The Federal Board of Revenue (FBR) has directed the Karachi Large Taxpayers Unit (LTU) to release excess input of Sui Southern Gas Company Limited (SSGC), within 12 months, Business Recorder learnt on Monday. According to sources, the FBR has violated all formal procedures to grant extraordinary favour to the company, directing the Karachi LTU to sanction all sales tax refund claims of SSGC within 12 months.
They said the sales tax refund claims could not be sanctioned without Sales Tax Automated Refund Repository (STARR) verification, but the said requirement has completely been disregarded through a notification. It is also said that some influential persons of SSGC have utilised their strong political contacts to pressurise the FBR to do so.
Moreover, they said, the board has also allowed manual processing of the refund claims of SSGC in cases where verification from STARR is not helpful, on the basis of declaration of SSGC. They said that SSGC would now file corporate guarantee for each case to the effect that it would pay back the amount refunded to it on the basis of its declaration, if found inadmissible at any later stage, along with penalties involved, the same would notwithstanding the time limitation.
They said that the board has also relaxed the conditions of Rule (34)(1)(d) of the Sales Tax Rules, 2006 by directing the Karachi LTU to allow claiming of refunds of excess input before lapse of 12 months. But the said relaxations are subject to post-refund audits by LTU Karachi including verification of sales tax invoices from other RTOs/LTUs. Sources said that Karachi LTU had raised objections in this regard as the gap between the department's assessment and the company's refund claims stood at over Rs 3 billion. But the Karachi LTU has now been forced to release all sales tax refunds of SSGC, without following legal formalities.
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