ISLAMABAD: In accordance with the Federal Tax Ombudsman’s (FTO) recommendations, the Customs Department’s Post-Clearance Audit (PCA) recovered Rs11.85 million less paid sales tax during the month of June 2022.
Specifically, the FTO was informed that some items were rendered chargeable to sales tax on the basis of the retail price at the time of import due to revisions made to Section 3(2) of the Sales Tax Act, 1990 in the Finance Act, 2019-20. In order to put the budgetary adjustments into action, the FBR issued the Customs General Order, which ordered the Directorate General of Reforms; Automation (Customs) to make the necessary modifications in the WeBOC clearing system of Customs for collecting sales tax on retail pricing.
The FTO observed that the department had not only failed to develop a functional and practicable solution to the problem at hand, namely the development of an IT-based module to cater for budgetary changes in order to capture and realize the exact amount of due taxes at the import stage on items subject to tax on retail price pursuant to the Finance Act, 2019, but it had also resulted in a massive revenue loss.
The FTO requested a report from the PCA Directorate General detailing their detections in this respect. Despite a three-year delay, data indicated that the FBR’s three committees failed to execute and accomplish the prescribed work with sincerity of intent.
In light of the foregoing, the Tax Ombudsman directed the FBR to ensure that the DG, and PCA, form a dedicated team at each regional Directorate under the supervision of the additional director for an in-depth audit of this sector and submit a monthly progress report of detections made and tax collected until the final deployment of the WeBOC module.
As a consequence, the aforementioned teams were formed in all three Regional Directorates of the PCA, the audit was successfully completed by all three directorates, and Rs11.854 million was recovered during the month of June 2022. This sum is in addition to the PCA’s previously recovered amount of 286.6 million.