Zubair qureshi Islamabad
Federal Tax Ombudsman (FTO) while concluding an inspection activity under Section 17 of FTO Ordinance, 2000 has recommended a feasible and conclusive way out to the FBR for affecting recoveries of evaded government revenue by way of misusing the Rule 3(A) of Rule 58H of Sales Tax Special Procedure Rule, 2007 introduced vide SRO No. 421(1)/2014 dated 04.06.2014.
According to a press release, Special Procedure Rules were introduced in 2007 to facilitate the Steel Sector.
According to the above referred Special Procedure Rules, collection of Sales Tax from steel melters/ re-rollers/ composite of melters and re- rollers having a single electricity meter was charged at specified rates under Rule 58H of Sales Tax Special Procedure Rule, 2007.
The above levied sales tax was collected through monthly electricity bills on the basis of consumption of electricity.
However, subsequently, in the year 2014, sub Rule (3A) was inserted under Rule 58H of the above said Rules, with effect from 04.06.2014.
The purpose behind the above insertion of sub-Rule (3A) was primarily to bring in an ease and convenience in Sales Tax collection from this sector i.e. steel melters.
As a corollary to above, the commissioners were empowered to collect Sales Tax directly from the steel melters and re-rollers after necessary adjustments in lieu of collection of sales tax at import stage and by issuing an adjustment/ exclusion certificate in this regard.
However, during the course of the above facilitation scheme, the following glaring discrepancies were noticed first by DG External Audit, then by PAC and finally by FTO Secretariat.