AGP unearths doubtful sanction of Rs347m refund by LTO Lahore

LAHORE: The office of Auditor General of Pakistan (AGP) has unearthed a doubtful approval of sales tax refund amounting to Rs 347.65 million by Large Taxpayers Office (LTO) Lahore.

According to the AGP report for the year 2024-24 on Federal Board of Revenue (FBR) pertaining to the Inland Revenue and Customs, during the financial year 2023-24, the LTO sanctioned sales tax refund amounting to Rs 347.65 million in case of a registered person. When record/file for the same refund was requisitioned, in response LTO authorities replied that as the refund amount has not yet been credited into the bank account of the registered person, therefore, the required in requisitioned cannot be provided.

According to the audit report, the issue of illegal release of refund was also highlighted on print/electronic media that the refund was sanctioned without fulfillment of legal obligations/credit verification of claimed amount whether the same was admissible to registered person under the law or not.

The FBR also constituted an inquiry committee to sort out the matter. The Audit requested the department for provision of sales tax refund sanctioned record/file and report of the inquiry committee constituted by the FBR, but the same was not provided to Audit, the report stated. Without scrutiny of record, authenticity of the sanctioned amount could not be verified which rendered the sanctioned amount of refund doubtful, the report observed.

The Audit reported this irregularity to the department in the months of October and November, 2024, with the request that all the relevant record may be provided to Audit, fix responsibility against the persons at fault and status of enquiry report be intimated to Audit, but no further reply was received from the department till finalization of the para.

The Departmental Accounts Committee (DAC), in its meeting held in November 2024, also directed the LTO to complete the legal proceedings, provide relevant record to Audit for scrutiny and submit a comprehensive report. However, no further progress was reported till the finalization of this report.

According to Section 10 (1) of the Sales Tax Act, 1990, if the input tax paid by a registered person on taxable purchases made during a tax period exceeds the output tax on account of zero-rated local supplies or export made during that tax period, the excess amount of input tax shall be refunded to the registered person.

Copyright Business Recorder, 2025