Category: Taxation

KARACHI: Federal Board of Revenue (FBR) has been empowered under sales tax law to appoint special audit panels for conducting audit of any registered person.

The updated Sales Tax Act, 1990 issued by the FBR, the Section 32A explains the powers of the revenue body for appointment of special audit panels.

Section 32A: Audit by Special Audit Panels

Sub-Section (1): The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following, –

(a) an officer or officers of Inland Revenue;

(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);

(b) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or

(d) any other person as directed by the Board,

to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.

Sub-Section (2): Notwithstanding that records of a registered person have been audited by an officer appointed under section 30, the Board or a Commissioner may direct special audit panel appointed under sub-section (1) to audit the records of any registered person.

Sub-Section (3): Every member of special audit panel appointed under sub-section (1), shall have the powers of an officer of Inland Revenue under sections 25, 37 and 38.

Sub-Section (4): Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue.

Sub-Section (5): If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.

Sub-Section (6): The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.

KARACHI: The sales tax law has authorized tax officials to access record maintain by registered persons for the purpose of investigation and audit.

According to updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR), the Section 25 explained maintenance of record by taxpayer and authority of tax department to access the record and conduct audit.

Section 25: Access to record, documents, etc.

Sub-Section (1): A person who is required to maintain any record or documents under this Act or any other law shall, as and when required by Commissioner, produce record or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data, he shall allow access to the officer of Inland Revenue authorized by the Commissioner and use of any machine on which such data is kept.

Sub-Section (2): The officer of Inland Revenue authorized by the Commissioner, on the basis of the record, obtained under sub-section (1), may, once in a year, conduct audit:

Provided that in case the Commissioner has information or sufficient evidence showing that such registered person is involved in tax fraud or evasion of tax, he may authorize an officer of Inland Revenue, not below the rank of Assistant Commissioner, to conduct an inquiry or investigation under section 38:

Provided further that nothing in this sub-section, shall bar the officer of Inland Revenue from conducting audit of the records of the registered person if the same were earlier audited by the office of the Auditor-General of Pakistan:

Provided also that audit under this section shall be conducted only once in every three years.

Sub-Section (3): After completion of Audit under this section or any other provision of this Act, the officer of Inland Revenue may, after obtaining the registered person’s explanation on all the issues raised in the audit shall pass an order under section (11).

Sub-Section (4): Omitted

Sub-Section (5): Notwithstanding the penalties prescribed in section 33, if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge voluntarily, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:

Provided if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge during the audit, or at any time before issuance of show cause notice he may deposit the evaded amount of tax, default surcharge under section 34, and twenty five per cent of the penalty payable under section 33:

Provided further that if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge after issuance of show cause notice, he shall deposit the evaded amount of tax, default surcharge under section 34, and full amount of the penalty payable under section 33 and thereafter, the show cause notice, shall stand abated.

Explanation.– For the purpose of sections 25, 38, 38A, 38B and 45A and for removal of doubt, it is declared that the powers of the Board, Commissioner or officer of Inland Revenue under these sections are independent of the powers of the Board under section 72B and nothing contained in section 72B restricts the powers of the Board, Commissioner or Officer of Inland revenue to have access to premises, stocks, accounts, records, etc. under these sections or to conduct audit under these sections.