The Federal Board of Revenue (FBR) has unearthed a massive tax fraud over Rs 11 billion in the Junaid Impex case, implicating 58 traders and business firms.

The scam has been surfaced during an investigation, reveal  documents obtained by ‘Pay Tax’ detailing the results. The Directorate of Internal Audit (Southern Region) Inland Revenue Karachi, a subsidiary of the FBR, submitted an interim challan report to the Special Judge of Customs, Taxation, and Anti-Smuggling in Karachi.

According to the report, the Directorate of Internal Audit initiated the investigation on August 1, 2024, following the filing of an FIR in the Junaid Impex tax fraud case. The scope of the investigation expanded as initial inquiries suggested that the individuals involved were working to benefit certain influential business groups and families in the country. As a result, the FBR extended its investigation to include these powerful groups and families.

The investigation identified the names, National Tax Numbers (NTNs), and Computerized National Identity Card (CNIC) numbers of the business groups benefiting from the fraud. A total of 58 traders and business units were implicated, including Muhammad Azeem of Azeem Complex, Muhammad Rizwan of Ruhan Enterprises, Muhammad Hassan of MHM International, Muhammad Younus of Arman Corporation, Abdullah Yousaf of Saeed & Co., Muhammad Qadeer of Ziyan Impex, and Zafar Hussain of Rija Impex.

Further investigation is ongoing, with more details under examination. The FBR had launched a significant operation under its digitalization initiative, which uncovered this large-scale tax fraud. The fraudulent company was operated by Muhammad Junaid, who, along with an accomplice named Ajmal, carried out the fraud against the national treasury.

The documents revealed that Ajmal, the second accused in the case, operated under the name “M/s Trade Zone.” Muhammad Junaid opened a bank account (Account No: 0104351685) at Meezan Bank Limited, Machi Miani Market Branch, Karachi, which was used for these fraudulent activities. The FBR obtained details of this account and broadened the investigation to identify more members of the gang involved in the fraud. Initial investigations suggested the fraudsters were working to benefit powerful business groups and families, leading the FBR to include them in its inquiry.

These findings were outlined in the interim challan report prepared by the Directorate of Internal Audit (Southern Region) Inland Revenue Karachi and submitted to the Special Judge of Customs, Taxation, and Anti-Smuggling in Karachi.

During the investigation, the abnormal tax profile of M/S Al-Junaid Impex/Muhammad Junaid (NTN: 6916339-1, STRN: 3277876191631) was observed, which was selling coal (HS Code: 2701) without making any legitimate purchases of coal or contributing any substantial net payments to the national exchequer during these transactions. This raised suspicion that the entity was fraudulent and involved in tax evasion through sales tax fraud.

Technical Way to Commit Tax Fraud 

Tax fraud under the Sales Tax Law is a highly technical offense and is often committed by organized criminal groups that operate with networks of fraudulent firms registered under various formations of the FBR. These groups exploit statutory loopholes to gain fake legal cover, thereby abusing the legal process.

Role of Al-Junaid Impex/Muhammad Junaid in Fraud

 M/S Al-Junaid Impex was declared to be located at Shop No: A-16, Pak Center, Teak Chan Odhadas Road, Pakistan Chowk, Saddar, Karachi. However, upon a visit by a Directorate team on August 13, 2024, neither M/S Al-Junaid Impex nor Muhammad Junaid were present.

Instead, Shoaib Ahmed, son of Abdul Hameed, was found engaged in another business involving printing cards. He stated that M/S Al-Junaid Impex and Muhammad Junaid had never operated from that location.

The Directorate team also visited a second listed address at Office No: 404(A&B), 4th Floor, New Challi Trade Center, Shahra-e-Liaqat, Karachi. Again, M/S Al-Junaid Impex and Muhammad Junaid were not present. Instead, Burhanuddin Mukarram and Ayaz Ahmed were found conducting their own business involving sanitary and related items. They both claimed that M/S Al-Junaid Impex and Muhammad Junaid had never existed at that address either.

 No evidence of typical business operations, such as warehouses, vehicles, or office staff, was found for M/S Al-Junaid Impex, which would be expected for a legitimate coal business.

It was concluded that M/S Al-Junaid Impex had engaged in fraudulent purchases of coal (HS Code: 2701) from M/S Trade Zone.