoes in Rawalpindi and Islamabad and impounded the record on account of alleged tax evasion and tax fraud running into hundreds of millions of rupees.

Soon after the raid, the LTO registered an FIR under Sales Tax Act against Jahanzeb Nadeem, the proprietor, and others including the point of sale (POS) vendor. It is the first FIR registered in a case involving POS under the Sales Tax Act after the introduction of the mandatory integration of POS for all tier-1 retailers in the country.

A report of the LTO said during the preliminary analysis and scrutiny of record, tax evasion and tax fraud to the tune of hundreds of millions of rupees were unearthed. The search operation was conducted simultaneously in Rawalpindi and Islamabad and the record was taken into custody from the head office of Metro Shoes in Rawalpindi and the F-7 branch in Islamabad after obtaining search warrants from the respective area magistrates.

Earlier, according to intelligence gathered about mystery shopping by the POS of Metro Shoes, Jinnah Super, sales tax invoices were collected by a team which showed an interesting and innovative mode of alleged fraud.

It was found that two invoices (having invoice value of Rs450 and Rs3,990 got verified carrying the same FBR invoice number and QR code and having same sales value of Rs450 invoice No M-ISD10000146163 of Rs3990 was found missing in the FBR’s system, but issued to the customers with replicated/reprinted QR code and FBR invoice number of an earlier reported invoice.

“This revealed that the POS system installed by Metro Shoes was made to be compromised intentionally so that transactions can be skipped from the POS real-time reporting eventually resulting into tax evasion.”

Criminal proceedings have been initiated by LTO against the proprietor of Metro Shoes under the Sales Tax Act 1990 in accordance with the Criminal Procedure Code 1898.

The commissioner enforcement of LTO stated in a statement that this was a clear case of tax fraud as FBR’s POS system had been tampered with by the taxpayer.

Published in Dawn, December 10th, 2021