Sales tax auditors are still hindering efforts to make the tax machinery business community friendly whereas audit authorities have failed to devise a comprehensive mechanism to check the blackmailing tactics of auditors during assessment of manufacturing units.
Sales tax consultants and tax practitioners, who frequently interact with the auditors, told this corespondent here on Saturday that there is no effective monitoring system to identify and improve their role as there is no remarkable change in their performance even after creation of Member Audit post two years back.
On the contrary, they frequently misuse their discretionary powers.
These auditors use the same old tactics of pressurising the units by making frequent visits and demanding unnecessary records, mainly for greasing their palms.
Tax consultants added that the unregistered persons are mainly afraid of auditors for which they show reluctance to join the tax paying community.
On the other hand, some senior CBR officials opined that effective enforcement measures have helped in checking the auditors' activities and monitoring has considerably improved their performance.
When told that auditors were still indulging in malpractices, officials termed these accusations as a fairy tales of tax practitioners.
Sources said that as per section 25 of Sales Tax Act, 1990, read with audit parameters and different circulars issued from time to time by the Board, registered person is bound to provide documents like sales invoices, sales register, purchase invoices, purchases register, stock register (quarterly for retailers), bank statement and bills of landing/shipping bill/bill of entries (for importer and exporters).
Under the law, the registered person should receive a letter for audit of sales tax paying unit with a list of documents required by the department. After 10 days of receiving of the letter the registered person has to provide the required documents to the auditor.
The auditor after checking the whole record makes an audit report within 30 days. In this regard, the auditor can take some record (copies) and acknowledge the receipt.
The copy of report shall also be forwarded to the registered person for record.
In violation of this procedure, the letter for prior intimation for audit is deliberately not dispatched to the unit, and auditors come to the unit showing photocopy of the letter.
In some cases, letters were received by the taxpayers, which did not contain the details of documents.
Once an auditor takes necessary documents, there is no deadline for finalisation of audit. Auditors time and again visit the units to unnecessarily cause inconvenience to the taxpayers. This forces the taxpayers to settle things through unfair means.
Sources said that in some cases the auditors on their own issue query letters to the units without seeking permission from the higher authorities or Collector of Sales Tax.
Sources questioned who is responsible for this attitude of auditors. Member Audit or Collector of Sales Tax or any other audit officials or the system?
Meanwhile, the CBR has recently started an exercise to focus on the capacity building and training of auditors/senior auditors for creating better understanding of taxpayers' problems.
The CBR is also actively working to revise the audit guidelines/ modules to ensure that result-oriented audit should be conducted without asking for unnecessary documents from the taxpayers.
The tax authorities have consulted Human Resource Department to devise a comprehensive strategy for capacity building of sales tax auditors as well as senior auditors.
The training and pragmatic shift in the thinking of auditors' could be instrumental in attracting taxpayers towards voluntary compliance increasing revenue collection.
Sources said that HRM department would develop the strategy to train auditors on the recommendations of sales tax department.
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