Large Taxpayer Units (LTU), Karachi has withheld billions of rupees sales tax refunds of major multinational and local companies including Shell, PSO, PPL, SSGCL, Pakistan Refinery Limited and National Refinery Limited, etc, for last six months, it is reliably learnt.
Majority of companies are considered to be efficient taxpayers and are recipient of ''top taxpaying organisations'' award. Sources told Business Recorder on Thursday that these companies are facing hardships in obtaining their refunds, owing to self-imposed, inadmissible procedures by the sales tax collector.
They said the clearance of the sales tax refunds was primarily linked with the approval of the related software Starr, which failed to work properly in accordance with the Sales Tax Act, 1990.
Elaborating, they said the software verifies all relevant records of the claimant of sales tax refund with the records provided by all other associates through cross match as priority to check the amount claimed by the taxpayer was deposited in the national kitty.
They said that if any objection is raised not only in the claimant entries but also in the records of other associates, the sales tax refunds claimant would be treated as responsible and would be asked to clear it else the refunds would be stopped. However, the taxpayers have no right to ask other taxpayers to share their records. They urged the sales tax collector to waive the said condition which is creating immense difficulties for them in obtaining their genuine sales tax refunds.
They termed it as illegal act, saying that according to section 38 of Sales Tax Act 1990, any officer authorised in this behalf by the board or the collector shall have free access to business or manufacturing premises, registered office or any other place where any stock, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or any other person; and such officer may, at any time, inspect the goods, stocks, records, data, documents, correspondence, accounts, statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the federal, provincial or local laws maintained in any form or mode and may take into his custody such records, statements, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorised officer may deem fit against a signed receipt.
(2) The registered person, his agent or any other person specified in sub-section (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorised officer.
(3) The department of'' direct and indirect taxes or any other government department, local bodies, autonomous bodies, corporations or such other institutions shall supply requisite information and render necessary assistance to the authorised officer in the course of inquiry or investigation under this section.
To a question, sources said that they approached the Overseas Chamber of Commerce and Industries (OCCI) to intervene but the two consecutive meetings with LTU officials went in vain. They said that the Board should amend the section 38 and would empower taxpayers in accordance with ongoing exercise to facilitate business community or would stop it, immediately.
They said that the ongoing inadmissible exercise would not create any considerable impact but to provide huge revenue loss to the exchequer, saying that business community is reluctant to pay sales tax. Therefore, sales tax is being detected only in ledger books.
They added the business community was of the view that if the Board took positive measures in this regard, they would deposit sales tax in the national kitty. When contacted, Khalid Mehmood, collector, sales tax, LTU, Karachi, said: "all is good". He said that the refund claims are being processed within five days aimed at facilitating taxpayers at maximum.
He dispelled the impression that the department has withheld sales tax refunds of major multinational and national companies just to create an artificial increase in the revenue collection in the last quarter. He said that the refund process is very simple, claimant has to attach bank guarantee of a reputable bank with his claim to obtain sales tax refunds and added that LTU has disbursed around Rs 5 billion sales tax refunds during last nine months of current fiscal year.