Plan chalked out to achieve Rs 108.75 billion sales tax target

ISLAMABAD (December 16 2002) : A new action plan has been chalked out to achieve sales tax target of Rs 108.75 billion at the import stage. The federal tax authorities have ordered investigation against importers allegedly involved in clearance of consignments using fake sales tax registration certificates and sales tax returns.

In some cases, 'import registration' was obtained on dubious NICs and bank accounts were opened on the same fake Identity Cards. These tax dodgers obtain L/C pro forma from the same banks but never opened L/Cs for import of raw materials etc.

The Central Board of Revenue (CBR) has also started countrywide operation against the gang of importers and clearing agents importing goods using name of other sales tax registered importers.

The authorities have unearthed cases where 'bill of entries' were removed from the record of Pakistan Revenue Automation Limited (PRAL) in connivance with the employees of PRAL and fake sales tax registration certificates were issued by the sales tax officials.

A senior sales tax official told Business Recorder on Sunday that Chairman CBR Riaz Ahmed Malik has given a formal approval to generate sales tax at the import stage by taking stern action against the unscrupulous importers.

The sales tax projection for 2002-2003 at the import stage is Rs 108.75 billion showing an increase of Rs 16.15 billion or 17.5 per cent as compared to collection of Rs 92.6 billion in previous financial year.

The pace of increase in revenue collection is much less than the desired level of growth, which prompted the authorities to plug in loopholes at the import stage.

It is impossible to check any sales tax fraud without the help of customs department, which is responsible for clearance of consignments.

In view of the huge sales tax evasion by the importers, the CBR has forthwith established a Customs Liaison Cell in each Collectorate of Sales Tax and appointed customs officials as in charge of these cells.

They have been exclusively assigned the job to receive data and co-ordinate with the sales tax/customs department to hunt such importers.

The liaison officials include Fateh Muhammad Sheikh, Additional Collector, Large Taxpayer Unit (LTU), Karachi; Furrukh Sajjad, Assistant Collector (Collectorate of Sales Tax and Central Excise, Karachi (East); Ahsan Ali Shah, Assistant Collector, (Collectorate of Sales Tax and Central Excise, Karachi (West); Mumtaz Ali Khoso, Deputy Collector, (Collectorate of Customs Sales Tax and Central Excise, Hyderabad); Ms Nooreen Tarar, Assistant Collector, (Collectorate of Sales Tax and Central Excise, Lahore); Mrs Sarwat Tahira Habib, Additional Collector (Collectorate of Sales Tax and Central Excise, Rawalpindi); Dr Nasir Khan, Assistant Collector (Collectorate of Sales Tax and Central Excise, Gujranwala); Abdul Malik, Deputy Collector, (Collectorate of Customs, Faisalabad); Usman Bajwa, Assistant Collector (Collectorate of Customs Sales Tax and Central Excise, Multan); Abdul Samee Babur, Additional Collector (Collectorate of Customs Sales Tax and Central Excise, Quetta) whereas an additional collector would be appointed at Collectorate of Sales Tax Peshawar.

Giving details, an official disclosed that a number of importers had submitted fake registration certificates and sales tax returns for clearance of imported goods.

This is a clear violation of Sales Tax General Order (STGO) 3/1998, which binds each importer to produce copy of sales tax registration and sales tax returns for the preceding month in order to file bill of entry.

The data pertaining to the registration/returns of the importers for each month is already available with the PRAL.

To eliminate the chances of fraud, the collectors of customs would ensure clearance of imported goods only after verification by PRAL. In case information about the registration or filing of returns is not available with PRAL, the same would be obtained from the respective collectorate of sales tax.

He further pointed out that a large number of importers in connivance with clearing agents, import goods using the name of other sales tax registered importers either by purchasing import authorisations or by committing fraud without taking the registered sales tax importers into confidence.

They do not declare any value addition and occasionally file sales tax returns without clearly indicating net payable amount of sales tax.

The habitual violators change their declared addresses and are not traceable for audit purposes.

However, official maintained, such type of fraud is not possible without the active support of the clearing agents.

All clearing agents should be warned to strictly follow the Rule 102 of the Customs Rules 2001.

Th official disclosed that the Collectorate of Sales Tax Karachi (East) has made a major breakthrough in detecting massive tax evasion by importers.

Investigation and Prosecution (I&P) branches of all collectorates of customs have been given assignment to detect similar cases by using techniques adopted by Collectorate of Sales Tax Karachi (East), sales tax official added.

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