SATURDAY SEPTEMBER 10: Wrong reporting of revenue figures: some RTOs CCs removed from lucrative positions

ISLAMABAD: The Chairman of Federal Board of Revenue (FBR), Salman Siddique on Friday informed the National Assembly Standing Committee on Finance that Chief Commissioners of certain Regional Tax Offices (RTOs) have been removed from their lucrative positions as a result of investigation carried out against senior tax officials involved in wrong reporting of tax figures for fiscal year 2010-11.
During high-level reshuffling it was decided on Thursday night that FBR Member Inland Revenue Khawar Khurshid Butt has also been transferred and posted as Director General Training, Lahore. The National Assembly Standing Committee on Finance expressed satisfaction over demotion in the existing grades and removal from lucrative posts of senior tax officials including Chief Commissioners of Regional Tax Offices, who were directly responsible for wrong reporting of revenue collection figures for 2010-11.
The NA Committee on Finance under the chairmanship of Fauzia Wahab here on Friday also gave clean chit to FBR Chairman Salman Siddique on the issue of gross misreporting of sales tax figures with the observation to punish those tax officials whether Chief Commissioners or FBR Member, who were responsible for creating embarrassing situation for the tax.
The committee observed that Salman Siddique was not directly responsible for reporting gross figures by the field formations. The committee members informed the FBR that they would examine the outcome of the inquiry being conducted by the committee headed by Finance Minister and further action would be recommended by the Finance committee in case it is not satisfied with the action taken by the inquiry of the Finance Ministry. In such a situation, the committee itself would recommend exemplary punishment for the tax officials involved in wrong reporting of revenue collection figures.
"We have made some key transfers/postings after getting approval from the Prime Minister, but I accept full responsibility of reporting of gross figures, being head of the FBR. I have posted out senior tax officials involved in wrong reporting of figures. I had offered tendering my resignation, but I am not free agent to come in and go out from service. The government asked me to continue my existing responsibilities," FBR Chairman Salman Siddique informed National Assembly Standing Committee on Finance which met here in the Parliament with Chairperson Fouzia Wahab in the chair.
The FBR Chairman also clarified his position on the issue of misleading figure announced in media about the revenue collection for 2010-11 and he accepted responsibility of this debacle and offered himself to step down before the committee. He said that the gross revenue collection figures were mistakenly forwarded by the RTOs and action against these RTOs has already been initiated.
Explaining the whole issue of gross and net reporting of revenue collection figures before the Finance Committee on Friday, Salman admitted the mistake as head of the institution and offered his resignation before the committee. He said that when it has came to his notice that the actual net collection was Rs 1550 billion for 2010-11 as compared to the announced figure of Rs 1590 billion on June 30 night, he also offered his resignation to the Minister of Finance. "I offered myself to step down from the post of FBR Chairman", he remarked.
He admitted that there was pressure on the FBR to meet the ambitious revenue collection target of Rs 1588 billion by end of June 2011. Till May 2011, the revenue collection figures were reconciled and confirmed. In June 2011, the monitoring of revenue collection figures was done on daily basis. On June 29, the FBR was required to collect Rs 81 billion for meeting the target of Rs 1588 billion for 2010-11. The FBR had collected Rs 51 billion in last two days. "However, what happened on June 30 night, you can say it was due to excitement, jubilation or stupidity," Salman categorically said.
The FBR Chairman said that in enthusiasm they started obtaining direct reports from field formations on June 30 night as they were on track till June 28, 2011 giving them confidence to materialise the desired target of Rs 1,588 billion. The reporting system did not care of gross and net collection and tax official Amna Khalifa had even cautioned him during that process which finally proved true as electronic data was not matching with the figures given by field formation on June 30 night.
"We were directly getting information from the field formations and issue came to the light when the data reported by the field formations was not matching with the electronic data. The data was cross-checked with the field formations and it transpired that some RTOs reported gross figure of sales tax," he stated.
He said that 11 out of 21 Regional Tax Offices (RTOs) and Large Taxpayer Units (LTUs) had given gross figures of sales tax, without excluding refund figures despite the fact that access of electronic refund data is available to all RTOs. Resultantly, this confusion resulted in presenting wrong revenue figures in a hurriedly called press conference. It was not a mathematical error by the FBR, but certain RTOs reported gross figure of sales tax instead of net revenue collection figure, he added.
When the committee members asked whether heads of these RTOs etc have been suspended, FBR Chairman said that the responsible tax officials have not been suspended. However, these tax officials have been downgraded and transferred to the Board. An inquiry has also being conducted by a committee headed by Finance Minister. The whole issue happened on the Inland Revenue side, but the FBR Customs Wing surpassed the annual target.
Qamar Zaman Kaira pointed out that whoever was responsible for this wrong reporting of figures should be punished, "whether he is Chief Commissioner of RTO or FBR Member". Chairperson of the committee Fauzia Wahab endorsed the viewpoint of the committee that the FBR had taken action against the involved officials and examples should be set for making such mistakes.
Bushra Gohar, of ANP, raised the issue that the transfer of any official could not be termed as punishment. So, after conducting inquiry, exemplary punishment should be given, holding responsible. The FBR Chairman said that there was no proof that someone committed this mistake of giving wrong figures with mala fide intent.
In the whole issue it has to be decided whether the reporting of the gross revenue collection figures was mala fide or not, FBR Chairman added. Responding to a query, he said that the revenue collection target for 2011-2012 is still Rs 1952 billion and FBR will collect Rs 90 billion from administrative and enforcement measures during current fiscal year including monitoring of withholding taxes, recovery of illegal sales tax adjustments and pursue tax related cases in courts for early settlement.
The performance of each Chief Commissioner of RTO and LTU would be monitored on monthly basis. The monthly collection of the Chief Commissioners has been reported to the Finance Minister on monthly basis. If the Chief Commissioner fails to meet the monthly revenue collection target, it would be reported to the FM. In case the Chief Commissioner of RTO or LTU would again miss the target for second consecutive month, he would be removed from his position. The Chief Commissioner, who would twice miss the target would loss his job. When contacted for seeking his comments on his posting, Khawar Khurshid Butt said: "I am very happy of being posted in my native city Lahore in Grade 22 position."