CBR Chairman Abdullah Yusuf took serious notice of the situation during a presentation of Hussain Ahmed Shirazi, Collector, LTU, Karachi, at the Sales Tax Collector's Conference here on Wednesday.
Sources said that Yusuf was astonished to know that out of 345 companies operating under LTU, Karachi, the regional authorities have blocked sales tax refund in 175 cases, and 145 largest taxpaying units have resorted to litigation against the department. Over 60 percent of total revenue comes from LTU, whereas 45 percent of these units are involved in litigation with the department.
Taking serious notice of the situation, CBR Chairman pointed out that units operating under LTU are the largest taxpaying units of the country, "but what type of message we are going to give" to foreign investors by issuing notices to these mega units.
During the conference, first presentation was of Shirazi, who told the participants about the issuance of notices to certain units of LTU. Chairman strongly contested that it is tax officials' duty to show positive results instead of resorting to notices or penalties.
The collectors should resolve the taxpayer's problems to give right signal to the international community, he said. Instead of going into litigation, it should be the objective to do business and bring more people into the tax net in a friendly manner, he added.
The collectors' conference also discussed the strategy to bring potential taxpayers, particularly retailers, wholesalers and dealers into the tax net.
It was decided to focus on analysis of production data and monitoring of industrial units depositing less revenue despite high growth in industrial sectors.
The conference also took up the issue of presumptive assessment under section 11 of the Sales Tax Act, 1990 and monitoring of litigation in High Court and Supreme Court.
Sources said that the participants agreed to reduce litigation by encouraging taxpayers to resolve matters under Dispute Resolution Mechanism.
The possibility of physical survey of units was also discussed to discover new taxpayers, sources added.
Meanwhile, a press release issued by CBR said:
Chairman, CBR has called upon the Sales tax Collectors to change themselves in accordance with the demands of new era of growth and competitiveness and help the government to achieve its economic objective.
Presiding over the Conference of Sales Tax Collectors, he advised them to get rid of the past practices of creating harassment and difficulties for the taxpayers. "We mean business; we have made certain commitments with government and the government has commitments with international agencies", he said. "We have to fulfil our commitments by achieving the revenue collection targets and consequently government would fulfil its obligations."
Referring to pending refund cases, Chairman directed the collectors to pay serious attention to these cases and settle them on priority basis.
In this connection, he particularly referred to New Refund Rules, introduced in budget, which aim at overhauling of sales tax refund system and payments to be made directly into the account of claimant and previous practice of many part payments has been done away with and full amount will be paid in approved cases.
Ways and means to control payments of refund against fake/flying invoices and verification of deposit of input tax against which the refund was claimed also came under consideration during the Conference.
Performance of Sales Tax Collectorates for 2003-04 was also reviewed and satisfaction was expressed over the fact that all revenue collection targets were achieved. The Chairman congratulated the Collectors over their achievements and hoped that the targets set for the current fiscal year will also be achieved.
Matters pertaining to implementation of budgetary measures, strategy for achieving revenue target for 2004-05, broadening of tax base and dispute resolution mechanism also came under discussion and necessary decisions were taken.
Member (Central Excise), Nasir Ahmed and Member (Sales Tax) Shahid Ahmed also spoke on the occasion. Sales Tax Collectors briefed the Conference about the performance of their Collectorates.