Tax record, soft data: FBR, AGP finally sort out contentious issues

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue and Auditor General of Pakistan have decided to sort out the most controversial issue related to provision of sales tax registered person’s record to the AGP and access to FBR’s soft data to the audit officers of the AGP for scrutiny.

Sources told Business Recorder here on Saturday that the FBR and AGP would convene a meeting on August 15, 2012 in this regard. The FBR and the AGP have different viewpoint on the issues and Public Accounts Committee (PAC) has directed the FBR and the AGP to resolve these issues. Recently, Chairman, PAC directed Chairman, FBR to hold a meeting with the AGP and resolve the following issues within 10 days: Firstly, Revenue Receipt Audit Officers access to soft data of FBR for audit. This issue is related to the line members of the FBR.

Secondly, provision of record of sales tax registered persons for audit. The issue is related to the FBR Member Legal.

The meeting between Chairman FBR and Auditor General of Pakistan will be held on August 15, 2012 as two meetings have already been held to resolve the issue.

Referring to a past meeting between the FBR and the AGP, sources said that in past the audit process was effective and mutual relations between both the organizations were exemplary except occasional delay in response to the audit objections. The FBR added that due to changes in IT operating environment, the existing procedures require review to facilitate audit process and record protection.

On the issue of non-production of sales tax and federal excise record, FBR was of the view that Peshawar High Court decided a case against the Audit Authorities as they are not Sales Tax authorities as provided in the Sales Tax Act, 1990. The said decision has also been upheld by the Supreme Court of Pakistan. The matter is still sub-judice owing to subsequent judgments of the Court. The Director General Audit, Inland Revenue (North) RRA negated the position elaborated by the Member (Legal) FBR. The Director General added that the Peshawar High Court’s judgment was in a particular case and has no general application. The Audit Expert of Revenue Receipt Audit (RRA) explained that it pertained to a case based on laws which are no more in the field. The Audit authorities further added that the PAC as well as Ministry of Law, Justice & Parliamentary Affairs (Law Division) had already given directives/advice by upholding the stance of Audit. However, it was mutually agreed that since the matter is sub-judice, both sides should wait for final verdict of the Apex Court.

On the issue of the access to soft data of FBR, sources said that the audit offices, of RRA in previous meetings had also requested for access to the soft data maintained by Pakistan Revenue Automation Limited (PRAL) and FBR. It was explained by FBR that in the past, tax department used to provide necessary record for review and examination to the Audit teams. But now in view of e-filing of tax returns by taxpayers, relevant data is maintained by FBR and its field offices in various forms/ places. It needs to be re-structured before making it available to Audit authorities as raw data will not solve the problem. The FBR added that in this respect various parameters may be mutually defined. The data captured through web-portal needs an exercise to convert the same into meaningful information. The other mode is the provisions of the data in soft mode but it may take time as various Software Applications are yet to be matured. The provision of raw data in such a position may not facilitate the Audit authorities for carrying out a meaningful audit. The Director General Audit (Customs) RRA proposed that whatever data is available with the FBR, Large Taxpayer Units (LTUs), Regional Tax Offices (RTOs) and Model Customs Collectorates (MCCs), etc its access should be provided to nominated responsible officers of RRA. This proposal was agreed in principle but was decided that a meeting between the representatives of FBR/ PRAL and AGP may be convened within a fortnight to finalize the mechanism for providing excess to the soft data of FBR to the Audit authorities while ensuring its protection.

The Audit authorities also requested for provision of soft data in support of monthly cash accounts of FBR Treasury Offices. The representatives of DRS/FBR and Federal Treasury Officer pointed out that the existing procedure of reconciliation of revenue receipts as approved by the Controller General of Accounts, is still on manual mode because all the branches of NBP, SBP, Treasuries & DAOs, etc. are not fully automated. Necessary linkages between the databases of various offices including PIFRA are yet to be established.

The data required by the Audit Authorities can be furnished by keeping the ground realities in mind regarding deposit and reporting of tax receipts. The Audit authorities observed that there can be no cash account without supporting of source documents i.e. receipt vouchers, whether it is manual or on soft form. After long deliberation, it was decided that all FBR’s Treasuries would supply monthly cash accounts duly supported with source document data in soft or hard form and reconciled with AGPR, to the Audit Offices concerned.  It was further decided that to start with figures of cash account statements consolidated at FBR, may be provided to Audit authorities on bi-annual basis along with consolidated compilation sheet.