Industrial units in erstwhile tribal areas: Tax officials to be deputed to check power consumption

ISLAMABAD: Senior members of the Federal Board of Revenue (FBR) admitted before the Senate Standing Committee on Finance that the raw materials and inputs imported for non-taxable areas, i.e., erstwhile the Federally Administered Tribal Areas (Fata) and the Provincially Administered Tribal Areas (Pata) were sneaked through the taxable territories of Pakistan without payment of duties and taxes.

Dr Muhammad Saeed Khan Jadoon FBR Member Customs Policy and Qaiser Iqbal FBR Member Inland Revenue (Operations) informed the committee on Tuesday that the import of goods manufactured in the non-tariff areas is subjected to the sales tax and federal excise duty (FED) on transfer to tariff areas of the country.

However, the inputs and raw materials imported for the tribal areas are not fully consumed in these areas and moved to the tariff areas of the country, the FBR member customs (Policy) said.

A team of tax officials would be deputed to check the electricity consumption of the industrial units located in the erstwhile tribal areas, the FBR official said.

The FBR Member Customs Policy said the FBR has received complaints that the goods meant for tribal areas were offloaded during transportation from Karachi to the non-tariff areas. To plug in leakages, the importation, transportation, exemption (from import-stage income tax), and consumption of raw materials have been elaborately dealt with vide FBR’s CGO # 1 of 2021.

In order to facilitate the operationalisation of benefits laid down in the law, the Fata/Pata-domiciled industrial units may acquire installed capacity determination certificate (ICDC) from the Khyber-Pakhtunkhwa Department of Industries or the Ministry of Industries.

The Regional Tax Office, Peshawar shall also establish a tax office in Malakand Division for prompt release of consignments, processing of consumption and exemption certificates and effective and timely implementation of law in letter and spirit.

Qaiser Iqbal FBR Member Inland Revenue (Operations) stated that there is some leakage of goods from non-tariff areas to the taxable territories. The FBR’s field formations have checked tax assessments of the units located in the erstwhile tribal areas based on the electricity consumption. Moreover, there are a lot of cheques lying with the customs department. The FBR has taken action and directed the field offices to plug in leakages of such goods.

Chairman Committee Senator Talha Mehmood showed anger over the FBR saying that the business community and traders are being harassed through issuance of illegal notices by the FBR’s field formations.

Talha Mehmood expressed serious concern over issuance of notices to the tune of Rs2.4 trillion to the business community before end of last fiscal year 2020-21.

During last fiscal year, over three lakh tax notices were served to the business community.

The notices were served to pressurise the business community to pay undue amount of taxes before June 30, 2021.

Commissioners Inland Revenue received instructions from the FBR to decide cases in June to create huge tax liabilities against the business community.

The Commissioners IRs have given decisions and orders in hurry to decide cases in favour of the tax department.

Tax officials gave decisions without hearing the viewpoint of the taxpayers to create unnecessary tax demands.

The FBR Member Inland Revenue (Operations) responded that the field formations every year expedite cases in June, so that the cases should not become time-barred.

There is no pressure on the field formations to decide cases in haste.

The committee sought details of tax liabilities created during June during the last five years.

The chairman Committee said that unjust decisions will not be tolerated under any circumstances.

It is our duty to provide a conducive environment for business to the people.

The Standing Committee recommended stern action against the tax officers who were involved in issuance of illegal notices.

Copyright Business Recorder, 2021