Chairman National Accountability Bureau (NAB) took a suo motu action against five cellular companies allegedly involved in massive evasion of sales tax and federal excise duty worth Rs 47 billion. It will also determine the role of officials involved in the alleged tax evasion. This was stated by Hafiz Mohammad Irfan, the spokesperson for NAB, at a press conference here on Saturday.
Irfan claimed about Rs 47 billion loss had been caused to the national kitty through tax evasion by five cellular companies including National Telecommunication Corporation (NTC), Pakistan Telecom Mobile Company Ltd (PTML), Telenor, Pakistan Mobile Communication Ltd (PMCL) and Warid. NAB spokesperson said that since 2007 cellular companies had been evading tax. According to him, FBR auditors took notice of tax evasion only in 2012. When FBR demanded payment of taxes, these companies approached Commissioner Inland Revenue (CIR) for registration of a case.
The CIR asked these companies to pay the due amount of tax. Later, these companies move to Appellate Tribunal Inland Revenue (ATIR). The tribunal gave decision in favour of interconnect charges. These companies applied to the Chief Commissioner Large Tax Unit, they were ready to pay tax from July 1, 2012. They asked for a waiver of last 5 years tax as evasion of tax, according to them, happened inadvertently.
On July 4, 2012, the chairman NAB took a suo motu notice to safeguard Rs 47 billion and asked chairman FBR to appear in person to explain details about the defaulted amount. The Chairman FBR was also directed not to take further action in terms of waiver of tax worth Rs 47 billion in case of cellular companies, he maintained.
Chairman NAB constituted a fact-finding committee comprising DG Operations, Director Special Operations and a senior Banking Officer of NAB to investigate the matter. A high-level team of FBR comprising Member Inland Revenue, Member Admin and Chief Sales Tax appeared before the NAB inquiry team and apprised it about the issue of giving wavier to telecom companies. Their explanation was sound to be unsatisfactory and they were restrained from signing a waiver notification. It was reported to the NAB authorities that the concerned staff of FBR were trying to issue subject waiver in spite of preventive instructions by the NAB.
The Chairman NAB ordered to find out why tax evasion continued for the last four years. Chairman NAB emphasised that chairman FBR should himself explain the viewpoint of his organisation. A team of senior FBR officers said that the chairman FBR was in Karachi. To avoid issue of warrants, the FBR team was asked to inform the chairman FBR about chairman NAB's direction to report in person.
The chairman FBR immediately flew from Karachi to Islamabad. On his arrival at Benazir Bhutto International Airport Islamabad, he rushed to the NAB headquarters and appeared before the fact-finding committee. During the discussion, the NAB officials pointedly questioned him for considering a tax waiver to cellular companies amounting to more than Rs 40 billion (Rs 26 billion principal amount, default surcharge and penalty) based on interconnect charges. Initially, chairman FBR said he was going to give a waiver to cellular companies. He (Chairman FBR) tried to convince the inquiry committee that grant of a waiver was in line with the law and he intended to grant waiver on the very next day. However, once he was confronted with evidence and supporting documents, he thanked the NAB for timely intervention and guidance provided to him by NAB in safeguarding national interests.
He accepted the viewpoint of NAB and agreed on a 4-point agenda. (i) No waiver whatsoever will be granted to cellular companies on grounds of interconnect charges. (ii) FBR will depute his lawyer to get stay vacated by producing evidence in the honourable court which has been pointed out by the NAB. (iii) Chairman FBR will approach NAB where the necessity of recovery arises. (iv) Chairman FBR expressed his commitment to work closely with NAB in larger interest of safeguarding the national exchequer.
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