Food outlets on Motorway: FBR to launch ST, FED enforcement drive

As the Federal Board of Revenue (FBR) is ready to launch the 'Sales Tax Lucky Draw Scheme' from January 1, 2011, it would use this opportunity for immediately launching an all-out enforcement drive against the potential restaurants/food outlets on Islamabad-Lahore-Peshawar motorway, which are earning windfall profits but contributing nothing to the national kitty in the form of taxes.
Tax experts told Business Recorder here on Monday that the 'Sales Tax Lucky Draw Scheme' would cover registered restaurants and food outlets through the lucky draw scheme to encourage voluntary registration of all those liable to pay sales tax and ensure that the tax deducted is also deposited into government treasury. Similarly, the FBR would also check massive evasion of sales tax and federal excise duty by poetical restaurants located on the Islamabad-Lahore-Peshawar motorway.
According to sources, some restaurants, refreshing stops, and food outlets located on the said motorway are selling food items three times dearer than normal prices. It is strange to note that prices of items sold at these food outlets are inclusive of taxes, but there is no check on them as far as deposit of the levy is concerned. The printed menu at these restaurants show that the prices of food items are inclusive of all taxes. The amount of sales tax has been collected from the consumers but not deposited in the national exchequer. There is an immediate need of effective enforcement drive against these food outlets to collect the sales tax and excise duty from these restaurants as per their actual potential.
Some of the restaurants are involved in massive evasion of sales tax by under-reporting their sales, etc. The actual daily turnover and tax estimates are much higher as compared to the payments made by these restaurants. The actual tax to be paid by these restaurants is much more as compared to their actual payments.
It is learnt that some restaurants on the Islamabad-Lahore-Peshawar motorway are earning huge profits on daily basis but not paying anything to the national exchequer. Certain restaurants fall within the jurisdiction of the Regional Tax Office Lahore, whereas others are covered within the area of RTO Sarghdha, Regional Tax Office Rawalpindi and Regional Tax Office Peshawar. The regional tax authorities are well aware of the fact that the restaurants and food shops are selling expensive things on the Islamabad-Lahore motorway. These restaurants seem to be operating like cartel, as far as prices of food items are concerned. Apparently, these food outlets have similar kind of expensive prices of different items and they are not paying the due amount of sales tax as per their actual potential.
Sources said that the FBR had deputed sales tax officials at a few hotels and restaurants in all major cities to monitor their daily sales and turnover for controlling massive evasion of sales tax by this major non-compliant sector. They said that the FBR is legally empowered to invoke provision of section 40B of the Sales Tax Act 1990 to depute sales tax officials in the premises of hotels/restaurants. The sales tax officers can be posted at hotels' premises round the clock to monitor their daily sales and record of details of input consumed (especially units of electricity and natural gas), and they should also ensure adherence to the sales tax law.