ISLAMABAD: The Federal Board of Revenue is investigating legal status of export samples declared in the monthly sales tax returns by a leading exporter instead of filing Goods Declaration (GD) to verify any illegality committed under the Sales Tax Act 1990 or Customs Act 1969.
Sources told Business Recorder here on Saturday that an exporter falling within the jurisdiction of the RTO Quetta has been engaged in sending export samples through courier services. The unit is declaring export samples through courier companies in Annex-D of the sales tax return instead of declaring the same in the Goods Declaration. The FBR wanted to confirm whether this practice is in line with the law or any violation of Sales Tax Act 1990 or Customs Act 1969 has been committed by the exporter.
The FBR's policy decision would have impact on the declaration of export of samples in the monthly sales tax returns instead of Goods Declaration, sources added. The FBR is repeatedly asking the Chief Commissioners of the Regional Tax offices (RTOs) to apprise of the practice (declaring export samples in sales tax return) adopted by the taxpayers within the jurisdiction of the RTOs. However, for the last one year, RTOs have not responded to the instructions of the Board. In the absence of the prevailing practice in the field formations, the FBR cannot issue a clarification or policy directives on the issue raised by RTO Quetta.
According to the details, the issue is related to the declarations of export samples in the monthly sales tax return by the exporter. The prescribed monthly Sales Tax Return notified, vide SRO.793 dated August 24, 2011 requires a registered person to declare his exports made during the year in the Annex-D of the return. An Industries Limited, one of the taxpayers of RTO Quetta, has reported that they are sending samples through the courier services. The courier service providers, as a general practice clubs all the shipments and declare them to Customs Authorities against a Goods Declaration filed under their name. However, the courier service providers provide them (M/s Industries Limited) an Airway Bill as an evidence of export.
As a registered person is required to declare his each and every transaction, whether domestic or international, therefore, M/s Industries Limited are declaring the export of samples through the courier service providers in Annex-D instead of declaring the Goods Declaration number. The Industries Limited is declaring Airway bill number in the relevant column of Sales Tax Return, reflected from relevant Returns for the Tax Periods September 2012 to December 2012.
Sources said that the Industries Limited has approached FBR for the clarification as whether the above practice adopted by them is in line with the provisions of the law or not and if the department has any reservation on the procedure adopted by them, the same may be communicated to them along with the provision of correct procedure.
Perusal of aforementioned sales tax returns revealed that the unit has shown very high figures of exports samples which is a risk area and needs attention. During the last four months M/s Industries Limited has shown exports of samples amounting to Rs 95.802 million and obviously being samples, the same have not been offered to sales tax and income tax. On the other hand 100 percent credit of input tax has been claimed by the said Industries Limited. The RTO Quetta has referred to the FBR for seeking further guidance, sources added.
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