Change of guard in FBR leads to end of creating excessive tax demands

LAHORE: A change of guard in the Federal Board of Revenue (FBR) has led to an end to the culture of creating excessive tax demands against specific sectors, brining a sigh of relief to the officers in all the field formations, said sources.

It may be noted that the FBR, under the former chairman Dr Muhammad Ashfaq Ahmed, had started issuing instructions/directions to the chief commissioners in the field formations for sector-wise selection of cases for audit purposes.

These sectors included oil & marketing companies (OMCs), edible oil manufacturers, auto industry, aerated water manufacturers, beverages, traders of electronics, cement and housing societies.

A good number of companies out of these sectors had challenged the audit selection on the ground that the FBR cannot interfere in the independent discretionary powers of commissioners to select and conduct audit. They were of the view the working of field formations has been compromised due to issuing of directives by the FBR to the Commissioners for audit selection with prescribed time lines.

All these notices were issued on the directions by FBR in revenue recovery drive, therefore, such directions were taken as impinge upon the independent statutory authority of the Commissioners for audits.

Accordingly, the whole process was challenged in the court of law on the plea that such directions would amount to undermine and fetter the independent discretion and statutory power of the Commissioners for selection and conduct of audit. Sources said the Board was seeking daily, weekly and monthly reports of fake demands from the field formations on a regular basis.

Interestingly, the Board had failed to recover even a single penny out of tax demands worth billions of rupees against 81 sugar mills. A special audit team of the Board had created this demand back in March following the alleged irregularities detected by the Sugar Inquiry Committee in 2020.

The Advisory Committee of Federal Tax Ombudsman (FTO) had objected to the practice of creating fake demands to collect taxes coercively by the field formations of Board. The committee included presidents of chambers of commerce and industry, chairman of export-oriented associations and tax consultants.

Also, the overload of work on the mid-career officers in the field formations was led to a tendency of preferring to opt for foreign missions job keeping in view the stress against low allowances and salaries. According to the insiders, 50 percent of the opportunity in the foreign missions was availed by the FBR officers last year.

A division bench of the Lahore High Court has also declared recently that the whole process was without lawful authority and of no legal effect in an intra court appeal by DG Khan Cement Company against the Board. It further said that the independent application of mind by the Commissioners was compromised after sector-specific audit instructions by the Board.

Copyright Business Recorder, 2022