The Federal Board of Revenue has temporarily dropped the idea of launching a new amnesty scheme for persons against whom cases have been framed for claiming illegal input tax adjustment by the Directorate General of Intelligence and Investigation FBR. Sources told Business Recorder here on Friday that the FBR had initially agreed with the idea of the amnesty scheme for payment of principal amount of sales tax by the persons involved in the mega sales tax scam.
The issue was discussed between the tax authorities and representatives of business/trade associations at Karachi last month. It was also agreed that the FBR may allow the taxpayers to pay the principal amount of sales tax in lieu criminal proceedings against them may be dropped.
The FBR had drafted a proposal to launch the amnesty scheme for payment of the principal amount of sales tax by December 31, 2011. On the other hand, some stakeholders wanted the scheme to be announced up to June 2012. The proposed amnesty is not likely to be given to the sales tax evaders for the reason that no guarantee has been given about the exact amount of payment of the recoverable tax. So far, the Board has decided to deal with the tax evaders by applying the provisions of the Sales Tax Act, 1990.
According to sources, there is no assurance that tax evaders would pay the principal amount of sales tax whereas the tax authorities are confident to ensure recovery of the evaded amount under the relevant provisions of the Sales Tax Act 1990. In the absence of any assurance of payment of the amount involving billions of rupees, the idea of launching the scheme has been dropped for the time being. Secondly, launching of such kind of scheme would give a wrong message to the business community that the FBR is not distinguishing between the honest taxpayers and tax evaders. If we give such kind of amnesty to the tax evaders, it would discourage the honest taxpayers to regularly pay taxes. The tax dodgers and the taxpayers should not be treated equally, sources said.
In the present circumstances, there is no intention of the tax authorities to launch such kind of amnesty scheme for those involved in mega sales tax scam. "For the time being the idea of launching of the scheme has been dropped by the FBR," sources added.
The issue of amnesty scheme mainly related to the persons who have not been directly involved in the tax fraud scam and booked in FIR due to part of the supply chain for claiming inadmissible sales tax adjustments. Some of the businessmen and experts have pointed out that the cases have also been framed against the units, which are basically indirect accused in the scam being part of the sales tax supply chain.
The details revealed that the directorate of customs intelligence in recent past has lodged some FIRs in which large number of taxpayers were booked either involved directly or indirectly on the charges of input tax adjustment/refund on fake/flying invoices. It is first time in Pakistan that scope of investigation was extended to third party or first supply chain stage invoking provision under section 8-A of the Sale Tax Act, 1990. The relevant section is made part of the Sales Tax Act, in 2008 and it is the first ever-practical incidence of its application.
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