FBR Orders Immediate Referral Of Suspected Tax Fraud Cases

The Federal Board of Revenue (FBR) has directed all field formations to promptly refer cases involving suspected tax fraud to the Directorate of Intelligence & Investigation (Inland Revenue). The directive applies to irregularities identified during sales tax assessments, audit proceedings, improperly issued refunds, and recovery-related processes.

The instruction follows the issuance of a Standard Operating Procedure (SOP) under Section 37A of the Sales Tax Act, 1990. Under this provision, authorised officers are empowered to investigate instances of tax fraud with authorities comparable to those of a civil court, including summoning witnesses, collecting documentary evidence, and making arrests where legally applicable. The SOP is designed to ensure that investigations are conducted in a manner capable of withstanding scrutiny before appellate forums.

Under the new framework, any case detected during proceedings under Section 11E or other assessment stages that indicates potential fraudulent activity must be immediately referred to the relevant Directorate. Upon receipt, the Directorate is required to review the matter within 30 days to determine whether proceedings under Section 37A(1) should be initiated.

Where such action is considered justified, the concerned Commissioner is formally notified of the decision. Conversely, if the Directorate concludes that proceedings under Section 37A are not warranted, the case is returned to the originating field office for completion of proceedings under Section 11E.

Following an inquiry conducted under Section 37A(3) and submission of the investigation report to the Director under Section 37(5), any further investigative measures under Section 37A(6) must be carried out strictly in accordance with Sales Tax General Order No. 2 of 2025.

The FBR stated that the SOP aims to reinforce tax compliance mechanisms, ensure timely enforcement action against fraudulent activities, and safeguard the integrity and transparency of tax administration across the country.