The Federal Board of Revenue (FBR) has decided to scrutinise tax record of hundreds of sales tax refund claimants, who obtained refunds to the tune of billions of rupees under the Expeditious Refund System (ERS), but had never claimed refunds under manual system in the past.
Sources told Business Recorder here on Friday that the issue of inadmissible refund claims under the ERS was discussed threadbare during the last Chief Commissioner conference chaired by FBR Chairman Salman Siddique held on August 4, 2011. A senior sales tax official shared an abnormal phenomenon in the ERS where sales tax refunds have been obtained by those registered persons who had never manually claimed refunds under the old system.
These registered persons for the first time claimed refunds through the electronic system and have no record of refund claims under the manual system. It is strange that how a registered person who had never claimed refund under the manual system has suddenly started claiming huge amount under the electronic system. The FBR has also shared the list of hundreds of all such persons with the Chief Commissioners of Large Taxpayer Units (LTUs) and the Regional Tax Offices (RTOs) for conducting Post-Refund Audit (PRA) of such persons.
During the conference, it was pointed out that a registered person of Hyderabad has been registered with the sales tax department since 1992, but never claimed refund under the manual system. However, as soon as the ERS has been launched, the concerned person started claiming refunds. In a single case, this person from Hyderabad has obtained sales tax refund of Rs 92 million under the ERS. The FBR has detected similar cases in Karachi, Lahore, Faisalabad, Sialkot and other cities where total amount touches billions.
Sources said that the Post-Refund Audit facility is available to the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) whenever sales tax refund cases are processed under the ERS and such cases are liable to be audited by the LTUs and the RTOs. In the past, there was no regular practice of auditing cases after giving refund under the ERS.
The FBR has shared various analysis with the Chief Commissioners in which the risky areas have been identified for selection of cases for PRA which include the cases who have not received refunds but with the introduction of the ERS they have started claiming refunds. At the same time, the taxpayers who are dealing in non-related activities such as persons belonging to the textile sector is receiving invoices from a person dealing in steel products, would also be subject to audit.
Similarly, where packing material has been consumed in a higher proportion than the standard packing material is also a candidate for the PRA. The Board has emphasised on completion of the PRA and sending the feedback to the FBR headquarters for further fine tuning the risk management system. It included hundreds of cases involving a couple of billions of refunds where those persons who were not manually claiming refund by started it under the ERS. The PRA will establish the genuineness of these claimants, sources added.
Comments
Comments are closed.