The Directorate General of Intelligence and Investigation, Customs and Excise, Islamabad, has rejected allegations made by the National Accountability Bureau (NAB) of alleged evasion of duties and taxes by oil refineries, LPG producers, petroleum companies and oil and gas well owners.
Sources told Business Recorder on Saturday that investigation was conducted to check whether these companies were involved in massive tax evasion through under-invoicing, misdeclaration and fraudulent techniques. However, the Directorate said it was unable to find any clue to prove the allegations made by the complainant through NAB.
The DG intelligence observed that the allegations seemed to be vague, but the CBR should conduct audit of these companies to thoroughly examine their tax records. The Directorate has only examined tax profiles of oil companies available with the tax department. However, it had no access to the detailed record maintained by these taxpayers at their premises.
Therefore, the DG Intelligence has proposed audit of the companies related to oil and gas sector for conducting detailed scrutiny of tax record pertaining to sales tax and federal excise. It has asked the Large Taxpayer Unit (LTU), Karachi, and Collectorates of Sales Tax and Federal Excise to conduct thorough audit based on record available with these companies.
Details showed that NAB, Sindh, had informed the DG, Intelligence, to investigate a complaint about evasion of duties and taxes by LPG producers, oil refiners and other oil and gas well owners. The NAB forwarded the complaint to the DG intelligence for further investigation.
Sources said that the allegations against these companies were not supported by any documentary/tangible evidence to proceed further. As regard the allegations against a gas company and a refinery, the DG intelligence investigated the tax profiles of last three years. In case of the gas company, tax profile showed that it did not export anything. However, exports were found on the profile of a refinery, showing exports made by the unit were 10.21 percent against the total sale during the period June 2004 to December 2004.
The data obtained from Pakistan Revenue Automation Limited (PRAL) showed that the exports of naphta were made to United Arab Emirates (UAE), India and Japan. However, it could not be proved that the same item was being sold in the local market. The company is declaring the sales, purchase and exports as is evident from monthly sales tax profile.
According to the investigating officer the complaint therefore apparently does not carry any weight. For detailed scrutiny, the record of calculation and analysis of purchases, productions, sales and exports would be required for which access to the company''s records would be necessary and therefore it is necessary that the collectorates and the LTU Karachi may conduct a thorough audit of the companies and related sectors on the basis of records pertaining to sales tax and federal excise.
The DG intelligence observed that petroleum is a vast sector and the companies are operating all over the country. Therefore, it would be relevant to mention that other units located elsewhere in the jurisdiction of other collectorates may also be got audited by the respective Collectorate of Sales Tax.
Sources said that the DG intelligence has also conducted inquiry based on the complaint against the refineries, LPG producers etc. According to the inquiry report of DG intelligence, it was alleged that the export declared Naphtha (tax exempted) is being sold in local market. Of the above export declared Naptha about 40-45 percent is pumped back or leaked in the market. It was also alleged that these companies are purchasing huge quantity of smuggled Iranian petrol and diesel and claiming illegal subsidies and causing massive increase in the smuggling of oil. Thus illegal sale of Naptha, illegal claim of subsidies on smuggled oil and tax evasion by misdeclaration of purchases and sales has been alleged.
DG intelligence concluded that only in depth audit of these companies could possibly lead to confirmation of these allegations. In this regard detailed calculations and analysis of the purchases, productions, sales and exports would be required for which access to the Company''s records would be necessary.
The CBR may directed the respective Collectorate and LTU Karachi etc to conduct audit of the companies and related Sector pertaining to sales tax and excise records, it said.