PAC for timely recovery instead of RGST

Acting Chairman of the Public Accounts Committee (PAC) Zahid Hamid has said that government can generate huge additional revenue through timely recovery of due taxes instead of imposing reformed general sales tax (RGST) on the public. He made these remarks during the PAC meeting here Wednesday as the committee was shocked to note that through test checks of a few cases in 2008-2009, Rs 9.4 billion tax dues have been detected, reflecting a huge revenue potential in major cases.
The committee observed that if the FBR just conducts such kind of test audits in different cases, the Board would be in a position to generate more revenue as compared to the projections of the RGST. "There is no justification to impose RGST on the general public in view of the fact that substantial amount of revenue could be generated through test checks of potential cases. The projections for the RGST would be approximately around Rs 25 billion whereas only test check of certain cases detected revenue shortfall to the tune of Rs 10 billion," he added.
The FBR should be conscious about the loopholes in the system, Zahid Hamid said adding that the Board must look into the possibility of conducting overall test checks of cases to recover legitimate government dues. PAC Member Riaz Fityana noted that had the FBR timely recovered dues from potential cases, the government would not needed to print billions of notes.
FBR Member, Indirect Tax Policy, Mahmood Alam tried to convince the committee that tax recovery is a time consuming process involving judicial proceedings. The government has different forums providing relief to the taxpayers and delays in recovery are due to lengthy procedures, he added.
The Auditor General of Pakistan (AG) informed the committee that under section 202 of the Customs Act, 1969 read with Customs Rules, 2001 and section 48 of the Sales Tax Act, 1990 read with Sales Tax Recovery Rules 2006, customs duty and sales tax due from a person can be recovered by customs and sales tax officers in accordance with the procedures laid down therein.
Test check of recovery registers pertaining to various RTOs and MCCs of the Punjab and KP revealed that revenue collecting departments did not take adequate measures for the recovery of adjudged government dues of Rs 5,170.210 million in 432 cases. In various RTOs and MCCs of Sindh and Balochistan, the tax collecting agencies did not take adequate measures for the recovery of Rs 4,299.623 million in 942 cases.
The DAC recommended the para for settlement to the extent of amount recovered, vacated, not due and verified by audit involving Rs 2,735.488 million. It directed the RTOs/LTUs to get the position verified by audit on the amount recovered, regularised, vacated and not due. It further directed to pursue the cases pending in adjudication as well as sub judice in courts of law and report progress to audit and FBR. The Chairman FBR was directed to focus on maximum recoveries, reconciliation and verification with audit and holding the DAC to settle the para.