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ISLAMABAD: On the directions of the President of Pakistan, the Large Taxpayer Office (LTO), Lahore has concluded the audit of a leading tractor manufacturing company, detecting serious sales tax discrepancies to the tune of Rs13.286 billion.

According to the audit report submitted by the LTO Lahore to the Federal Tax Ombudsman (FTO), the LTO has also imposed a penalty of Rs5.414 billion besides sales tax involved of 13.286 billion.

The LTO Lahore has issued a show cause notice to the tractor manufacturing company (tax year 2022) to explain sales tax discrepancies of Rs13,286,997,779 during the audit.

In November 2023, the president had directed the Federal Board of Revenue (FBR) to restore the investigation against MTL against the alleged inadmissible sales tax refund of over Rs12 billion for the tax period 2018-2022.

The president had dismissed representations filed by the FBR and the MTL and endorsed the order of the FTO for the initiation of recovery proceedings against the said company.

The president in his decision has observed that since FBR has already initiated audit proceedings against the MTL for tax years, 2018-2022, which are currently under process, any interference in the matter is likely to prejudice the independence of the competent authority and is thus being avoided.

The order also requires FBR to provide proper opportunity to MTL so that their viewpoint is also made part of the audit report, the president’s order added.

The summary of sales tax discrepancies issued by the LTO Lahore revealed that the inadmissible/unlawful claim of input tax under Section 8 of the Sales Tax Act totalled at Rs364,174,394 and a penalty of Rs18,208,720.

The inadmissible/unlawful claim of input tax on account of purchases made from blacklisted/suspended and non-active suppliers has been reconciled by the LTO Lahore.

The inadmissible/unlawful claim of input tax on account of non-apportionment of input tax against exempt supplies totalled at Rs713,819 and a penalty of Rs35,691.

Copyright Business Recorder, 2024

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Kureshi Jun 14, 2024 03:12pm
13 billion by one company only. It's a huge discrepancy. Fbr should have all time record of tractors rolled out of factory premises.
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