Islamabad—In a fresh move against the individuals or companies allegedly involved in white collar crimes, Federal Investigation Agency (FIA), country’s watch dog has raided at the godown and seized the heavy stock of non-duty paid tobacco products worth rupee of millions. According to a communiqué DDL/E/63/16/Acc/LHR, raiding team of FIA comprising Khalid Saeed Sub-Inspector (SI), Assistant Sub-Inspector (ASI) Shafiq-ur-Rehman and Sohail Arif FC under supervision of Sub-Inspector (SI) Asif Hussain from Commercial Banking Circle (CBC) raided at different godowns located at Safdar Block Phase-1, Chak No. 90/9 Arif road Sahiwal and Nazeer Ahmed Housing Scheme, Street No. 1, Arif Road Sahiwal and seized heavy stock of non-duty paid cigarettes manufactured locally by Khyber Tobacco Company (KTC) and Walton Tobacco Company (WTC).
The watchdog FIA believed that the owner of godowns in connivance of KTC management were allegedly involved in evasion of General Sales Tax (GST) and Federal Excise Duty (FED), which caused heavy financial losses to national kitty. During the raid, FIA officials also arrested a person named Irfan Alam who was the resident of Taj Town, Tehsil Mian Channuu, District Khanewal who was accused to involve in running illegal business of tax evaded tobacco products. FIA seized the different brands of cigarettes including Gold Street Classic, Gold Street International, Hero, Chance, Olympic; Bridge and Kissan, the products manufactured by Khyber Tobacco Company (KTC) located in Mardan and Walton Tobacco Company (WTC) in Mirpur.
SI Asif informed that when the culprit Mr. Alam was asked to produce the purchase invoices and other relevant tax documents regarding the sale of tobacco products, he remained failed to provide any plausible justification. According to the statement recorded by the Alam, he was engaged with illegal sale of tax evaded tobacco products with active connivance of a local distribution company namely Numeric Distribution Network (NDN) located at Khan Plaza, Firdous market, Gulberg III, Lahore and management KTC Mardan. “The company NDN supplied me these tobacco products through different legal and illegal means and I stocked these supplies in the above said godowns. I have been running this business for last 4 to 5 years and paid cash amounts to the said company. Alam confessed in his written statement.
In a move against tax evaders, the enforcement department of Federal Board of Revenue (FBR), directorate of Intelligence and Investigation (I&I) wing along with Inland Revenue Services (IRS) has seized 1.2 million non-duty paid cigarettes worth Rs. 3.89 million during different raids in the country. Earlier in another move, the directorates of I&I-IRS in joint operation also seized the godown in Faisalabad owned by Sarhad Cigarette Industries, adding that the company has also been directed to produce invoices and prove that taxes and duties have been paid on the cigarettes but so far there has been no response. The sale of Local Tax Evaded (LTE) cigarettes continues to be on the rise with statistics pointing at the prevalence of locally manufactured cigarettes in the market, priced at an average of Rs. 27 per packet – an amount that is below the minimum tax per packet amount set by the government of Rs. 33.80.
Low segment tax-paid brands are priced at an average of Rs. 57 per pack, whereas high segment tax-paid segments are priced at around Rs. 110 per pack. These brands face serious unfair competition from LTE brands that sell at prices which are priced at less than even half of the tax-paid segment due to the evasion of taxes. Most local manufacturers evade these taxes by under declaring their production so that they can sell their illegal cigarettes at prices lower than that printed on the pack. The price gap between the two segments continues to increase annually and is fuelling the growth of LTE cigarettes in Pakistan. Furthermore, in the last 4 years, taxes have seen a 100% increase which has resulted in tax-paid cigarettes becoming more expensive for the Pakistani household to afford. The consequences of the rise in illegal cigarettes have been multifold and can affect the Government, the society, the consumers, and the tax compliant industry.