Directorate General Intelligence and Investigation Customs has requested Chairman FBR Mumtaz Haider Rizvi to empower the directorate to exercise powers of the Sales Tax Act 1990 and Federal Excise Act 2005 to investigate beverage industry and check movement of non-duty paid and counterfeit cigarettes despite the fact that Directorate General Intelligence and Investigation Inland Revenue is actively engaged in the job at present.
Sources told Business Recorder here on Friday that the Directorate of Intelligence Inland Revenue is legally empowered to check sales tax and federal excise frauds in beverage industry and to conduct raids on non-duty paid tobacco/cigarettes. However, Directorate General Intelligence Customs has no legal authority to investigate sales tax and federal excise cases under the said law. This investigation agency, ie, D.G Intelligence Customs has asked the tax authorities to obtain similar kind of powers available to the Directorate of Intelligence Inland Revenue under the Sales Tax Act 1990 and Federal Excise Act 2005. In the presence of ongoing sales tax and federal excise investigations being conducted by the DG Intelligence Inland Revenue, the availability of similar kind of powers to Customs Intelligence would create a parallel agency for the taxpayers. The extension of sales tax and federal excise powers to the Customs Intelligence would simultaneously result in investigation of same sectors by the two intelligence agencies of FBR.
The directorate of customs intelligence has requested to investigate the beverage industry of Lahore and non-duty paid tobacco and cigarettes at a time when the DG Intelligence Inland Revenue has already launched countrywide exercise of documentation and investigation against the beverage units of Lahore. A number of vehicles carrying non-duty paid tobacco and cigarettes have been seized in the KPK by the directorate.
Interestingly, the DG Intelligence Customs is seeking investigative powers of Sales Tax Act 1990 and Federal Excise Act 2005 despite the fact that its sister organisation is already conducting investigations under the Sales Tax Act and Federal Excise Act. Moreover, the DG Intelligence Customs has requested the FBR to allow sales tax and federal excise investigation of the same sectors which is already being investigated by the Directorate General Intelligence and Investigation Inland Revenue, sources added.
If investigative powers of sales tax and federal excise were granted to the DG Intelligence Customs, these two agencies would have the same powers of Sales Tax Act 1990 and Federal Excise Act, creating a unique kind of situation for the taxpayers. In such a situation, beverage industry, cigarette sector and other sectors dealing in sales tax and federal excise would have to face two agencies, ie, Directorate of Intelligence Inland Revenue and Directorate General Intelligence Customs.
According to a letter of the Director General Intelligence Customs to the FBR Chairman, this Directorate General had forwarded a preliminary investigation report regarding evasion of duty/taxes by M/s Gourmet Foods on supply of beverages. The Chairman FBR, vide his autographic note on the letter decided that DG I&I-FBR may be granted special powers to investigate this case as DG I&I (IR) does not have the capacity to conduct such audits at this stage. This Directorate General has not received any formal approval of FBR to conduct audit of M/s Gourmet Foods, however, DG I&I (IR) vide letter No 2(14)BEVERAGE/12-10317-k, conveyed that the Chairman, FBR has decided "that all complaints involving duty/taxes evasion on Income Tax, Sales Tax and FED shall be dealt with by Directorate General, Intelligence & Investigation (IR)".
It is pertinent to mention here that the Chairman, FBR vide his autographic note on this Directorate General's letter No 1(2)DGCI/Tech/Task Force/C ig/2010/6512, approved that the Directorate General Intelligence & Investigation-FBR may be empowered under the Federal Excise Act, 2005 and Sales Tax Act, 1990, to check movement of non-duty paid and counterfeit cigarettes and for this purpose authorised the Directorate General to constitute eight special mobile squads to be deployed in KPK, border areas of AJK and southern Punjab. However, the notifications regarding empowerment of the Directorate General to intercept/seize non-duty paid and counterfeit cigarettes have not been issued so far. The anti-smuggling squads of the Directorate General have been directed to gear up their efforts against smuggling of cigarettes and in a recent incident 127,500 cigarette packets of smuggled cigarettes have been seized from a secret godown in Lahore. However, not being empowered under the Federal Excise Act, 2005 the staff of the Directorate General is unable to intercept/seize non-duty paid and counterfeit cigarettes, Director General Intelligence Customs said.
Director General Intelligence Customs further said that it would not be out of place to mention that this Directorate General has extensive experience of dealing with complicated investigations and audits of Sales Tax and Federal Excise Duty and has a proven track record of unearthing mega tax scams of Sales Tax and Federal Excise Duty running into scores of billions. Keeping in view this expertise of the Directorate General I&I-FBR, the Board constituted a task force on cigarette sector headed by Director General I&I-FBR. The task force after analysing the entire sector and taking input of all stake holders submitted a comprehensive study report to FBR, which is being considered by the Board for making policy decisions to minimise leakage of revenue in cigarette sector.
In view of the foregoing, it would be in the national interest that Directorate General I&I-FBR may be empowered, under Federal Excise Act, 2005 and Sales Tax Act. 1990 to seize non-duty paid and counterfeit cigarettes and to conduct complicated audits/investigations of Sales Tax and Federal Excise Duty so that the hemorrhage done to the revenue can be mitigated and FBR can achieve its revenue targets, Director General Intelligence Customs added.
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