Tax dept has taxed entire undeclared sales shown under ‘amnesty’

LAHORE: The sales tax department has taxed the entire undeclared sales shown in amnesty after the taxpayer failed to provide proof of tax paid.

The taxpayer, an aluminum extrusion company, had taken the plea of confidentiality against the claimed amnesty under Assets Declaration Ordinance, 2019 for not providing any proof for the payment of tax due against it.

According to details, it was reported to the taxation officer by the Directorate of Intelligence and Investigation-IR that the company was involved in tax fraud by way of making taxable supplies without charging/paying due sales tax and further tax and without sales tax registration. Furthermore, electricity meter of the company was showing huge electricity bill.

Subsequently, the company got itself registered in sales tax and agreed to deposit a certain amount voluntarily. Later on, it filed declaration of amnesty under Assets Declaration Ordinance, 2019 showing undeclared sales worth millions of rupees with payable of tax as deferred payment.

The department required from the company to submit proof of payment of tax under amnesty. The company declined to provide the proof of payment.

The department made calculations of the recoverable amount and issued a show cause notice. The department further observed that the company at its own declared lesser sales under tax amnesty scheme and undeclared supplies were detected during investigations.

The company had failed to deposit due tax on undeclared supplies along with default surcharge in the national exchequer to avail the benefit of amnesty. Hence, a hefty amount on the value of undeclared sales was taxed by the department.

However, the relevant appellate forum decided that Section 14 of the Ordinance 2019 primarily was restrictive for the department for making any disclosure of amnesty claimed by any person but the taxpayer could not hide behind said provision to not show proof of payment to the department while still availing benefit of amnesty, as in case of non-payment of tax, the amnesty declared would be void.

Accordingly, the relevant forum confirmed the tax charged on sales by the department.

Copyright Business Recorder, 2024