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Concessions on import duties caused Rs5.8bn loss to govt: report

BISLAMABAD: Concessions on import duties, exemptions and the zero rating of tax notified under the statutory regulatory orders (SROs) caused a loss of Rs5.8 billion to the national exchequer during the fiscal year 2013-14.

This was disclosed in an audit report submitted to the Public Accounts Committee (PAC) on Tuesday.

“Ten Model Custom Collectorates (MCCs) extended the benefit of exemptions and concessions of duties and taxes to different parties under certain SROs without fulfillment of requisite conditions which resulted in non-realisation of revenue of Rs5.8 billion,” the report stated.

Defending the exemptions, however, Federal Bureau of Revenue (FBR) Chairman Nisar Mohammad Khan said a sizeable amount related to the defence import.

He said due to security reasons, neither the defence forces disclosed any details about their import nor the customs authorities could check items in consignments meant for the forces. Therefore, the FBR can charge a certain amount of tax on the defence import.
FBR chairman tells PAC most of the concessions are related to defence import

“There is a system based on mutual understanding under which a lump sum amount is imposed on the defence import as a tax,” Mr Khan explained.

He, however, said since the policy related to the issuance of SROs by the FBR had been abolished, it was not possible for the board to offer such concessions any longer.Audit officials, on the other hand, described the FBR stance as ambiguous.

They said under the SROs, the FBR exempted private parties from taxes on the import of tables, chairs and other items which were produced locally. Under the government policy, the FBR cannot offer any concession on the import of products that are produced locally as it would discourage the indigenous manufacturing. PAC member Dr Arif Alvi asked the FBR to clarify its position on the loss of Rs5.8 billion as it would create doubts on the transparency in the revenue board.

“This may be an outcome of corruption, corrupt practices and incompetency of the officials at the helm of affairs,” he said.

But the FBR chairman claimed that the audit authorities had exaggerated the amount as there was sufficient material on record with the FBR to justify the exemptions.

PAC Chairman Syed Khursheed Shah directed the audit authorities and the FBR chairman to reconcile the audit paras in the departmental accounts committee (DAC) meeting and come up after a fortnight.

According to the audit report, “the irregularity was pointed out to the FBR from July to December 2013. In the DAC meeting held in January 2014, the department reported that an amount of Rs3.16 million was recovered, Rs31.08 million was not due, Rs395.5 million under recovery, cases for the recovery of Rs23.3 million sub judice in courts, cases for Rs2.1 million under adjudication and cases for Rs2.83 billion were contested. No response was submitted in respect of Rs2.5 billion.”

The PAC also took up the audit para related to the non-recovery of Rs7.6 billion by the 11 MCCs and the directorate of intelligence and investigation, Karachi.

The audit pointed out the irregularity to the FBR in December 2013. In response, the FBR said it had recovered Rs13.3 million and was pursuing the other cases. Before the PAC, the FBR chairman expressed his inability to engage highly professional lawyers to contest the cases for the recoveries.

He told the PAC that around Rs400 billion of the FBR were stuck up due to litigation. The FBR can engage a lawyer on Rs1 million fee and in case the lawyer demanded more, it needs approval from the law ministry.

Auditor General of Pakistan Rana Assad Amin informed the PAC chairman that the issue can be taken up at a meeting when the committee would discuss pending court cases.

courtesy : dawn news



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