ISLAMABAD (February 08 2003) : To curtail sales tax evasion under restructuring drive, the Central Board of Revenue (CBR) has ordered investigation against steel melters and steel re-rolling mills allegedly involved in underreporting of revenue.
The CBR on Friday directed all collectors of sales tax to conduct on-the-spot audit of ingots, billets, MS bars, girders and flat bars manufacturers up to February 28, 2003.
The tax authorities want solid proof of tax evasion, wrong input tax adjustment, violations of section 73 and false declaration by the steel sector.
The CBR has authorised the tax officials free access to business/manufacturing premises, registered offices or any other place where stocks, Business Records or documents are kept/stored.
These officials would have the authority to inspect the goods, stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding sources of funds or assets at any time.
As per orders, they can take into custody records, statements, diskettes or documents, in original or their copies, against signed receipt.
The units have to answer any questions put up by tax officials.
The CBR has noted 'with great concern' that Association of Steel Melters has failed to convene periodical meetings with the regional collectorates except Collectorates of Sales Tax, Peshawar, Faisalabad and Lahore.
The CBR apprehended that steel melters are not paying actual amount of sales tax by showing false record of input and output tax, as authorities have not received any audit or contravention report against the steel melters.
The CBR pointed out that the association of manufacturers of MS bars, girders and flat bars has admitted that most of its members do not have the sales tax receipts of inputs purchased from the local market.
The payment of sales tax by these manufacturers is also nominal which shows that these manufacturers are either claiming input tax without valid sales tax invoices or indicating incorrect amount of output tax.
The manufacturers of steel products should be thoroughly audited to detect evasion of sales tax.
The CBR added that some of the registered persons have claimed input tax on the basis of invoices against which no payment was made as per procedure prescribed under section 73 of the Sales Tax Act, 1990 or their suppliers have not correctly declared the output tax charged from these manufacturers-cum-buyers of ingots/scrap.
The collectors should extensively investigate this aspect as well, the order said.