ISLAMABAD: The Federal Board of Revenue (FBR) has started scrutiny and examination of 199 cases of sales tax refunds involving Rs 166.38 million, it is learnt here.
Sources told Customs Today that refunds had been sanctioned by the field formations allegedly without verification of payment of tax by suppliers, payment to suppliers through banking channel and checking the stock consumption which made the sanctioning orders provisional.
Sources said that rule 36 (1) of the Sales Tax Rules 2006, provides that after disposing of the refund claim, the officer-in-charge shall forward the relevant file to the post-refund audit division for post-sanction audit and scrutiny, which inter-alia includes verification of input tax payments by respective suppliers under Section 8-A of the Sales Tax Act, 1990 and compliance of Section 73 of the Act, regarding payment against certain purchases through the banking channel.
The irregularity was pointed out by the Federal Board of Revenue to field formations and instruct them to furnish the report. In 138 cases involving Rs1,132.86 million field formations failed to complete the report, in two cases of Rs. 3.59 million it was reported that post refund audit had been initiated and in 89 cases of Rs226.19 million. Field formations plead that the refunds claims sanctioned on the basis of risk based selection through computerized post refund scrutiny.
FBR did not agree with the contention of field formations because the refund claims were sanctioned through expeditious refund system without fulfilling the formalities i.e. compliance o sanction 73, admissibility of input tax under section 7 and 8 (1) of the Sales Tax Act,1990.