''Unlawful'' deduction: Balochistan government approaches CCI to get back Rs 1.1387 billion

The government of Balochistan (GoB) has approached Council of Common Interests (CCI) to get back the Rs 1.1387 billion "illegally" deducted by the federal government, well informed sources told Business Recorder.
Finance Division (Government of Pakistan) on January 11, 2018 informed the Government of Balochistan that an amount of Rs 1.1387 billion was deducted at source on December 29, 2017 against a total claim of Rs 1.1837 billion from the share of government of Balochistan on account of FBR''s withholding tax claims.
The details of claims were as follows: (i) non collection of tax on registration of new vehicles, Rs 9,161,257;(ii) shortfall in deduction on passenger vehicles, Rs 651,360,000;(iii) shortfall in deduction in goods transport vehicles, Rs 225,654,988; and (iv) accumulated 5 per cent service charges ( deducted by GoB), Rs 297,509,292. The total amount is Rs 1.1837 billion of which an amount of Rs 45,000,000 was deducted subject to further verification. The balance recoverable/adjustable amount was Rs 1.1387 billion.
The Government Adjuster further asked the government of Balochistan to get these figures reconciled with RTO Quetta and in case of any amount which is not due for deduction may be claimed through refund mechanism. The Excise and Taxation Department, Government of Balochistan has filed an appeal on February 12, 2018 under section 122b of the Income Tax Ordinance 2001 before the Chief Commissioner (IR) Regional Tax Office Quetta with request to probe basis of their claims ( ie. relevant data/ details of vehicles) for reconciliation purposes. The Government of Balochistan is still waiting for response from Chief Commissioner (IR) Quetta. The provincial government maintains that the FBR''s claims and deduction made by Federal Adjuster does not seen to be legal because the liability was/is against the private vehicle owners instead of Government of Balochistan. The Excise and Taxation Department on its part has initiated the process of recovery of arrears from vehicle owners and depositing the amount in the FBR''s account till October 2018; Rs 6 million have been recovered and deposited in the FBR account.
The government of Balochistan further argues that the Federal Government cannot deduct any amount from the Provincial Consolidate Fund of provinces as the custody of this is entrusted to the provinces under article 119 of the Constitution and in the case of Balochistan another safeguard has been provided under the Presidential Order of 2001 of the 7th NFC Award which clearly says that the share of Balochistan in the net proceeds of the divisible pool shall remain protected. However, despite these safeguards, an amount of Rs 1.1387 billion has been deducted which is not justified and reduced the fiscal space available to the provincial government.