It needs clarification that the Federal Board of Revenue (FBR) has the legal authority to tackle the issue of blacklisted companies in cases where registered persons have made purchases from the firms when they were compliant/active taxpayers. Tax experts told Business Recorder here on Monday that certain taxpayers had made purchases from the blacklisted firms in the past when these companies were doing proper business.
The taxpayers, making purchases from the firms in the past, were not aware that they would become blacklisted in future. It is not the mistake of the registered persons who made purchases from units which later were blacklisted. In such a situation, the department has to verify whether the unit has duly paid the output tax in the past. If the payment of the output tax has been verified, the department has to accept the sales tax invoice issued in the past. It is the duty of the tax department to ensure verification of the output tax payment. In case the supplier has paid the output tax, the genuineness or authenticity of the invoice could be confirmed. During the period when a specific firm was actively doing business, the invoice would be considered lawful in case output tax has been paid. Even if later this firm becomes blacklisted, the benefit of invoices issued in the past cannot be taken away from the registered purchaser. Therefore, the department has the legal authority to effectively tackle the issue of blacklisted companies which issued genuine invoices in the past when they were compliant taxpayers.
Sources said that if the buyer has the invoice of a blacklisted company, then the output tax has to be verified during the period when the firm was actively doing business. The sales tax invoice in question has to be accepted for this period in case tax payment has been made. Sometimes, late filing of sales tax returns also result in delay in disclosing the information about the authenticity of the invoice issued by a blacklisted company.
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