Inadmissible input tax adjustments: FBR amnesty scheme fails to deliver
ISLAMABAD: Leading tax experts of Karachi have contested that the amnesty scheme announced by the Federal Board of Revenue (FBR) vide notification 563(I)/2012 has failed to attract a large number of persons involved in claiming inadmissible input tax adjustments or persons against whom tax fraud cases were framed by tax department.
Experts told Business Recorder here on Wednesday that huge amount of over billions of rupees was involved in this single account and government is making efforts to recover the major chunk of revenue from the announced policy under the amnesty scheme. Due to some legal issues the revised amnesty scheme has not attracted large number of persons.
According to details, the Directorate of Customs Intelligence had busted sales tax fraud scam and lodged some FIRs in both Lahore and Karachi. The accused involved in this mega scam are over and above thousands of taxpayers involving billion of rupees unlawful adjustment/refund of bogus input tax claims by the supply chain and all persons being part of the supply chain were booked in FIR according to terms of sec-8A of the Sales Tax Act.
They said that the issue of extending scope of FIR to supply chain without any direct evidence and completion of inquiry was grossly criticized by trade and industry. There were over hundreds of civil petitions filed by taxpayers on this single account. According to information, the FIRs included names of some business houses including public limited entities which make the whole exercise of Directorate at stake.
It is learned that prior to commencement of this Finance Bill (2012-13) the issue for introducing one time amnesty was seriously being considered by the board. The team of directorate in coordination with representatives of trade and industry has made detailed deliberation on the pros and cons and different repercussion. The trade was of the view that 100% payment of principal amount is unjustified as issuance of notices to 3-4 stakeholders within the supply chain means recovery of 300-400 percent instead of 100 percent from a single registered person of the supply chain. If the government is asking the taxpayer to deposit 100% as principal amount, it is basically 300 % to 400% to be deposited by 3-4 persons in the supply chain.
The other basic demand was to allow taxpayers to get refund if the cases decided in favor of taxpayer by the courts or any appellate authority, the team of directorate in principle seems to be agreed on these modalities in principle however later on the board has not convinced to such extend and amnesty under notification 563(I)/2012 was announced with extending benefits to only such person who has to discharge 100% of their alleged liability by 25th June 2012.
The amnesty is further becomes non productive where an amendment was introduced through notification 606(I)/2012 which requires taxpayers to withdraw cases / complaints filed before any forum including FTO or High Court.