Electronic Electricity Meters: FBR acts against manufacturers involved in tax evasion

The Federal Board of Revenue has launched a countywide drive against the assemblers/manufacturers of 'Electronic Electricity Meters' allegedly involved in evasion of duties and taxes, causing loss to the exchequer.
Sources told Business Recorder here on Tuesday that the FBR has issued instructions to the Directorate General of Post Clearance Audit FBR to detect similar kinds of cases of evasion of taxes by the assemblers/manufacturers of Electronic Electricity Meters and co-ordinate with the Directorate General of Intelligence and Investigation Inland Revenue (IR) FBR for completion of the exercise on national level. In a single case of Lahore, Director General, Post Clearance Audit FBR has detected short-payment of sales tax, income tax and the Federal Excise Duty to the tune of Rs 15.317 million. It is apprehended that assemblers/manufacturers of Electronic Electricity Meters is all major cities might be involved in similar kind of evasion which would be verified by the Directorate General of Post Clearance Audit FBR.
According to information report of Directorate General of Post Clearance Audit FBR, in pursuance of a credible information passed on by the PCA HQ, desk audit of clearance data pertaining to period 2007-2011 revealed that a Lahore based (Pvt) Ltd company imported 64 consignments of single phase Electronic Electricity Meters Kits from China and got them cleared from Model Customs Collectorate, Lahore by declaring it as Meter PC Board including 'GMST', Current Transformers, Battery Lithium, and LCD, under various PCT headings ie 8534,000; 8504,3100; 8506,1000; 8506,5000;8506,8000; 8531,2000 and 9013,8000 at lower rates of customs duty instead of correct description ie Electronic Electricity Meter Kits classifiable under PCT heading 9028.3000.
In its report, the directorate further stated that a special audit team of PCA Lahore visited the factory premises of the said importers and samples from in-bonded consignments were drawn in the presence of factory's representative. The samples clearly established that the imported goods were in SKD condition. The goods ie complete Electronic Electric Meter Kits imported in SKD condition met the essential character of complete/finished articles which were liable to be classified/ assessed as complete/ finished article in term of Rule 2(a) of the General Rules of Interpretation, under PCT 9028.3000 attracting 25 percent customs duty, 15-17 percent sales tax, 2-5 percent income tax and special federal excise duty @ one percent. Moreover, irregular exemption of customs duty, sales tax, income tax and special FED under serial No 74 & 90 of SRO.565(I)/2006 dated June 5, 2006; zero-rating of sales tax under SRO.549 (I)/2006 dated June 11, 2008; irregular concessions under Income Tax Ordinance 2001 and Federal Excise Act, 2005 have also been availed.
This misdeclaration by the Lahore based importer has resulted in evasion of duty and taxes to the sum of Rs 72,593,617 (Customs Duty: Rs 57,556,258 Sales Tax: Rs 11,187,914, Income Tax: Rs 3,849,446 and Special FED: Rs 280,454). An audit observation has been issued to the said importer by the directorate. Further progress in the matter shall be intimated to the Board in due course, directorate of the post clearance audit added.