ISLAMABAD (May 22 2006): The powers of the directorate of inspection and internal audit, customs, sales tax and federal excise have been curtailed by a recent CBR notification, it is learnt.
Official sources told Business Recorder that under the new notification, the directorate is no more empowered to directly demand the taxpayer's record and probe financial scams involving tax officials.
Previously, the directorate's officials were empowered to carry out audit of the taxpayers, seize the disputed goods/consignments as well as call the record maintained by the taxpayers. They were also empowered to initiate criminal proceedings against the persons involved in tax frauds. The officials were also empowered to carry out audit of the registered persons.
Now, the directorate staff can only investigate the taxpayer's record available with the collectorates, and not the record available at business premises of the taxpayer.
Sources said that the relevant sections of the Customs Act, 1969 and Sales Tax Act, 1990 dealing with discretionary powers of investigation officials have not been specified in the revised notification.
Citing an example, they said that some collectors of sales tax had given wrong approvals of duties/taxes-free imports by manufacturers-cum-exporters under the Duty and Tax Remission for Export (DTRE) Scheme in the past. But the objections raised by the directorate of inspection and internal audit were rejected by CBR, directing the collectors to permit duties/taxes-free imports under the DTRE scheme. Though the DTRE approvals of certain firms involved in frauds were suspended, the reservations expressed by the directorate on violation of rules were not given due importance by the Board, sources said.
Moreover, the directorate had detected misappropriation of funds allocated for the collectorates along with the administrative/procedural irregularities. It was brought to the notice of the Board that the customs officials were not ready to cooperate with the staff of the Directorate General of Inspection and Internal Audit. But, objections raised by the directorate were ignored.
Officials said that the Board has revised the powers and functions of the directorate, barring investigators to punish the tax officials involved in fraud scams and corruption.
In the absence of necessary powers, the field formations are not bound to comply with the directorate's observations, they added.