FED short-filers face freeze on imports, bank accounts

The Central Board of Revenue (CBR) has empowered tax officials to block imports and freeze bank accounts of short-filers of federal excise duty (FED) by using new enforcement provisions available under section 14A of the Federal Excise Act, 2005.
Through Finance Bill 2007, the powers of excise officials have been considerably enhanced in the budget through introduction of section 14A in the Federal Excise Act. Under the new law, the tax officials can recover short-paid amount from the manufacturers of excisable commodities without issuance of a show-cause notice.
According to section 14A, in the Federal Excise Act: "Where a registered person pays the amount of duty less than the duty due as indicated in his return, the short paid amount of duty along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts without prejudice to any other action under this Act or the rules made thereunder: Provided that no penalty shall be imposed unless a show cause notice is given to such person."
Previously, sales tax officials were empowered to take action against the short-filers of sales tax under section 11A of the Sales Tax Act. Now the excise officials have been entrusted with same powers to deal with the short-filers of excise duty. Tax officials would be able to take action against all those who are actively involved in trading but not filing their returns.
Sources said in the absence of an effective mechanism in the excise law to recover short-paid amount of FED registered persons often short-paid due tax without any cogent reasons. Such short payment of FED particularly by organised sectors is completely unjustifiable. Therefore, there was need to introduce a legal provision so that immediate recovery action could be taken against a registered person who had failed to deposit full amount of excise duty.
To incorporate necessary enabling provisions, a new section 14A has been introduced in the Federal Excise Act, 2005, whereby immediate stoppage of clearances can be imposed and the business bank accounts of the registered person or persons can be attached, sources added.