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A minor mistake of the Federal Board of Revenue in the sales tax-cum-payment challan form has caused massive loss to the exchequer, allowing power distribution companies to wrongly adjust input tax under Sales Tax Act 1990. The FBR has launched a large-scale investigation against the power distribution companies, which unlawfully caused huge loss to the national exchequer by wrongly adjusting input tax under sales tax laws.
Sources told Business Recorder here on Wednesday that only a small mistake in the sales tax return cum payment challans has allowed unlawful adjustment, causing massive loss to the national exchequer. The FBR has constituted a fact finding committee to fix responsibility for unlawfully extending an illegal facility to power companies. It would be investigated that how an error has been committed to amend the sales tax return form which allowed such benefit to the power distributing companies.
The committee would be headed by Muhammad Aqil Usman (IRS/BS-21) FBR Member (Legal) FBR (HQ) Islamabad. The Member of the committee would be Muhammad Raza Baqir (IRS/BS-20) Chief Commissioner-IR RTO-II, Karachi whereas Fahad Ali Chaudhry (PCS/BS-18) Second Secretary (STM) FBR (HQ) Islamabad would work as Secretary of the committee.
The committee would identify tax officials responsible for allowing such illegal adjustment of tax, which ultimately caused huge loss to the national kitty. The committee is required to examine the whole issue of extending illegal facility in return of sales tax at the cost of the huge public revenue. Details of the cases revealed that the Power Distribution Companies have been unlawfully adjusting the input tax of steel melters and re-rollers not only against their own output but also against the final tax paid through electricity bill by steel melters and re-rollers on the supply of ingots, billets and MS Products.
Huge loss of revenue was caused due to an error in sales tax return-cum payment challans form, which allowed such adjustment in violation of relevant provision of the act, rules and notifications made there under during July, 2008 to date. The FBR has directed the committee to furnish their report within 20 days after the receipt of this office order, sources added.

Copyright Business Recorder, 2011

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