ISLAMABAD: Federal Tax Ombudsman (FTO) has directed the tax authorities to expedite setting up Customs laboratories at collectorates.
In its recommendations, the FTO office directed the Federal Board of Revenue (FBR) to expedite the task of setting up of customs laboratories in the remaining customs collectorates and upgradation of existing customs labs as per international best practices.
The FBR has also been advised to assign administrative control to Member (Customs) to save the lab officials from local pressures.
The FTO made this recommendations in an own motion investigation initiative to investigate systemic maladministration of the Customs Administration for failing to establish customs laboratories in the Customs Collectorates as per World Customs Organization (WCO) guidelines, besides failure to upgrade the existing customs lab functioning at MCC Karachi, Lahore and Faisalabad.
Absence of quality laboratory facilities not only compromise collection of legitimate due government revenue but also put at risk import/export controls, environmental protection, control of dangerous goods.
The FBR responded to the FTO notice that the existing Customs lab at Karachi had been upgraded and more than 95 per cent of items, such as textile fabrics, yarn, chemicals, dyes, petroleum hydrocarbons, pharmaceutical materials and metals etc. are conducted there. “Few samples were, however, forwarded to other labs, like HEJ Research Institute of Chemistry and PCSIR…”
Crux of the investigation is that necessary actions have been initiated by the FBR, after initiation of the investigation, through constituting a committee on June 16, 2021, to examine the proposals for setting up modern Customs labs in the remaining Customs Collectorates as well as upgrading the existing labs as per the best international practices.
2. The President Federation of Pakistan Chamber of Commerce & Industry, Federation House, Main Clifton, Block-5, Abdullah Shah Ghazi Road, Karachi : Member
3. The President, Karachi Chamber of Commerce and Industry, Aiwan-E-Tijarat Road, Off: Shahrah-e-Liaquat, P.O.Box No. 4138 Karachi : Member
4. The President Women Chamber of Commerce & Industry, Karachi South #4, Plot # 1-C, Lane # 2sehar Commercial Area Phase-VII, D.H.A. Karachi : Member
5. The Chief Executive, Karachi Women Chamber of Commerce & Industry, District East Plot #391, Block # 3, 6th Floor office # 604, Al Reef Tower, Salamgir Road Karachi
6. The President, The American Business Council of Pakitan 155-C 4th Floor Almurtaza Commercial Lane – 2 DHA Phase 8-A Karachi : Member
7. The President, Overseas Investors Chamber of Commerce & Industry Chamber of Commerce Building, Talpur Road Karachi : Member
8. Chairman, Air Cargo Agents Association Of Pakistan, suite No. 305, 3rd Floor, Fortune Centre, 45-A, Block 6, P.E.C.H.S., Sharah-e-Faisal, Karachi : Member
9. Chairman, All Pakistan Fruit & Vegetables Exporters, Importers & Merchants Association House No. 175, C.P. Berar Society block 7/8 Karachi : Member
10. Chairman Customs Agents Association Room No. 7/8, Bombay Plaza Mezzanine Floor, Bohri Road Opp. New Custom House, Karachi : Member
11. Chairman All Pakistan Shipping Association Room No. 712, 7th Floor, Business Centre, Mumtaz Hassan Road Karachi : Member
12. Chairman, Pak Readymade Garments Manufacturers & Exporters Association 3rd Floor, Plot # 57-C 24th Commercial Street Phase II (Ext), D.H.A. Karachi : Member
13. The Chairman, Pakistan Bedwear Exporters Association 245-1V, Block 6, P.E.C.H.S. Karachi : Member
14. The Chairman, Pakistan Leather Garments Manufacturers & Exporters Association, St # 20, Central Avenue, Sector, 7/A Korangi Industrial Area, Karachi : Member
15. The President, Karachi Tax Bar Association, Strachan Road, Saddar Karachi : Member
16. The President, Sukkur Chamber of Commerce & Industry 1st Floor, Sukkur Chamber House, Bunder Road Sukkur : Member
17. President Hyderabad Chamber of Small Traders and Small Industry Naz & Bilal, Shopping Mall 41/499/1, Mezzanine Floor, Saddar Hyderabad : Member
18. The President, Pak-Iran Joint Chamber of Commerce and Industry Jk Plaza, Plot No. 06 Zonki Ram Road, Tamir-e-Nau Masjid Quetta : Member
19. The President, Chaman Chamber of Commerce & Industry Commerce House, Trunch Road, Chaman : Member
20. The President, Gwadar Chamber of Commerce & Industry GCCI, Civic Center airport Road Gwadar : Member
21. Chairman Pakistan Carpet Manufacturers & Exporters Association 23-D, Block # 6, P.E.C.H.S. Shahrah-E-Faisal Karachi : Member
22. Chairman, Pakistan Chemicals & Dyes Merchants’ Association PCDMA House, Rambharti Street, Jodia Bazar Karachi : Member
23. Chairman, Pakistan Waste Products Association, 7/12-A, Rimpa Plaza, M.A. Jinnah Road Karachi : Member
24. Mr. Adnan Mufti, Chartered Accountant, Moore Sheikha Mufti, C-253, PECHS, Block-6, Karachi : Member
25. Mr. Muhammad Ali, Sr. Reporter, Business Recorder, R-1367/15, Federal B. Area, Karachi : Member
26. Mr. Asif Haroon, FCA, State Life Building No. 1-C, I.I, Chundrigar, City Railway Colony, Karachi : Member
27. Mr. Shahnawaz Akhtar, Sr. Staff Correspondent, Bol News, Bol Headquarter, Bol Road, Karachi : Member
28. Mr. Ashraf Khan, Sr. Correspondent, 24 News, DHA Phase 2 Ext, Karachi : Member
29. Mr. Asif Inam, Chairman South Zone APTMA House, 44-A, Street No. 01, Molvi Tamizauddin Khan Road, Lalazar, Karachi : Member
30. Chief (IR-Policy) – IR, FBR (HQ), Islamabad : Member
31. Chief (ST-Operations) IR, FBR (HQ), Islamabad : Member
32. Chief (Tariff) –Customs, FBR (HQ), Islamabad : Member
33. Mr. Shahid Ahmad, Advisor (Customs), FTO Secretariat, R.O. Karachi : Member
34. Mr. Manzoor Hussain Memon, Advisor (Customs), FTO Secretariat, R.O. Karachi : Member
35. Mr. Badruddin Ahmad Qureshi, Advisor, FTO Secretariat, R.O. Karachi : Member
36. Justice (R) Muhammad Nadir Khan, Advisor Incharge, FTO Secretariat, R.O. Quetta : Member
The Chairman of the Advisory Committee may co-opt any person for assistance of the Committee as per need.
Due to budgetary constraints, the FTO Secretariat will not be able to bear the expenses relating to participation of the Members in the Advisory Committee Meetings.
The Federal Tax Ombudsman (FTO) has taken swift action in response to a complaint against customs authorities, addressing unnecessary delays in the clearance of a consignment. The complainant, a regular importer of Agricultural Tractors, reported that the customs authorities had unjustifiably halted the clearance of a shipment of tractors destined for use by farmers in the country.
ISLAMABAD: Federal Tax Ombudsman (FTO) has declared an amnesty scheme for customs clearance of stolen imported cars without legal action.
Customs authorities’ decision about clearance of stolen imported cars under Transfer of Residence, Baggage Scheme or Gift Scheme upon payment of redemption fine and taxes without following any legal provision has been decleared illegal by the Federal Tax Ombudsman.
In an own motion investigation, the FTO Islamabad found that the decision taken in Customs conference held at the then CBR (FBR) on 02.08.2006 was illegal.
The FTO’s investigation committee also underlined that without following due legal procedures such decisions will promote illegal import of stolen vehicles and facilitate international criminal activities.
In this connection, FTO issued notices to Federal Board of Revenue (FBR). The FBR submitted report that Customs collectorates in Sialkot and Peshawar had cleared six and three such stolen imported vehicles in 2007 and 2013-2014 respectively.
The FTO also recommended FBR to direct all Collectorates of Customs and other concerned authorities to stop these illegal practices forthwith.
The Customs authorities were also directed that the stolen imported vehicles either should have been returned to authorities of the country from where vehicles were stolen after receiving occurring expenses or these vehicles should have been confiscated and disposed of through public auction.
The committee also recommended FBR to direct MCC Sialkot to seize identified six vehicles and take appropriate legal action against importers involved in such illegal businesses.
The FTO ordered a report from the competent authorities to be submitted within 45 days. Earlier, the FTO took the Own Motion in connection of the decision taken in Customs Conference held at the then CBR (FBR) on 02.08.2006, in which it was decided that the Collectorates may clear stolen imported vehicles after imposition of 30 percent redemption fine under the Provision of Customs Act 1969 while no action should be taken unless recognized agency of the foreign country approaches government of Pakistan.
An appeal of the Federal Board of Revenue (FBR) has been rejected by the President of Pakistan in issuance of bogus refund cases.
President Dr Arif Alvi on Sunday disposed of 42 representations of the FBR in cases of bogus sales tax invoices, worth over Rs 1.2 billion.
The FBR had filed the representations with the President of Pakistan assailing the orders of the Federal Tax Ombudsman (FTO) passed in suo moto cases, in which bogus sales tax refunds were reimbursed fully or partially by the delinquent officials of the FBR to the fake claimants.
The huge scam was unearthed by FBR’s Directorate General Intelligence & Investigation-Inland Revenue and the Red Alerts were issued to the concerned field formations. However, no action was initiated against the FBR officials and the fake claimants.
The FTO on taking suo moto notice of the matter had issued directions to the FBR to investigate and identify the officials involved in verification of the registered persons (RPs) and initiate a disciplinary action.
In pursuance of the FTO’s recommendations and also the previous orders of the President of Pakistan passed in similar cases, the FBR constituted six fact-finding inquiry committees to deal with 130 suo moto cases relating fake refund claims.
The Terms of Reference (ToR) of the committees were meant to identify the wrong-doings and involvement of officials in each case, and fix responsibility. Also, these committees were tasked to prepare a draft charge sheet and statement of allegations with respect to each official and submit a report to the Board within 30 days.
President Alvi, in view of the findings of the committees, disposed of the representations of the FBR pertaining to the cases in which full or partial refunds were paid fraudulently.
He directed the FBR for submission of a monthly implementation report to the Federal Tax Ombudsman’s Secretariat till the completion of the action on each case.
He also ordered to afford an opportunity of show-cause and hearing to the official in case of any departmental action proposed against him, to satisfy the requirement of due process and the principles of natural justice.
ISLAMABAD: Federal Tax Ombudsman (FTO) has recommended that tax authorities should initiate criminal prosecutions against persons involved in smuggling or selling non-duty paid goods.
In its proposals for budget 2021/2022, the FTO recommended measures on the issues of smuggling, misdeclarations, under-invoicing and non-transparent auctions.
In order to effectively check the smuggling, it was recommended that criminal prosecution should be initiated against the persons/owners of the showrooms involved in business of Non-Duty Paid (NDP) vehicles, fuel pumps of smuggled oil and storage godowns of other smuggled items, from whom the NDP goods were recovered as provided in the Customs Act, 1969 read with the Prevention of Smuggling Act, 1977.
Installation of scanners on the ports was recommended to be given top priority. It was emphasized that if government invested herself in this project, it will raise the potential of higher revenue and more effective check on misdeclaration of description or quantity of imported goods.
So far two scanners have been added at Karachi Ports in addition to one already installed there. Two scanners have also been installed at Jamrud and Torkham, Peshawar.
It was recommended to provide a mechanism in law for cross-matching of value declared on export documents of exporting station to import documents at importing station.
Federal Board of Revenue (FBR) was asked to prescribe Model Auction Rules for auction through electronic means and prepare/operationalize an auction module in the WeBOC system to bring transparency and efficiency in the auctions.
According to FBR, under the WeBOC-Glo initiative (an enhanced version of WeBOC), an electronic auction module has been developed and deployed in the system. This module envisages online registration of bidders who can bid for all auctionable goods displayed on website by the Customs authorities. Pilot is being run at Karachi Port (South Asia Port Terminal only).
In view of constant complaints about delayed clearance at the border stations, generators should be provided on priority for speedy passengers/goods clearances and maintenance of IT and infrastructure support.
ISLAMABAD: Federal Tax Ombudsman (FTO) has recommended disabling sales tax registration as soon application received for de-registration.
The FTO submitted proposals for budget 2021/2022, stating that in order to stop misuse of registration for issuing fake invoices, immediate disabling of the registration was proposed in electronic system as soon as the application for de-registration was received.
Sales Tax Registration of commercial importers was proposed to be allowed only to Income Tax filers along with other necessary cautions (i.e. declaration of Pakistan Customs Tariff (PCT) headings of the products they trade in) to check bogus registration.
Following budget proposals were also sent to FBR:
• to provide for immediate disabling of the registration in electronic system, pending final de-registration, as soon as the application for de-registration was received;
• to prescribe a list of documents/records to accompany the de-registration applications for the purpose of sub-rule (2) of rule 11; and
• suitable amendment to be made in rule 12(a)(vii) so that the Commissioner shall issue the orders of revocation of suspension within two weeks from the last date prescribed for issuance of show cause notice.
ISLAMABAD: Federal Tax Ombudsman (FTO) has advised the Federal Board of Revenue (FBR) to simplify income tax return forms in consultation with stakeholders to facilitate the taxpayers.
In its proposals for the budget 2021/2022, the FTO recommended simplification of returns forms in consultations with small taxpayers along with availability of option of filing the returns in Urdu.
Similarly, an option to file the returns manually with facility provided by the FBR to upload on line data was also proposed.
The FBR in response to the FTO stated that simplified Income Tax Returns for salaried, small traders having turnover up to Rs10 million, manufacturing Small & Medium Enterprises (SME’s) having turnover up to Rs50 million have been issued.
It was recommended that FBR should devise some system so that sunset date of filing return is not extended but late filing may be allowed with certain incremental penalty for delay in filing per month or any part of it.
The FBR responded that in 2020, last date of December 08 was not extended. According to FBR, Income Tax Return making rules have been issued. Though these are applicable for Tax Year 2022 but FBR is following this for Tax Year 2021 and return forms would be available by 1st July (to be submitted within due date without extension on last date).
The FTO proposed that FBR may approach the concerned Authorities/Establishment Division, to issue instructions to bind the heads of government departments, autonomous bodies and large scale public sector organizations to get the certificate of filing of returns by their employees falling in the tax net at the end of the last date and to link their promotion/annual increments with mandatory return filing.
Regarding audit, it was proposed to rationalize its parameters so that more focus should be laid on large entities rather than small taxpayers.
Moreover audits should also include investigative work to detect the evasion through a study of input/output standards of utility bills and production capacity of machinery etc. Several cases for audit should in line with capacity of FBR to complete the audit in a year.
ISLAMABAD: Federal Tax Ombudsman (FTO) has recommended restricting powers of tax officials in recovery of outstanding account through freezing bank account of taxpayers.
The FTO in its proposals for budget 2021/2022 said that coercive recoveries through attachment of bank accounts without notice and subsequent delay in restoring the account, hits the taxpayers very hard.
It was recommended that notices should be issued with bar code and time limit may be prescribed for ensuring the de-sealing of bank accounts of taxpayers/assesses after resolution of issue.
Following measures were also suggested as budget proposals:
• Restrict the use of power to attach bank accounts unless the case under litigation has been established at least in the first appellate stage;
• Adherence to service of Bar-Coded notices to eliminate possibility of abrupt attachment of bank accounts for recoveries and hasty ex-parte decisions;
• Shortest time limit may be prescribed in the statute to ensure de-sealing of bank accounts of taxpayers/assesses.
According to FBR, it is mandatory not to issue Income
Tax related notice without Bar Code. The mechanism of automatic stay of demand by paying 10 percent of demand also exists under all IR laws.
However, FTO constantly receives complaints on coercive recoveries and issues appropriate Recommendations.
ISLAMABAD: A representation of Federal Board of Revenue (FBR) has been rejected by the President of Pakistan on Friday that was filed against an order passed by the Federal Tax Ombudsman (FTO) in bogus refund case.
According to details, President Dr. Arif Alvi rejected the FBR’s representations directing the tax authorities to recover amount of Rs14 million paid in bogus refund claim.
The President upheld the decision of Federal Tax Ombudsman (FTO) following its suo-moto action against the irregularities committed by the FBR field formations in registering, processing, sanctioning and issuing sales tax refunds to fake refund payments during the period 2012-2013.
President Alvi in his decision wrote: “it was surprising and shocking that FBR failed to investigate fake claims where refund had already been made in full connivance with FBR officials”.
Expressing strong displeasure over the scam, he said: “How can we afford not to recover and criminally charge the fraudsters.”
The President stressed recovery of the embezzled money, saying: “instead of resistance by FBR to the suo-moto action by FTO, they should recover the precious money of the people of Pakistan.”
It is worth-stating that FBR has filed 74 similar representations with the office of the President against the orders of FTO. Out of 74 representations, 22 cases have been decided while 52 are still awaiting adjudication.
Furthermore, according to the relevant record, FBR had allowed Rs 875.277 million to be paid to fake RPs, of which a payment of Rs 223.312 Million has already been made.
The FTO in its verdict, dated April 27, 2020, had directed the Chief Commissioner-Inland Revenue and Corporate Regional Tax Office (RTO), Karachi to investigate and identify the officials involved in registration of fake RPs and initiate disciplinary/criminal action against those found involved and report compliance within 45 days.
The FTO in its decision further directed FBR to initiate appropriate action including criminal proceedings leading to recovery of amount swindled from public exchequer through claiming inadmissible input tax and bogus refund.
Instead of implementing the directives of FTO, the FBR challenged its jurisdiction and filed a representation with the President taking plea that it could not issue such orders and rely on interdepartmental correspondence of FBR.
The President rejected FBR’s representation and made it clear that the body could exercise its power conferred under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 to investigate irregularities in the department.
It is to be mentioned here that the investigations conducted by Directorate General of I&I-IR (Intelligence & Investigation and Inland Revenue), Karachi in case of M/s Z.A. Exports — a fake RP with principal activity as manufacturer of iron and steel — revealed that bogus claims worth Rs 18.519 million were made in tax period 2012-13 against irrelevant invoices.
The President lauded the Directorate General of I&I-IR (Intelligence & Investigation and Inland Revenue) for issuing Red Alerts and detecting fraudulent activities in FBR, and regretted that the “national exchequer was made to suffer colossal loss of revenue”.
