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ISLAMABAD: The Auditor General of Pakistan (AGP) has directed the Federal Board of Revenue (FBR) to punish senior tax officials responsible for the issuance of an illegal notification for the legalisation of smuggled/illegal mobile phones without payment of any fine.

The audit report of the AGP of the FBR (2021-22) recommended that the FBR should hold an inquiry and fix responsibility regarding the issuance of SRO1455 (I)/2018, under Section 181 of the Customs Act, 1969, that allowed the release of smuggled mobile devices seized before December 31, 2018, on payment of applicable duties and taxes without the imposition of fine.

The AGP stated that the process of issuing customs SROs granting exemptions and concessions lacks transparency and appropriate legal cover. Moreover, there are no internal monitoring reports by the FBR with regard to the objectives and performance of such SROs. Therefore, it is currently impossible to determine the cost-effectiveness of such exemptions in stimulating existing and new investment, employment generation, and new technology.

The AGP further objected that the arbitrary use of discretionary powers conferred by the law on the federal government and the FBR is evident in both the issuance and application of several SROs granting exemptions and concessions.

No proper mechanism of monitoring and supervision by the senior management is available to prevent misuse of the SROs in the field.

AGP unearths malfeasance worth Rs418.436bn by FBR field formations

Customs authorities do not apply exemptions with precision, which is obvious from the audit observations of Rs6.25 billion, the AGP added. The AGP has recommended that the federal government and the FBR should review all active SROs issued under Section 19 of the Customs Act, 1969 and withdraw such of them as are not covered by the express mandate of the said section.

Parliament should amend section 18 of the Customs Act 1969 to provide for a transparent and structured procedure for decreasing or removing regulatory duties and additional customs duties so that the SROs under this section cannot be issued arbitrarily or with any ulterior motive.

The FBR should strengthen its internal controls in the field formations so that the concessionary SROs are applied only to eligible importers and eligible items and dutiable items do not escape the application of levying SROs.

The AGP has also strongly recommended the FBR immediately withdraw the questionable SROs on the import stage.

Copyright Business Recorder, 2022

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