Claims under ERS: Post Refund Audit deadline missed

The Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) were unable to complete Post Refund Audit (PRA) of all sales tax refund, processed and sanctioned, under the Expeditious Refund System (ERS) by the deadline of July 31, 2011. Tax experts told Business Recorder here on Thursday that upon adverse observation for clearance of refunds through ERS by the Chief Commissioner RTO, Karachi.
FBR had issued guidelines with instruction for completion of PRA of refund cases recently cleared through ERS by July 31, 2011. The deadline has passed but the field formations have yet to complete the PRA of all such claims issued under the ERS. This also reflects total failure of the concerned FBR Wing/Directorate General, which is directly dealing with the issues of the PRA under the ERS, they said.
In the absence of specific guidelines by concerned authorities in FBR, the ongoing practice for general application of PRA without any benchmark is against the basic intention of the policy makers to end physical interaction of taxpayer and tax officers.
According to the experts, the field formation has failed to complete the PRA exercise despite the fact that electronic verification has already been done by the system itself; the field formation was only required to check the apparent abuse of excessive refund as earlier reported to the board in general.
The majority of refund claims cleared under ERS pertain to export oriented sectors including textile and leather. Even in this sector facility of ERS was extended only to manufacturer-cum-exporter. All commercial exporters or refund claimants against local zero rated supplies were not eligible for this scheme.
When contacted, some manufacturers-cum-exporters expressed strong reservations on the abuse of discretionary powers by the filed formation and audit officers. They claimed that some of the tax officers had already started interaction with the individual exporters for positive clearance by them. They questioned when any refund claims was according to past satisfactory claim history within the limit of 1-2 percent of exports value as mutually agreed with the board and already cleared by system, then there was no question of PRA at all. However, if there was any alarmingly high amount of refund claim in deviation of past history, only then it might require appropriate clarification and PRA.
They were of the view that current practice for general application of PRA without any bench mark was against the basic intention of the policy makers to reduce the interaction of taxpayer and tax officer to limit the scope of corrupt practice. The experts said the entire electronic filing of return and refund processing was the part of tax administration reform project and all would go in vain if the system was not followed in true spirit.