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Maersk commits serious crime of sales tax evasion worth billions: Advocate Mehwish

Maersk commits serious crime of sales tax evasion worth billions: Advocate Mehwish

PESHAWAR: Billions of rupees sales tax evasion by M/s Maersk Pakistan (Pvt) Ltd on unrecorded transactions will raise questions on the department’s working for sale tax enforcement. Enforcement of the sales tax like that of any other tax basically connotes securing obedience to the law in force but the Maersk shipping line was found to have crossed every limit by causing serious loss to the revenue collection.

This was stated by Advocate Mehwish Kaka Kheil while talking with Customs Today at Peshawar about the mega sales tax scam of Maersk Shipping Line.

The advocate further said that Sindh Revenue Board has to deal with that section of the shipping business community which tries to evade taxes and cause loss to the national exchequer. She said that evasion of sales tax is of two types; tax evasion on unrecorded transactions and recorded transactions.

Under the former category, sales tax is evaded by canceling the particular transactions of purchase or sale. These transactions are nowhere in the books of accounts. The Maersk shipping line has used this way to conduct tax evasion as the payment has not been on the record anywhere. The shipping line carried out business with clients without payment of sales tax, she added.

On the other hand, the latter category of evasion that is evasion in relation to the recorded transactions means that particular transactions are recorded by the dealer in the books of accounts but they are either shown as exempted or taxable at a lesser rate. Thus two categories could be termed as evasion of tax through suppression and through false claims, the advocate informed.

In the case of sales tax evasion by Maersk shipping company, the enforcement wing’s duty was to conduct inspections of the shipping, trade test, purchase, lorry check and extract verification. The officers of the enforcement wing are also in charge of prevention of bill trading and conducting raids on the dealers but here it seems they are found apart from carrying out their duties.

It is pertinent to mention here that talking exclusively with Customs Today, Commissioner Operations Sindh Revenue Board (SRB) Mohammad Amir said that the Board will definitely issue a show cause notice to Maersk Pakistan after completion of audit. It is a common practice that the Board cancels license of tax evading companies as it has already cancelled licenses of 84 companies after completing all legal formalities. If a company does not pay sales tax after issuance of notice, then the Board starts process to cancel its license.

He said Maersk Line earned $24299 million in 2017 and paid Rs76.67 million sales tax to other governments which compelled the SRB to conduct audit of the company in Pakistan. Maersk shipping company posted business of $27117 million in year 2012, $26196 million in 2013, $27351 million in 2014, $23729 million in 2015, $20715 million in 2016 and earned $24299 million in year 2017 and the company paid Rs76.67 million tax in last fiscal year.