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Abbottabad RTO detects over Rs500m tax evasion in mines sector

Abbottabad RTO detects over Rs500m tax evasion in mines sector

ABBOTTABAD: The Federal Board of Revenue’s (FBR) Regional Tax Office, Abbottabad has detected Rs500 million unpaid amount of sales tax from potential mines owners.

The Central Investigation & Prosecution Cell of the RTO Abbottabad collected data of monthly production reports of minerals i.e. soapstone, phosphate, feldspare and granite from Mines & Mineral Department and initiated inquiry with the prior approval of the then Chief Commissioner Aslam Mahmood Lillah who is presently posted as Director General Withholding Taxes in the FBR.

During inquiry, it was revealed that almost all the mine/leaseholders were doing business in millions of rupees per month without getting sales tax registration. According to the provisions of section 14(1)(a) read with section 2(5AB) of the Sales Tax Act, 1990 further read with rule 4 & 6 of the Sales Tax Rules, 2006, any manufacturer having annual turnover of taxable supplies exceeding Rs 5 million or utilities bills more than Rs 700,000 per annum is liable to get himself registered for sales tax.

Furthermore, section 3(1) read with section 6(2) and section 26(1) of the Sales Tax Act, 1990 requires that any person making taxable supplies shall pay sales tax at prescribed rate and shall furnish true and correct information about his taxable activity while filling his sales tax return. Furthermore, according to sub-section 25 of section 2, registered person means a person who is registered or is liable to be registered under Sales Tax Act. Accordingly they were informed that they get themselves registered with sales tax regime and also pay due Sales tax. But unfortunately none of them applied for sales tax registration. Resultantly, more than Rs 500 million sales tax is being imposed on all of them. However, remaining large number of leaseholders of other minerals will be taxed after receiving remaining data.

On the directions of Chief Commissioner Dr Amir Talpur, this unit also collected data from Sui Northern Gas Pipelines Limited (SNGPL) and Peshawar Electric Supply Company (PESCO) regarding gas as well as electricity consumption by all industrial and commercial consumers. After scrutiny of data it has been learned that only one bakery was registered in whole Hazara Division. Accordingly after detailed inquiry sales tax more than Rs 50 million was imposed and some amount was also recovered. Moreover, a large number of bakeries are now registered in sales tax net and are properly filing their monthly sales tax returns.