Inland Revenue department: Customs authorities accused of interfering in the domain

LAHORE: Customs authorities are accused of interfering the domain of Inland Revenue department by issuing notices for reassessment and recovery of income and sales tax post clearance of the imported goods, said sources.

Sources from among the clearing agents’ operators told this scribe that some importers had received notices in the recent past from the Collectorate of Customs for reassessment and recovery of short levy of income tax and sales tax after the release/clearance of their consignments.

The importers had objected to the notices on the ground that the post clearance assessment and recovery falls within the domain of Inland Revenue and not the Collectorate of Customs.

They said all the revenue segments, including customs, income tax, sales tax and excise, operate in their different fields. Customs department enjoys the power to collect taxes at the import stage, but this power does not include any authority to assess and recover income tax and sales tax post clearance of the consignments.

According to tax practitioners, the Customs authorities have no power to recover any short levy of sales tax and income tax once imported consignments are assessed to duty and taxes and released from Customs.

Only the officials of Inland Revenue department could initiate proceedings, if any, in respect of short levied sales tax and income tax, they added.

They have further added that the Customs department merely acts as a collecting agent for advance tax and any such conferment does in no manner create any other jurisdiction for the department.

However, the department authorities were of the view that an addition of the word taxes in their law confers concurrent jurisdiction upon the Customs department to assess, recover or adjudicate any alleged short levy of income tax and sales tax even post release/clearance of the imported goods.

Interestingly, said sources, the Federal Board of Revenue (FBR) has had never issued any notification or instrument conferring any such power upon the Customs authorities for recovery of income and sales tax post clearance of goods.

As a matter of fact, they stressed, a simple perusal of the notices suggest that the departmental authorities were misinterpreting to assume the role of Inland Revenue department to recover short paid income and sales tax at the import stage. Otherwise, they added, the levies emanating from the taxing entries in the federal legislative list are the fountainhead for the imposition of customs duty, excise, income tax and sales tax and each levy operates. In its own separate field.

According to them, no tax law confers any parallel jurisdiction and authority to the Customs authorities to put themselves into the shoes of the Inland Revenue department for reassessment and recovery of income and sales tax post clearance of goods. They are only empowered to collect advance tax upon imports at the same time and manner as the customs duty payable prior to the clearance of the import. But no blanket power is available to Customs officers in this regard, they added.

Copyright Business Recorder, 2023