Authorities uncover multi-million rupee tax evasion scheme by ‘fake company’

The Directorate of Customs Post-Clearance Audit (PCA) South has discovered tax evasion amounting to millions of rupees through a fraudulent company, leading to the registration of legal proceedings against Suleman Industries.

The investigation of business operations at the company (Suleman Industries) led Director of Customs PCA South Shiraz Ahmed to detect unusual activities.

According to reports, PCA DG Dr Zulfiqar Ali Chaudhry ordered the investigation of the company's manufacturing status - which some suspected the company was misusing. The audit team discovered multiple inconsistencies when examining the available records from Income, sales and customs tax departments.

Authorities launched a ground inspection which showed that the company's address contained no manufacturing equipment as it did not possess the necessary facilities for production. Reports claim that Suleman industries exploited its manufacturing status to obtain tax exemptions and concessional tax rates even though it did not meet the requirements for these benefits.

The onsite investigation team showed that the company was providing imported embroidery machines to the domestic market, among other items, at lower tax rates. Reports say that officials first suspected foul play when they realised that the volume of imports did not match the financial capacity of the company. Authorities believed that the firm was possibly involved in money laundering given the suspicious nature of the transactions.

Reports reveal that the company was found to be illegally funding imports and evading taxes through the import of embroidery machinery. The firm under investigation was able to successfully procure 2.4 billion rupees worth of goods and its tax evasion tactics resulted in the national exchequer failing to realise over 217 million rupees in revenue.

According to the firm's own records, manufacturing operations were not being conducted at the address listed in their documents. Investigations revealed that the company rented units to make it seem as if manufacturing was taking place.

However, site locations were not equipped with embroidery equipment and electricity records from the recent past confirmed that no manufacturing operations took place there.

The PCA South filed a Customs Act, 1969 case against the bogus entity which may also face the Anti-Money Laundering Act, 2010 - which concerns trade-related financial crime.

Special teams at PCA continue their active investigation of the matter according to Shiraz Ahmed while striving to prosecute every offender. Authorities are actively on the lookout for Syed Suleman Jafri and his business associates who own PCA.