Regional Tax Office (RTO)-III, Karachi has finally de-attached all 15 bank accounts of different Sindh government departments with no recovery. Talking to Business Recorder, a senior official at RTO-III, who requested anonymity, confirmed to have released all 15 bank accounts of different Sindh government departments with no recovery on the directives of Chairman FBR.
He said the department had attached some 15 bank accounts of different Sindh government departments to recover sales tax amounting to Rs 4.32 billion, pending for the last three fiscal year.
He said that provincial departments during procurement were required to withhold sales tax from the suppliers and deposit the same into kitty within prescribed period. However, no-compliance of law was made by any Sindh government departments during the last three fiscal years, accumulating tax to the tune of Rs 4 billion. An order was issued to the Sindh government and later, RTO-III, Karachi against non-compliance has frozen 15 bank accounts for tax recovery some three days ago, the official maintained.
Replying to a question, he said that Chief Minister Sindh Murad Ali Shah discussed the issue with the federal finance minister and later the tax department on the directives of chairman FBR de-attached all bank accounts with no recovery. Moreover, he said a meeting in this regard with the officials of Sindh government would be convened on April 30, 2018 to settle the issue.
Meanwhile, sources said that Sindh Excise police in order to pressurize the FBR officials cordoned off the main RTO building and confined officials for hours. They said that Sindh Excise police department met chief commissioner Dr Fazal and asked to produce payment challans of property tax and motor vehicles tax, which the sources termed illegal and unjustified as no provincial government could collect tax from federal departments under the law.
On the other hand, CM Syed Murad Ali Shah said that the FBR was trying to recover double taxation, as at the time of payments to suppliers the Accountant General, Sindh withholds and deposits the same amount to FBR as `Withholding Agent' and now the FBR has again been claiming the same amount.
He said the FBR has issued notices for recovery of Rs 260.4 million Income Tax with regard to the purchase of jute bags, PP bags and Tarpaulin during tax year's 2010-11 to 2015-16 and added that as a matter of fact the jute industry is exempted from income tax according to a SRO issued by the federal government.
He said that as regards the PP bags, etc the Accountant General Sindh, at the time of payments had already deducted the tax. "This is a double taxation against the Sindh government," he said.
The finance department officers during the meeting informed the chief minister that the principal amount of Income Tax is Rs 435.277 million and Rs 1.33 million is penalty and Rs 3.89 billion is withholding tax on goods. During the scrutiny and deliberation in the meeting it was surfaced that the demand created by FBR was on the basis of total budgetary allocation and blanked calculations without considering real time transactions and at-source deduction of taxes by the office of the Accountant General Sindh.
The chief minister after going through the FBR orders said that the FBR officers have passed orders ex-parte without hearing the concerned department. He was informed by different departments that in some cases, orders-in-original, show-cause notices and hearing notices were not delivered to the relevant departments due to which the period provided to lodge appeals has become barred by time limitation and therefore they had requested for condonation so that they could lodge appeal to offer their defense at the relevant appellant forum.
Meanwhile, Chief Secretary Rizwan Memon told the chief minister that he had held a meeting with Chief Commissioner and Commissioner RTO-III on April 19, 2018 wherein the finance department was assigned to complete the reconciliation task with the FBR and other stake-holders. Therefore, he has directed all the departments and AG Sindh to be on board to complete the reconciliation task.
The chief minister was informed that on cross verification, the tentative figures given by the AG Sindh indicated that out of total demand of Rs 4.328 billion and amount of Rs 645.522 million against Income Tax and Rs 20.629 million against GST on goods have been deducted at-source by AG Sindh leaving behind a disputed amount of Rs 3.662 billion against GST on goods which required reconciliation.
The Chief Minister directed Chief Secretary Rizwan Memon to provide services of Sindh Revenue Board Tax Consultants to all the provincial governments departments so that they can deal with such cases. Later, he constituted a committee comprising SRB Consultant Mushatq Kazmi, Secretary Local Government Ramzan Awan and Special Secretary Finance Shohab to make necessary documentation and reconcile the claims made by the FBR.