On the directives of the Directorate General of Intelligence and Investigation Inland Revenue (IR) Federal Board of Revenue (FBR), tax authorities in Lahore are in the process of recovery of sales tax to the tune of millions of rupees from marriage halls after completion of assessments under the on-going drive of documentation.
Sources told Business Recorder here on Wednesday that the Regional Tax Office-II headed by Chief Commissioner Mustafa Ashraf has effectively taken action against marriage halls, which have not paid a single penny as sales tax and failed to respond to notices to the department. The DG RTO Lahore-II has also detected cases where 75 percent tax rebate has been wrongly claimed by the teachers and researchers of private educational institutions under clause (2) Part-III, second schedule to the Income Tax Ordinance 2001.
Details showed that in pursuance of FBR's commitment to launch a forceful drive against tax evaders and defaulters, Regional Tax Office-II, Lahore started action against major marriage halls, providing catering services at their premises. Scrutiny of official record showed that none of the marriage halls working in the jurisdiction of RTO-II was paying sales tax into the government exchequer, despite being part of a multi-billion rupees business. Accordingly, the marriage halls providing catering services were issued show-cause notices to explain their defaults. Instead of responding to the notices, the marriage halls knocked the doors of Lahore High Court, seeking remedy through constitutional writ petitions praying before the court to declare the show-cause notices as illegal.
Sources said that the Lahore High Court, Lahore in its landmark judgement dismissed these writ petitions and directed the petitioners (marriage halls) to face the legal process of tax authorities where exhaustive procedures are already in place to ensure that no tax goes unpaid and at the same time no injustice is meted out to any taxpayer. The judgment clearly seems to send a message to the taxpayers that they can not avoid their tax liabilities by seeking interference from the superior judiciary.
All such cases are actively pursued by the Regional Tax Office-II, Lahore before the court and it is believed that millions of rupees of sales tax would be collected after completion of assessments against marriage halls. Sources said that Chief Commissioner Mustafa Ashraf of RTO-II Lahore also unearthed technique used by certain teachers and researchers, who wrongly claimed tax rebate as admissible under the Income Tax Ordinance 2001. The issue of 75 percent tax rebate claimed by the teachers and researchers under clause (2) Part-III, second schedule to the Income Tax Ordinance, 2001 was thrashed and it was observed that the same has wrongly been claimed by the teachers employed in private educational institutions and academies.
Notices are being issued for rectification to such teachers and proceedings are in hand. As an example, tax shortfall in one case for Tax Years 2009 and 2010 was observed and demand of short tax liability of Rs 791,672 has been created and recovered. All such cases of similar nature are being thrashed out for proper tax liability for previous five years to recover the proper tax as per law, sources added.