Steel sector cases: FTO helps FBR recover Rs5.5b revenue

LAHORE: The Federal Tax Ombudsman (FTO) has assisted the Federal Board of Revenue (FBR) in recovery of Rs 5.5 billion stuck up revenue in steel sector cases.

The inspection team Constituted by FTO had made strenuous efforts and examined voluminous data provided by the corporate tax office, Lahore. For cross check, the team also retrieved the relevant data from Lahore Electrical Supply Corporation (LESCO).

According to FTO’s findings in the subject inspection, there is a huge gap between number of exclusion certificates issued as per LESCO data and that of CTO, Lahore. Furthermore, the CTO Lahore did not have information regarding amounts deposited in treasury and corresponding CPR numbers which are of crucial importance.

Also, non-production of record in respect of remaining exclusion certificates clearly depicts that the same fall in extremely grey area where instances of maladministration, misuse of authority, ulterior motives are likely to prevail. According to the FTO findings, based on examination of relevant record an amount of approximately Rs5.5 billion is suspected to be evaded in such cases at CTO Lahore.

The FTO has further observed that all the steel units which have had availed exclusion certificate need to be confronted by the FBR and amounts as per ECs must reconcile with the payment of sales tax at the relevant point of time and where ever there is a difference, it needs to be recovered.

Further, in order to ensure fast recovery of this apparent loss of Rs.5.5 billion, the FTO has recommended the FBR to re-locate the jurisdiction of Steel Cases from Corporate Tax Office (CTO) Lahore to Large Tax Office (LTO) Lahore or Regional Tax Office (RTO) Lahore for a more independent and effective recovery proceedings. Similarly, any officers/ officials having any link in the past, with the cases of steel melters must not be associated or assigned the fresh jurisdiction of said cases.

The FTO has also recommended FBR to recover the loss incurred on priority basis through its investigation arm, Directorate General I&I-IR. Internal investigation on all Pakistan basis, with special emphasis at Lahore, solely aiming at recovery of loss incurred is required probing all cases of exclusion certificates.

It may be noted that in order to facilitate steel sector special procedure rules were introduced since 2007. According to the Rules, collection of sales tax from steel melters/re-rollers/composite of melters and re-rollers having single electricity meter was charged at specified rates under Rule 58H of Sales Tax Special Procedure Rule, 2007. The above levied sales tax was collected through monthly electricity bills on the basis of consumption of electricity. However, subsequently, in the year 2014, sub Rule (3A) was inserted under Rule 58H of the above said Rules with effect from 04.06.2014.

Copyright Business Recorder, 2023