The Federal Board of Revenue has declared sales tax refund of a Karachi-based company as doubtful on the basis of high-risk areas identified in the refund claim, which included incorrect submission of stock statement. Sources told Business Recorder here on Monday that the FBR has directed the Chief Commissioner Regional Tax Office (RTO)-II Karachi to be extremely careful while processing sales tax refund claim of a registered person having Sales Tax Registration Number-'1700280003719' RTO-II Karachi.
According to the FBR, during scrutiny of sales tax return of the registered person, risk areas have been identified as: Firstly, claimed 100% input tax as refund ie Rs 1,894,180 in sales tax return for the month of December-2011. Secondly, no consumption from current purchases has been declared.
As per FBR's observations, the exports of Rs 10,043,960 were made in June-2011 and August-2011; however refund was claimed against the purchases made in December-2011. The registered person has declared in stock statement that nothing has been consumed in exports/zero-rated supplies from current purchases whereas refund claim of input tax amounting to Rs 1,894,180 has also been filed. Since no consumption from the current purchases/input tax has been declared therefore refund cannot be sanctioned.
The scrutiny of sales tax return reveals that the registered person has made purchases under Duty and Tax Remission for Export (DTRE) scheme. Surprisingly, the registered person purchased goods from the same suppliers after paying sales tax in the same period which is doubtful. The refund should be sanctioned after audit of the purchases made in normal regime as well under DTRE scheme. The Chief Commissioner, RTO Karachi should consider these observations while processing pending refund claim in the instant case, sources added.
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