Rs469bn tax demand: FBR fails to collect a single penny from sugar mills?

LAHORE: The Federal Board of Revenue (FBR) could not recover a single penny out of a tax demand of Rs 469 billion against 81 sugar mills so far, said well-placed sources.

A special audit team of the FBR had created this demand back in March, following the alleged irregularities detected by the Sugar Inquiry Committee in 2020.

They said the Large Tax Office Lahore had generated a tax demand of Rs105 billion against some 28 sugar mills out of which only Rs500,000 has been deposited by the mills to avail the automatic stay from tax recovery.

According to the sources, creating fake demands has become a norm of the day and most of them are challenged and turned down by the courts, costing millions of rupees to both the taxpayers and the Board.

The sources further said the Board had given a target of Rs85 billion to the LTO for the second quarter of 2021-22, out of which a tax demand of Rs65 billion has been generated so far. They added that 90 percent of demands created by the LTO was fake and courts would either remand or delete them at the end of the day.

Majority of tax officers are at present badly stuck up with the task of creating demands against the taxpayers.

Meanwhile, none of them is allowed to visit the premises of taxpayers to verify facts on ground. Instead, said the sources, they relied on the tools available within the system to create fake demands.

“We request tax consultants and chartered accountants of the taxpayers that let us impose tax demands and better challenge them to strike them off at a later stage,” said an officer requesting anonymity.

He said the Board was forcing the field formations since last two years for creating excessive demands. Prior to it, he added, the cases of taxpayers were examined on merit and cleared if no major legal contravention was found. Right now, he said, the field formations were generating a demand Rs 20 million against a tax return of Rs 2 million and the taxpayers are found shedding tears while pointing out that the actual worth of their business was much less than the demand created against them.

Another tax officer said the Board was seeking daily, weekly and monthly reports of demands from the field formations on a regular basis.

Secretary Pakistan Tax Bar Association Ch Qamar-uz-Zaman, when contacted, said the tax assessment is considered to be a quasi judicial proceeding and the Board is not authorized to intervene it by dictating targets vis-a-vis demands. It has demoralized the existing taxpayers and given rise to litigation that is consuming most of the time of courts.

The assessment quality has also been compromised, as the balance of the work of a tax officer has become out of order. He said this situation may also lead to corrupt practices as a tax officer would adjust two cases of his choice while creating fake demands against five taxpayers.

He said there is a need to rationalize tax rates to encourage tax culture instead of collecting revenue through fake demands.

Copyright Business Recorder, 2021