ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to conduct a special audit into cases related to steel melters.
As per details available with this scribe, the FTO while exercising own-motion power under has taken notice of gross misuse of sales tax special procedure rules after an initial inquiry confirmed glaring instances of organised fiscal fraud in the handling of cases of the steel sector.
The FTO’s report revealed instances of misuse of powers, negligence, inattention, delay, incompetence, inefficiency and ineptitude of FBR officers in the administration of duties while working on cases regarding steel melters at Lahore.
Initially, it was found that 881 exclusion certificates (ECs) in 39 cases of registered persons were issued against cheques without ensuring payment of tax. In addition, 347 cheques out of 881 were found missing for clearance while another 29 cheques had bounced.
The fate of other unattended cases can be judged from this scenario wherein the total number of cases is around 200.
Evidence on record proves that in addition to the issuance of ECs, original cheques were returned to the registered persons after the receipt of bribes in many cases while there are also examples of cheques submitted by one taxpayer being credited to others who availed ECs without paying any tax.
Despite having solid evidence of fraud in 39 cases, only eight FIRs were registered against the culprits. In fact, despite a solid documentary trail, so far only one formal inquiry has been initiated and that too against an upper division clerk (UDC).
The state of affairs of this particular inquiry can be judged from the fact that it was initiated by an officer who himself was part of the team alleged to have issued bogus ECs and is currently in Dubai after being granted an ex-Pakistan leave.
Furthermore, the fraudulent issuance of ECs, which is an exclusive domain of the commissioner IR, the department has held a UDC responsible, making a mockery of internal accountability.
“Despite all of the above, the department is portraying the whole scam as a minor procedural lapse,” the FTO stated in the report.
It may be mentioned here that the FTO has directed FBR to conclude the unending trail of ‘fact finding inquiries’ and formal administrative proceedings based on observations made by an external audit besides ordering an inquiry against the officers who have been wrecking havoc with the state exchequer.
In addition, it also directed the FBR to conduct a special audit of all steel sector cases at not only Lahore but also other stations to gauge the quantum of similar loss in other cities.