Entering of the field formation staff of the Federal Board of Revenue (FBR) to business premises and forceful monitoring of stock, production and supply of manufactured goods without any prior intimation, notice or any show-cause notice has inflicted a negative impact on smooth business operations besides adding to the cost of doing business. The field formation staff is also carrying out such activities in sheer violation of the requirement of the relevant tax laws, said tax expert Muhammad Shahid Baig.
He said only the Federal Board of Revenue is empowered under relevant laws to post officers of Inland Revenue to monitor stock, production and supply taxable goods for the purposes of Sales Tax Act, 1990. However, the Chief Commissioners, as well as the Commissioners, are exercising these powers despite the withdrawal of the same through Finance Act 2018 to avoid abuse and misuse of the power by the officers acting single-handedly, he added. According to him, the objective of the 2018 Act is to ensure collective consultation among all the seven members of the Board before bringing the field staff into action against any business concern.
Unfortunately, he said, individual officers are passing such orders singly, which is a violation of the intent, object and mandate of the law. The exercise of powers vested in the Board cannot be exercised by any other office unless specifically provided under the relevant law.
He said the provisions of section 40B cannot be invoked in an arbitrary manner rather the same is required to be exercised for some object, ground or purpose that is legitimately and lawfully within the contemplation of the Act. There is no justification for posting officers on the business premises by an individual officer, he added.
In some cases, he pointed out; another violation of the relevant law is taking place as such officials are being posted at business premises which are not officers of Inland Revenue.
He said misinterpretation of section 40B of Sales Tax Act 1990 can be assessed from the fact that the said provision requires monitoring of production, sales and stock positions of taxable items but the field formation monitors the exempted goods as well during the proceedings. Therefore, posting of huge number of officials for monitoring of premises where no such production or sales take place is void and irrelevant.
Also, he has pointed out that the exercise of the power conferred under section 40B of Sales Tax Act 1990 is required to be time-bound and time frame or period must be given but most of such notices lack any such provisions, which is against the spirit of the law. According to him, the apex court has already mandated the requirement of specifying a time limit for the posting of officers under section 40B of the Act.
He said the powers conferred under section 40B are discretionary and monitoring has not been mandatory once the purpose is served but most of such notices lack any such provision and monitoring continues without a time bar to fleece genuine taxpayers.
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