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ISLAMABAD: The Federal Tax Ombudsman (FTO) has expressed serious concern over the huge disconnect between Regional Directorates of Intelligence and Investigation (I&I) Inland Revenue Karachi & Lahore and concerned Regional Tax Offices (RTOs) of Karachi and Lahore.

According to an order of the FTO issued here on Tuesday, the Federal Board of Revenue (FBR) should direct Directorate General of I&I-IR, Islamabad to, expeditiously, extend full cooperation/coordination to CCIR, RTO Lahore in determining civil/criminal liability against fraudsters, involved in claiming fraudulent/inadmissible input tax adjustment.

The FBR has also directed Member-IT, FBR/PRAL to conduct forensic audit in the matter so as to assist in meaningful outcome of investigations; investigate role of Central Registration Office (CRO)/Local Registration Offices (LR0s) in allowing change of name and address of registered person, purportedly without knowledge of Complainant.

The FBR should direct concerned formations to, expeditiously, provide outcome of investigations on above lines to CCIR, RTO Lahore so as to assist adjudication authority to determine true merits of the case; and (v) report compliance within 45 days.

This Complaint was filed against Deputy Commissioner-IR, Zone-I, RTO Lahore, in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), for issuance of Show Cause Notice dated 14.05.2022 against Complainant.

It is evident that there is huge disconnect between Regional Directorates I&I-IR, Karachi & Lahore and concerned RTO5 Karachi & Lahore while issuing a show cause notice to Complainant without appreciating holistic picture of the case. Investigation, conducted in the matter, is half cooked and real culprits, who actually claimed inadmissible/fraudulent input tax adjustment, are yet to be determined.

Keeping in view RTO Lahore’s serious capacity issues/lack of human resource, as expressed by RTO Lahore’s DR during hearing, to effectively conduct investigation/coordination across the country, it is critical that Directorate General of 1&1-IR, Islamabad extends its due assistance/cooperation to RTO Lahore to investigate this case of big tax fraud to which Director, I&I-IR, Karachi and Lahore are in agreement with.

Further, forensic audit in the matter is of paramount importance, therefore, Member-IT, FBR and PRAL need to contribute their due role so as to assist in meaningful outcome of investigation. Needless to say that recurrent systemic misuse of input tax adjustment by fraudsters is due to inefficient Central Registration Office (CRO)/Local Registration Offices (LROs) which needs serious detailed evaluation for corrective measures as all fake/fraudulent sales tax persons are registered/get registered due to weaker regulatory controls by CRO/LROs which may well include incapacity, negligence, omissions and commissions.

Copyright Business Recorder, 2022

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