Over 65 textile companies face action: Rs 400 billion illegal sales involve Rs 20 billion ST
Over 65 top/prominent textile companies made illegal sales of Rs 400 billion involving sales tax of Rs 20 billion and face prosecution, FIRs, arrests and criminal proceedings in case they fail to clear their sales tax liabilities by March 31, 2013 under amnesty scheme.
Copyright Business Recorder, 2013
Sources told Business Recorder here on Wednesday that the FBR has constituted special teams and raiding squads country-wide to arrest and prosecute all those textile tycoons who made illegal sales to non-operative, suspected or blacklisted units to avoid payment of 5 percent sales tax. List compiled by FBR revealed some big names of textile sector who evaded sales tax to the tune of billions. List also discloses sellers'' names and ''sales discrepancy value'' of each unit.
The FBR has given last opportunity to the textile units to clear their past sales tax liabilities in the next four days to avoid arrest and prosecution. The FBR has given directions to the raiding squads and special teams to immediately arrests the tax evaders, who failed to avail the lucrative amnesty scheme ending on March 31, 2013. It is in the interest of the defaulted companies to pay 2 percent sales tax under amnesty scheme to avoid criminal action in coming days. According to sources, certain textile units have made illegal sales to the tune of Rs 400 billion. Taking into account 5 percent sales tax, the evaded amount of tax comes to around Rs 20 billion. The FBR will not spare anyone including powerful and influential textile tycoons who have ignored government''s amnesty scheme. The raiding squads of the Regional Tax Offices (RTOs) would register FIRs and arrest senior officers of the textile units involved in tax evasion, official added.
Meanwhile, the Federal Board of Revenue (FBR) has decided to prosecute and arrests registered persons in zero-rated sectors detected through Computerised Risk-Based Evaluation of Sales Tax (CREST) system, who failed to deposit due amount of sales tax evaded under SRO 283(1)/2011, SRO 1058(1)/2011, SRO.1125(1)/2011 till March 31, 2013.
Sources stated that the FBR had announced an amnesty scheme for textile sector to clear their past sales tax liabilities under SRO 283(1)/2011, SRO 1058(1)/2011, SRO.1125(1)/ 2011 on payment of 2 percent sales tax without any default surcharge or penalty before March 31, 2013. If the persons, who evaded sales tax under the said notifications, who will not avail amnesty by March 31, prosecution will be initiated against them including arrests of financers and managers for clearance of their past liabilities.
Details revealed that the CREST has detected Rs 400 billion sales which the registered persons from five zero-rated sectors made to other registered persons which were non-operative, suspected or blacklisted. In fact these sales were made to such registered persons, who were non-operative. The sales were circumvented to avoid 5 percent tax which was chargeable to sales made to un-registered persons. After this detection by CREST, prosecution was initiated in Peshawar, Lahore, Karachi and Faisalabad. Meanwhile, the concerned associations have approached the tax authorities and assured that they are ready to pay tax at the rate of 2 percent which is now chargeable to sales on local supplies irrespective of the status of buyers. The government after due deliberations issued a notification in which they were given the option to pay 2 percent sales tax by March 31, 2013. In this regard, the FBR had issued an SRO 179 (I)/2013. The supplies made during the period from April 1, 2011 to February 28, 2013 would be covered under amnesty scheme for payment of past sales tax liabilities. The last date for availing the amnesty scheme is before March 31, 2013.
It is learnt that in case the tax involving around Rs 20 billion is not paid, the prosecution against the main culprits would be initiated without any exception. Big business houses making such fictitious sales include quite a few business houses operating in zero-rated sectors.
According to the amnesty scheme, all registered persons, who claimed zero-rating on supplies made by them in terms of SRO.283(1)/2011, dated April 1, 2011, S R O 1058(1)/2011, dated November 23, 2011 and SRO.1125(1)/2011, dated December 31, 2011, during the period from April 1, 2011 to February 28, 2013 may, with respect to all or part of such supplies on which due tax has not been paid and irrespective of the past or present registration status of the buyers, pay sales tax at the rate of 2 percent of the value of such supplies through a special sales tax return to be prescribed by the Board, along with details of all sales tax invoices against which such payment is being made, without any default surcharge or penalty, provided that such payment is made on or before March 31, 2013. The notification shall not entitle any person to claim refund or adjustment against any sales tax paid on such supplies at a higher rate, SRO 179 (I)/2013 added.