The selection of taxpayers operating under special sales tax/Federal Excise Duty (FED) regimes for audit through random computer balloting (Tax Year 2013) has raised legal questions about tax audit of units working without input/output adjustment mechanism.
Tax experts told Business Recorder here on Monday that different sectors like commercial importers and edible oil industry have approached the FBR against the audit of sales tax selection under section 25 of the Sales Tax Act, 1990. The selection of commercial importers for audit through random computer ballot by the FBR for Tax Year 2013 has raised a legal question whether cases of full and final discharge of tax liability could be subjected to audit.
Similarly, the tax regime with respect to sales tax/FED applicable on registered manufacturers of vegetable ghee/cooking oil falls under a special procedure settled between the industry and the Federal Board of Revenue (FBR). As per contours of said procedure the manufacturers are not eligible for input/output adjustment of FED paid @ 16 percent at import stage of edible oil. Whereas, exemption is granted from Sales Tax vide entry no. 24, Sixth Schedule of Sales Tax Act, 1990.
Furthermore vide S.R.O 24(I)/2006 dated 7th January, 2006, additional FED in value addition mode @ Re 1/kg is also levied on vegetable ghee/cooking oil including edible oil at import stage, which is the final liability. In this regard your attention is also drawn on Federal Excise General Order 01 of 2006 dated 19th January, 2006.
Likewise, vegetable ghee/cooking oil has been excluded from withholding of sales tax through Rule 5 of Sales Tax Special Procedure (withholding) Rules, 2007 (S.R.O 660(I)/2007 dated 30th June, 2007). They said that all other inputs of manufacturing are also paid with the liability of sales tax, which is yet again non-adjustable. The manufacturers in light of 'Special Procedure' have discontinued input/output adjustment on their products since its adoption in year 2004. But obviously in reciprocation ease of book keeping was granted to simplify the cumbersome records, since it is understood that over and above cent per cent tax liability has been discharged in advance. Consequently, at this stage the sifting of record and its provision is considered to be a laborious and useless exercise. In the light of the legal explanation, the industry has asked the FBR to withdraw the audit notices issued to registered manufactures of vegetable ghee/cooking oil, experts added.
Comments
Comments are closed.