LAHORE: The sales tax department has taken strong stance against tax evasion, rejecting the plea of an importer who had been misdeclaring goods to avoid paying the correct amount of taxes.

The importer had been clearing water-based varnishes as acrylic polymers, attracting a lower duty rate of 10% instead of the correct rate of 20%. The tax department discovered the evasion and issued a show-cause notice, ordering the importer to deposit the evaded duties and taxes.

The importer argued that it had been able to clear identical consignments in the past while paying lower duties and taxes, and therefore, should be allowed to continue doing so. He said previously he had been able to clear identical consignments while paying lower duties and taxes.

However, the tax department rejected this argument, saying that the show-cause notice was predicated on data coming into the knowledge of the department. It further clarified that a wrong benefit extended beyond the law or policy cannot be perpetuated.

To resolve the controversy, the matter was referred to the classification committee of the department, which after examining the issue determined that the goods were appropriately classifiable on the basis of their composition, consistent with the view claimed in the show cause notice.

Accordingly, the relevant appellate forums agreed with the department and directed the importer to pay the tax as per the fresh assessment because the importer fails to prove that the composition of the imported consignments was anything but that determined by the department.

The tax department’s decision sends a clear message to importers that they cannot rely on past practices to evade taxes. The department is committed to ensuring that all importers comply with the law and pay the correct amount of duties and taxes.

This crackdown on tax evasion is part of the tax department’s efforts to increase revenue collection and reduce the budget deficit. The department is using advanced technology and data analytics to detect and prevent tax evasion, and is committed to taking strong action against those who try to cheat the system.

Copyright Business Recorder, 2024