Inland Revenue examines persons buying motor vehicles through customs auction

Inland Revenue examines persons buying motor vehicles through customs auction

KARACHI: The office of Inland Revenue (IR) of Federal Board of Revenue (FBR) has launched examination of persons who purchased large number of vehicles through customs auctions.

Sources in IR said on Monday that the probe had been initiated on the directives of the Federal Tax Ombudsman (FTO) regarding some bidders were frequently indulged in participating in bidding and buying large number of vehicles.

The FTO in a case of stuck up motor vehicles at ports, which were brought into Pakistan through personal baggage, transfer of residence or under gift schemes in violation of SRO 52(I)/2019 dated January 15, 2019 issued by the ministry of commerce.

As per details till November 25, 2020 the number of stuck up vehicles were 587 at the MCC East and West. Around 167 vehicles were auctioned till the date under review.

During the investigation of the case the FTO was told that a small number of so-call professional bidders purchased large number of vehicles regularly and then sell the same on huge profit in the open market.

“One of the reasons of purchase of vehicles by these bidders is that many interested persons from the general public either do not possess NTN or they don’t want to bring their names on record due to various reasons including subsequent taxation, hence, they prefer to purchase goods or vehicles through these bidders,” the FTO was informed.

The FTO was further informed that 62 bidders had purchased 167 vehicles auctioned during the period from July to November 2020, which 20 bidders purchased 117 vehicles.

The sources said that the FTO was told that an e-auction was to be introduced by the FBR and in this regard SRO 1174(I)/2020 dated October 26, 2020 was already issued.

However, date for implementation of e-auction rules would not be notified by the FBR later on as the e-auction module is still under development.

Customs authorities assured the FTO stating that after implementation of e-auction, the goods ripe for auction would be disposed of without delay, besides, the mafia of professional bidders would be addressed, resulting in improvement in revenue realization.

The findings of the FTO revealed: “During investigation, another aspect came to surface i.e. whether the bidders who participate in the auction proceedings declare their economic activities in their income tax returns.

“It is most probable that these economic activities may not be monitored by the IRS Wing, which if monitored carefully with due diligence may enhance legitimate revenue of the government.

“Thus, there is a need to share data/information with the concerned field formations of Inland Revenue so that this sector is brought into the tax net.”

The FTO recommended that the Collector, MCC Appraisement and Facilitation East and West, Karachi to pass on information about the bidders who participated in auctions on regular basis to respective IRS field formations.

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