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A key recommendation issued by the Federal Tax Ombudsman (FTO) remained unimplemented by the Federal Board of Revenue (FBR) to proceed against tax employees, particularly those in higher ranks, found involved in perpetration of sales tax frauds.

In a past order, the FTO had observed that PRAL and Intelligence & Investigation (I&I) appear to have failed to devise an effective automated online system for registered sales tax persons. Complicity and collusion of rogue Tax employees with outside criminal elements is also not ruled out.

FTO had recommended restructuring of the PRAL transforming them into proactive agents of sales tax fraud prevention and detection and set up a task force to investigate all aspects of sales tax fraud. To proceed against tax employees found involved in perpetration of fraud, particularly those in higher ranks. The FTO has given these instructions in a landmark public interest complaint tiled as Waheed Shahzad Butt Versus Secretary Revenue Divisions reported as 2014 PTD 1424 = 109 TAX 12.

Sources said that FBR had neither preferred representation before the President under Section 32 of the FTO Ordinance, 2000 nor any review has been filed before the FTO for reversal of findings/recommendations, however, despite lapse of reasonable time implementation on the crucial recommendations issued by the FTO remained unimplemented.

FTO has asked the FBR to set up a task force to investigate all aspects of sales tax fraud and propose effective countermeasures. The board has also been asked to review Investigation and Intelligence staffing policy and ensure that only highly qualified professionals with demonstrated expertise in uncovering cases of online crime could be assigned key investigative roles.

Copyright Business Recorder, 2020