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Revenue Board issues procedure for blacklisting units

ISLAMABAD (December 21 2003): The Central Board of Revenue (CBR) has empowered the collectors of sales tax to blacklist any of the registered units allegedly involved in tax evasion/fraud, issue of fake invoices, not filing sales tax returns for the last six or more months and giving wrong business address to officials.

The CBR on Saturday issued procedure for blacklisting and consequently suspending sales tax registration/enrolment of suspected units through 'Sales Tax General Order (STGO) 6/2003'.

Official sources told Business Recorder that CBR has blacklisted over 1700 units, and the new mechanism would ensure a uniform policy for blacklisting suspected units. There are many units which have submitted wrong addresses to the collectorates.

Therefore, it is not possible to examine their tax records or access their business premises. Such units may be blacklisted in future.

Moreover, tax officials would try to trace the person, on the basis of other information like NIC, income tax data or bank account before blacklisting any unit.

Under the new procedure, the criteria for blacklisting a unit include non-availability of registered person at the given address, refusal to allow access to business premises or to furnish record to an authorised sales tax officer; abnormal tax profile such as taking abnormal input tax adjustment, continuous carryforward or sudden increase in turnover; making substantial purchases from or supplies to other blacklisted/suspended persons and non-filers of sales tax returns for six or more months.

Before initiating any action to blacklist or suspend any registered or enrolled person, the collectorate would confirm the information. In case of reported non-availability at the given address, the collector would check from the Registration Division whether the person has submitted any information about change in address, the given address many be visited by an officer of the Collectorate or an attempt may be made to trace the person from documents such as National Identity Card (NIC), income tax record or bank account.

In case of reported non-access to the premises or non-production of record, a notice may be issued to the person to allow access/produce record, clearly indicating that refusal or delay will result in blacklisting or suspension of his registration/enrolment.

If the collector intends to blacklist a unit, he will issue an order mentioning reasons for such blacklisting/suspension. Copies of the order will be endorsed to the person concerned, all other Sales Tax Collectorates, the Sales Tax Wing computer system and STARR system.

Each collectorate should circulate all such lists to their refund, audit and other concerned staff to ensure that no refund is paid or input adjustment is made on invoices issued by such suspected persons.

As per procedure, after issuing order for blacklisting or suspension of registration/enrolment, the collectorate should proceed to conduct inquiry under section 21(4) of the Sales Tax Act, 1990, and in case of confirmation of the offence, proceed to take legal and penal action under the relevant provisions of the Sales Tax Act, 1990.

Such inquiry may extend to suppliers and buyers of the blacklisted/suspended person to ascertain whether any inadmissible inputs or refunds have been taken by them.

Where the case is not established against a suspected person, the collector will issue an order revoking the blacklisting or suspension of registration/enrolment, endorsing copies to the person concerned, all other Sales Tax Collectorates, the Sales Tax Wing computer system and the STARR system for deletion from their lists.

The collectorates should circulate copies of all such orders to their concerned staff for information.

Unless the collector specifies otherwise, such orders shall have effect from the date of original blacklisting or suspension of registration/enrolment of the concerned person, so that invoices issued by him during the intervening period are acceptable.

In case audit of the blacklisted/suspected person was already conducted before initiating the inquiry under section 21(4) of the Sales Tax Act, 1990, and such audit report is approved by an officer not below the rank of an Additional Collector, it may be accepted for the purpose of revoking the blacklisting or suspension/enrolment.

However, if the audit report is not so approved, and upon inquiry, an offence is established against the blacklisted/suspended person, appropriate action shall also be taken against the officials who submitted the defective audit report.

In case of Sales Tax House Karachi, the order for blacklisting/suspension will be issued by the Collector of Sales Tax (Headquarters) on the advice of Collector of Sales Tax (Enforcement) or (Audit) or his own information.

The order for revoking any blacklisting/suspension order shall be issued by the Collector of Sales Tax Headquarters immediately on receipt of a clearance report from Collector of Sales Tax (Enforcement) or (Audit) after completion of inquiry under section 21(4) of the Sales Tax Act, 1990, or audit, as the case many be.

Each such order shall cite the reference number of the relevant letters from Collector (Enforcement) or (Audit).

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