ISLAMABAD: The Federal Board of Revenue (FBR) has raised a huge sales tax demand of Rs 18 billion against a leading tractor manufacturing company in line with the implementation order of President Asif Ali Zardari.
The FBR has timely implemented an order of the President and completed an audit of the said company, resulting in sales tax demand of Rs 18 billion.
The FBR has also confirmed to the President of Pakistan that the quasi-judicial /adjudication proceedings have been finalized against the said Lahore-based company.
Sales tax on tractors hiked to 14pc from 10pc
In this regard, Large Taxpayer Office (LTO), Lahore has submitted an implementation report dated January 25, 2025 to the President of Pakistan through Federal Tax Ombudsman (FTO).
President has directed the FTO to submit the final compliance report and explanation of the queries raised by the President in the said audit case of Lahore-based company.
According to the compliance report of LTO Lahore submitted to the President of Pakistan, refer to the letters’ issued by the Advisor to the Federal Tax Ombudsman, Regional Office, and Karachi to submit the implementation report in respect of the order of the President of Pakistan against the subject complaints. In this regard, the updated position in the subject matter has been submitted to the President.
“The latest position vis-à-vis audit is that Sales Tax audit proceedings under section 25 of the Sales tax Act, 1990, for Tax Year 2022 (Tax Periods July, 2021 to June, 2022) have been concluded in respect of this company vide Order-In-Original No. Audit-ST-01/2024-2025 dated 22.01.2025 under section 11(2) & 11(3) now replaced with section 11E of the Sales Tax Act, 1990 and Sales Tax demand of Rs 18,214,981,043/- has been created against the said company in line with the recommendations of the honourable Federal Tax Ombudsman as well as the order of the President of Pakistan.
The summary of sales tax issues/ discrepancies issued by the LTO Lahore revealed that the amount of recoverable sales tax in the matter of inadmissible/unlawful claim of input tax under Section 8 of the Sales Tax Act totalled at Rs169, 106,450 and a penalty of Rs8, 455,323.
The inadmissible/unlawful claim of input tax on account of purchases made from blacklisted/suspended and non-active suppliers has been reconciled by the LTO Lahore.
The inadmissible/unlawful claim of input tax on account of non-apportionment of input tax against exempt supplies has been reconciled by the LTO Lahore.
The short payment of sales tax by misusing SRO.563(I)/2022 is of Rs 1,301,283,988 and penalty of Rs 1,301,283,988.
Non-payment of sales tax against advances received from customers totaled at Rs 214,226,622 and penalty of Rs 10,711,331.
Inadmissible/unlawful claim of input tax on account of non-compliance of section 7, 8(1) (ca) (d) & section 73 of the Sales Tax Act 1990 was Rs 5,662,986,281 and Rs 5,662,986,281.
LTO Lahore compliance report added that the quasi-Judicial / adjudication proceedings have accordingly been finalized; therefore, audit proceedings stand concluded as per the recommendations of the honourable Federal Tax Ombudsman as well as the Order of the President of Pakistan. Thus, compliance has been made to the said recommendations, LTO Lahore added.
Copyright Business Recorder, 2025
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