LAHORE: Issuance of arbitrary tax notices to the beverage sector firms without referring disputed matters to the valuation committee has irked beverage firms, terming it harassment on the part of field formations of Federal Board of Revenue (FBR).
According to sources, such notices are issued by the tax offices to leading beverage firms while deriving the value of concentrate used by them on mere assumptions, conjectures and surmises.
In all such cases, they said the field formations avoid referring the matter to the valuation committee for appropriate determination of value of disputed concentrates used by the beverage firms.
They said all such show-cause notices are being issued under the sales tax act, federal excise act and income tax ordinance. The purpose of this exercise is to trap beverage firms into procedural hiccups to extract maxim revenue before the matter is settled in accordance with law.
It may be noted that the field formations are found adamant to apply relevant provisions of law wrongly to create fake demands against the beverage firm.
In a recent case, one leading beverage company pursued the issue and requested the Large Tax Office (LTO) Lahore to constitute a valuation committee before carrying out the execution of show-cause notice.
Accordingly, a committee was constituted with a representation both from public and private sectors and two members from Lahore Chamber of Commerce and Industry were added to it to ensure transparency.
The sources said the said valuation committee commenced its proceedings and while it was holding hearings, the department intervened and stopped it to proceed further when it realized that the decision of the committee might go against it.
However, the beverage firm kept pursuing the issue at all the relevant forums with a focal point that the law has provided for determination by a valuation committee when value of a concentrate could not easily be ascertained.
The sources said the said beverage firm kept securing decisions in its favor from all the appellate forums and finally it was declared by the higher courts that arbitrary departmental acts without recourse to the valuation committee were violation of relevant laws.
It may be noted that the business community has also been agitating in front of Federal Tax Ombudsman (FTO) against the field formations for creating fake demands for arm twisting of corporate tax.
It was reported earlier by this scribe that one dairy firm had no option but to hold salaries of employees to pay such a demand few last year.
Copyright Business Recorder, 2023
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