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ISLAMABAD: The Auditor General of Pakistan (AGP) has issued policy guidelines to the Federal Board of Revenue (FBR) to deal with the blacklisted companies, including suspension of persons who failed to file sales tax returns for six consecutive months.

According to a special study of the AGP on blacklisted companies, the AGP has issued a set of policy recommendations to the FBR to tackle the menace of blacklisted companies.

Firstly, the registration of persons involved in the issuance of fake invoices should be suspended.

Secondly, the registration of persons involved in the purchase/supply of taxable goods from/to black-listed registered persons, should be suspended. Thirdly, the registration of persons who failed to file sales tax returns for six consecutive months may be suspended.

Fourthly, the adjustment of input tax on taxable supplies, as claimed by the purchasers/sellers of black-listed registered persons, should be disallowed.

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Fifthly, the adjustment of refund on taxable supplies as claimed by the purchasers/sellers of black-listed registered persons, should be disallowed.

Sixthly, the Internal Audit Wing should be strengthened in order to help management detect such irregularities at early stage.

Seventh, an internal Audit may be conducted by FBR to detect other irregularities not covered by this study.

Eight, the compliance of applicable provisions, under Income Tax ordinance and Sales Tax Act should be ensured.

The special study on blacklisting and suspension of registration during the period March and April 2022. The main objectives of the audit were to examine whether the tax collecting authorities had exercised the vested provisions under law under section 21 of Sales Tax Act 1990 read with Rule 12 of Sales Tax Rules 2006. Commissioner, having jurisdiction, is satisfied that a registered person had issued fake invoices, evaded tax or committed tax fraud, registration of such person may be suspended by the Commissioner through the system, without prior notice, pending inquiry. This also includes, non-availability of registered person at given address, refusal to allow access to business premises or refusal to furnish record to an authorized Inland Revenue Officer, non-filing of sales tax returns, making purchases and supply to other black-listed persons etc. The issue of bogus refunds/inadmissible adjustment of input tax, has been frequently highlighted as well as the unearthing of non-existent companies, fake invoices, allowing invoices of black-listed companies and involvement of tax authorities, have further increased the gravity of situation.

This Special Study Report comprising Fourteen (14) paras on loss of revenue on account of blacklisting and suspension of registration, amounting to Rs.1.3 billion. The key findings are; Inadmissible claim of input tax by the Black Listed/suspended/de-registered persons, Unlawful/wrong output tax charged by the Black listed/suspended/de- registered person, Non recovery of Sales Tax, Suspension & subsequent blacklisting of sales tax registration not made on prescribed time, undue favour to sales tax registered person not made suspension & blacklisting.

Copyright Business Recorder, 2022

Comments

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Shaukat Hayat Oct 31, 2022 06:56am
Nothing new; it is a routine exercise carried out by the field formations of FBR.
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Muhammed Oct 31, 2022 12:53pm
AGP has not made any recommendations on what stern action should be initiated against tax officials involved with these bogus companies.
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