In a bid to stop payment of sales tax refund on fraudulent documents, the Central Board of Revenue (CBR) has directed Sales Tax collectorates that all refund claims 15 percent in excess of amount of the monthly average amount claimed by the applicant during 2004-05, shall be subject to strict scrutiny.
The directives have been issued after dramatic surge in refund claims amount ahead of the abolition of the sales tax refund system replaced by the zero-rated system from July 1, 2005, informed sources at the Sales Tax Collectorate in Karachi revealed on Thursday.
The collectorates have been advised that refund claims of exporters depicting increase more than 15 percent in the amount of refund claims contrary to their monthly average of claimed amount of nine to ten months for the year 2004-05 or making zero-rated supplies to low tariff countries, shall be processed on the basis of average profiles, if admissible, under the law and remaining claims shall be subjected to pre-refund audit scrutiny.
In case the total claim is suspected, the same should be subjected to pre-refund audit. The refund claims based on multiple returns and revised returns of the same refund claimants or their suppliers are to be blocked by the Chief of STARR automaton system and referred to the Assessment and Processing Division of the concerned collectorate to ascertain the bonafide and genuineness of these returns.
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