RTO Karachi contemplating seizing KESC bank accounts

Regional Tax Office-II (RTO) Karachi is contemplating seizing the bank accounts of M/s. Karachi Electric Supply Corporation Ltd. for the recovery of "admitted tax liability" amounting to Rs 1.4 billion. Official sources told Business Recorder here on Friday that the Sindh High Court in an interim order has asked not to take any coercive action against the KESC. The concerned RTO has requested the court to allow recovery before June 30, 2013.
The RTO-II Karachi is strongly pursuing the case at the level of court for early recovery of the unpaid amount. After getting due permission from court, tax authorities would exercise powers to seize bank accounts of the utility agency to recover the purported tax liability within current fiscal.
The RTO-II Karachi has issued a detailed order against the corporation under section 161 of the Income Tax Ordinance 2001.
According to the tax department, this order is being passed "strictly" in accordance with the interim order dated: June 11, 2013 of the High Court of Sindh in Suit No, Nil of 2013 (M/s. KESC Ltd. Vs. FBR and others). This tax demand as a result of this order will only be recovered after so allowed by the Court in the above suit.
The order stated, inter alia, that the taxpayer is a public limited company engaged in the business of generation, transmission and distribution of electricity. Jurisdiction of the taxpayer is assigned by the FBR to the said RTO vide its notification.
According to it, taxpayer has committed a tax default U/s. 161(1) of the Ordinance read with Rule 43 of the Income Tax Rules 2002 by not depositing tax collected under section 235 of the Ordinance, RTO maintained.
Therefore the taxpayer is held "taxpayer in default" in terms of section 161(1) of the Income Tax Ordinance 2001 and tax default has been computed. "The net tax payable U/s. 161 is Rs 1,443,377,475/- The proceedings of default surcharge U/s. 205 of the Ordinance shall be initiated separately subject to Court''s orders."
This order is being passed in the light of the directions of the High Court in its interim order. The tax demand created will only be recovered after so allowed by the Honourable Court in the above suit, according to RTO''s order.