Cases against illegal input tax adjustment: pay principal amount of ST and avoid prosecution: FBR

There is a strong possibility of launching of an amnesty scheme for persons against whom cases have been framed for claiming illegal input tax adjustment by the Directorate General of Intelligence and Investigation FBR. It is learnt on Thursday that the Federal Board of Revenue is ready to launch amnesty scheme for such persons, who are ready to deposit the principal amount of sales tax involved in the case.
There is no need of unnecessary prosecutions or criminal proceedings against such persons who have agreed to pay the principal amount of sales tax. "If people are ready to pay the whole amount of sales tax, the tax department should also show soft attitude to them. The FBR primarily comprises tax collectors and they are not prosecutors. Being tax collectors the department has to focus on recovery and collection instead of criminal proceedings against the business and trade. The Board should show some relaxation to the persons who are ready to discharge their tax liabilities," sources added.
The issue of amnesty scheme mainly related to the persons who have not been directly involved in the tax fraud scam and booked in FIR due to part of the supply chain for claiming inadmissible sales tax adjustments. The issue was discussed between the tax authorities and representatives of business community during ongoing visit of FBR Chairman Salman Siddiq to Karachi. Some of the businessmen and experts have pointed out that the cases have also been framed against the units, which are basically indirect accused in the scam being part of the sales tax supply chain.
According to sources, tax authorities have principally agreed over issuance of amnesty scheme for cases made by Customs Intelligence against illegal input tax adjustment. Tax authorities speaking to the trade has agreed over launching of the amnesty scheme for cases made by Customs Intelligence against illegal input tax adjustment. In case of any amnesty scheme has been approved by the tax authorities, the FBR may allow the taxpayers to pay the principal amount of sales tax in lieu criminal proceedings against them may be dropped.
The details revealed that the directorate of customs intelligence in recent past has lodged some FIRs in which large number of taxpayers were booked either involved directly or indirectly on the charges of input tax adjustment/refund on fake/flying invoices. It is first time in Pakistan that scope of investigation was extended to third party or first supply chain stage invoking provision under section 8-A of the Sale Tax Act, 1990.
The relevant section is made part of the Sales Tax Act., in 2008 and it is the first ever practical incidence of its application. It is learnt that due to application of this provision even some reputable and public limited companies were booked in criminal proceeding and at present almost more 100 constitutional petitions were filed all over the country in which whole exercise was made questionable, experts said.
The business community in Karachi has raised their serious concern over harassment caused to the genuine taxpayers who were even not directly involved and accused only as third party or part of supply chain.
During meeting with business community replying to the question, tax authorities have reportedly stated that it is never the policy of their team to cause any harassment and if the taxpayers are ready to discharge their liability and deposit the government dues in national kitty they can be facilitated through amnesty, sources added.