There is lack of co-ordination between the Federal Board of Revenue (FBR) and the field formations on the crucial issue of Post-Refund Audit of sales tax refunds issued expeditiously under the Expeditious Refund System (ERS). Sources told Business Recorder here on Friday that the problem of Post-Refund Audit was discussed threadbare during the last Chief Commissioners' conference held at the FBR House.
The Director General of the ERS had made a presentation on the ERS during the last conference to inform the Chief Commissioners about the status of the ERS. It was pointed out that the deferred sales tax claims and Post-Refund Audit had not been initiated by the field formations. This means that the most important area of the ERS ie Post-Refund Audit has not been implemented in the field formations. Some of the Chief Commissioners emphasised that the field formations should be taken on board regarding refunds paid under the ERS.
According to sources, the Chief Commissioners requested the DG ERS to provide with the relevant data to initiate the deferred claims and the Post-Refund Audit. The house resolved to share shortcomings of the ERS with the Pakistan Revenue Automation Limited (PRAL) and in this regard submit the report electronically.
When contacted, a tax expert said that the manufacturers-cum-exporters have not received any notices of Post-Refund Audit of the sales tax refunds issued under the ERS. The FBR will conduct audit of selected units based on the risk based criteria used for processing and clearance of refund claims. So far, the FBR has not selected any cases for the Post-Refund Audit of the manufacturers-cum-exporters liable to audit.
He said that the Board has already introduced a new provision in the ERS for automatic clearance of sales tax refund under no objection to avoid blockage of claims under the electronic system. The refund claims under this rule shall be processed by Risk Management System (RMS) of FBR IT system within two working days of electronic submission of refund claim in the RCPS format. The system will automatically clear the amount under no objection. The electronic advice will be issued to the CSTRO and the registered person about the refund amount cleared by the RMS for payment. The objections detected by the system will be communicated to the refund claimant and the concerned RTO/LTU for information.