Registration of FIRs: Govt acts to resolve issues between FBR, textile exporters

ISLAMABAD: The government has taken serious notice of the FIRs registered against leading textile mills and is taking steps to resolve the issues between the Federal Board of Revenue (FBR) and the textile exporters, highly placed sources told Business Recorder Saturday.

Official sources on strict condition of anonymity informed that, "Yes, the government is aware of the FIRs issue against leading textile exporters. The appropriate steps are being taken to resolve the issue between the textile exporters and the Large Taxpayer Office Lahore," top officials added.

The FIRs registered against the leading textile exporters by the Large Taxpayer Office Lahore has used the words of tax fraud, massive evasion of sales tax, and fraudulent input tax adjustment against the textile units.

Law contravened included sections 6, 7, 8, 22, and 26 of the Sales Tax Act read with Section 2(37) of the Sales Tax Act 1990.

The FIRs also stated that the offence committed included Section 33 (13) of the Sales Tax Act, 1990, read with Section 2(37) of the Sales Tax Act, 1990.

Section 2(37) of the Sales Tax Act is related to the tax fraud.

It says, knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) doing of any act or causing to do any act; or omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration or falsifying the sales tax invoices.

The All Pakistan Textile Mills Association (APTMA) Chairman, Adil Bashir, has urged the federal government to stop the FBR from harassment of taxpayers, and withdraw all the FIRs lodged against leading genuine and bona fide manufacturers and exporters.

In a statement issued here on Saturday, he lamented that the prime minister of Pakistan was all out to support the export-oriented sectors of Pakistan but some vested interests were bent upon frustrating the intents of the government by harassing exporters and hindering the unprecedented growth in exports.

According to him, exports from Pakistan have registered an impressive uplift over the last few months due to unflinching support by the prime minister but the pace of potential upsurge in exports may be retarded by unfriendly attitude of certain government functionaries.

He said that FASTER and WeBOC systems of the FBR have become hub of errors and glitches, and the FBR has itself repeatedly publicly admitted that the FASTER system had multiple flaws, mistakes and deficiencies.

He regretted that instead of correcting the system and making it more efficient, field formations of the FBR have started lodging stereotyped FIRs without applying judicious mind and without an iota of evidence of mala fide intention and mens rea on part of the said taxpayers.

In the absence of any willful default and without mens rea which are essential ingredient of initiating criminal proceedings, the FIRs are being lodged which may pollute congenial business environment created due to hard efforts by the government.

He asked how it was possible that an exporter claiming refund of tens of millions of rupees would indulge in any petty malpractice by adding another few million and create problem for himself. In this regard, he particularly mentioned that the Large Taxpayer Office, Lahore has recently registered FIRs against leading textile exporters in total disregard to the fact that computer system of the FBR had itself erroneously uploaded input tax adjustment of sales tax twice.

Bashir said the FBR system had uploaded the data twice erroneously due to system error in September 2019, and there was no misdeclaration or omission on part of the taxpayers.

He added that the alleged offence relate to only the month of September 2019 which establishes that it was not an individual act but result of systematic error of the FBR itself.

He said that initiating criminal proceedings by the LTO Lahore against major reputed companies even without confronting them or issuing show-cause notices is contrary to the principles of natural justice and amounts to gross harassment of leading taxpayers.

He said that it was very painful to name and shame all directors of the mills by nominating them in the FIR without even conducting a meaningful inquiry, and in the absence of any incriminating evidence.

He stressed that in case any agency of the FBR finds any lapse in the compliance of tax laws, it should serve proper show cause notice upon the alleged taxpayer and no criminal proceedings should be initiated against any such person unless and until the case has stood scrutiny and test of an impartial judicial forum.

Bashir offered the services of the APTMA to the FBR in conducting any meaningful inquiry against tax evaders.

He expressed the hope that the federal government would take stock of the situation and issue necessary directions to the FBR for immediate withdrawal of the FIRs in the larger interest of the business environment in the country and fostering of exports

Copyright Business Recorder, 2020