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ISLAMABAD: The Federal Tax Ombudsman (FTO) on Thursday directed the Federal Board of Revenue (FBR) to take an appropriate policy decision with regard to collaborating with the police and other law enforcement agencies (LEAs) to seize smuggled vehicles plying across the country.

The direction has been given after own motion investigation undertaken after receiving news reports that there are a large number of non-duty paid vehicles plying in Malakand Division and adjoining areas of the KPK.

During the investigation, reports were sought from the secretary Revenue Division, director general I&I Customs, and chief collector of Customs KPK. Reporting on the estimated number of NCP vehicles, plying in KPK, Chief Collector Customs KPK submitted that exercise, undertaken by the erstwhile MCC, Peshawar, in the light of the ECC decision and the Board’s instructions, with due assistance from provincial authorities/local administration of newly-merged districts of KP, indicated that NCP vehicles, registered till October 2018, were around 121,193, however, figures may vary keeping in view existence of a large number of unregistered vehicles and constant smuggling of such vehicles into these areas, Whereas, Director General I&I (Customs), reported that an exercise was undertaken by the erstwhile MCC, Peshawar, in the year 2018, regarding plying non-duty paid vehicles, to be verified by the local administration and said requisite data is maintained by the Collectorate of Customs Enforcement, Peshawar. However, on the basis of information through unofficial sources, an estimated number of NCP vehicles, plying in Malakand and other areas of Khyber-Pakhtunkhwa, is around 0.2 to 0.3 million.

Briefly, The Customs Act, 1969, was extended to the Federally Administered Tribal Areas (FATA) in 1984 and to Provincially Administered Tribal Areas (PATA) in 1975. Accordingly, duties and taxes were enforced via Border Customs Stations (BCS) in ex-FATA/PATA but only at the import stage. Inside ex-FATA/PATA, neither Customs officials were deployed, nor customs provisions enforced, particularly with regard to smuggled non-customs paid vehicles.

After the passage of the 25th amendment to the Constitution, in 2018, FATA/PATA were merged with Khyber-Pakhtunkhwa (KPK), whereby, all federal laws got extended to these areas automatically. Economic Coordination Committee (ECC), in its meeting, approved certain tax concessions for ex-FATA/PATA residents. Further, federal cabinet, in its meeting held on July 18, 2018, while promoting the opinion that, in view of the peculiar nature, geography as well as economic backwardness of erstwhile FATA/PATA, a phased approach for enforcement of federal tax laws was necessitated, thus, expanded scope of tax remissions, with regard to NCP vehicles, for a period of five years ending on 30th June, 2023.

The FTO findings state that the smuggling of NCP vehicles is going on even after 30.06.2018, the cutoff date, given in the ECC’s decision.

The Tax Ombudsman observed that the FBR formations, entrusted to enforce customs regulations, were required to seize smuggled vehicles, being transported through settled areas without payment of duties/taxes. Ironically, despite having information that the number of NCP vehicles has increased twofold in the last four years, only 204 NCP vehicles were seized by the Collectorate of Enforcement, DI Khan and Peshawar, while Director I&I Peshawar apprehended 57 vehicles in the period from 1st July 2021 to till June 30th 2022.

Collectively, a total of 261 NCP were seized which is less than one vehicle per day. The FTO noted that as per Enforcement Collectorate’s own account, smuggled vehicles pass through settled areas before joining NCP lots in Malakand Division and there are 0.2 to 0.3 million NCP vehicles in various areas of the KPK. Hence, failure by Customs Enforcement and Intelligence formations to intercept and seize vehicles, being transported through settled areas, despite having knowledge of same tantamounts to maladministration.

Accordingly,the FTO has recommended the FBR to direct the Chief Enforcement, FBR Customs (focal person) to collaborate with Inspector Generals of other LEAs/Police, entrusted to perform functions under the Customs Act, 1969, and to chalk out a plan to seize all smuggled vehicles, plying countrywide.

The FTO also directed all chief collectors to ensure that tight border controls are in place so that smuggling of vehicles is prevented at the time of entry into Pakistan and that vehicles, crossing border, are effectively seized by the LEAs, confiscated accordingly and timely auctioned as per the law and the rules.

Copyright Business Recorder, 2022

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