FTO Targets Rs133m Fake Tax Invoices Scam

The Federal Tax Ombudsman (FTO) has directed the Director General of Intelligence and Investigation (I&I) Inland Revenue to track down cybercriminals who used IP addresses and VPNs to introduce fake tax invoices into the supply chain. The directive also requires identifying the original subscriber responsible for the fraudulent activities.

According to the FTO order, criminals illegally accessed a taxpayer’s password ID and fraudulently filed a sales tax return for April 2025. They inserted fake supplies worth Rs 133.125 million through Annexure-C, resulting in a sales tax impact of Rs 23.962 million. The FTO ruled that this act constituted maladministration and disrupted the filing of sales tax returns in subsequent periods.

The Federal Board of Revenue (FBR) has been instructed to order the Chief Commissioner-IR at RTO Quetta to initiate legal proceedings for conviction. The Director General, I&I must determine whether the culprits operated from within or outside the company and develop the capacity to trace VPN users involved in creating fake tax invoices.

Senior Citizen Uncovers Rs133m Fake Tax Invoices Fraud

The complainant, a 68-year-old senior citizen and registered commercial importer since August 2008, discovered the fraud while attempting to file his April 2025 sales tax return. Immediate action by the Commissioner of Quetta helped prevent further revenue loss. However, the FTO emphasised the need to register an FIR under the SOPs for cases involving fake or flying invoices, as detailed in Sales Tax General Order No. 12 of 2023.

Investigations revealed that M/s Rafi Enterprises, a taxpayer at RTO Quetta, knowingly purchased fake invoices without actual movement of goods or valid payments, violating section 73 of the Sales Tax Act. The FTO noted that weak enforcement encourages unscrupulous taxpayers to profit from fake tax invoices and evade taxes.

Highlighting that the sales tax system is based on self-assessment and taxpayer trust, the FTO stressed that strict penal and prosecution measures must be applied. The order directed the authorities to register FIRs against all beneficiaries and vigorously pursue their prosecution under the law.