LTO Lahore imposes Rs5.41bn penalty on Millat Tractors over sales tax discrepancies

Large Taxpayer Office (LTO) Lahore has imposed a penalty of Rs5.41 billion on Millat Tractors Ltd (MTL) over mammoth sales tax discrepancies.  

According to a news report, Large Taxpayer Office (LTO) Lahore conducted a tax audit and detected sales tax discrepancies amounting to Rs13.28 billion at the tractor manufacturing company.

The audit findings have been submitted to the Federal Tax Ombudsman (FTO) and the LTO Lahore issued a show-cause notice to Millat Tractors for the tax year 2022.

The investigation follows a directive from the President of Pakistan, who ordered the Federal Board of Revenue (FBR) in November 2023 to reopen the investigation into alleged inadmissible sales tax refunds of over Rs12 billion for the tax period 2018-22.

The President dismissed representations filed by both the FBR and MTL, endorsing the FTO’s order to initiate recovery proceedings against the company. 

The LTO Lahore informed the FTO that quasi-judicial proceedings are underway following the issuance of the show-cause notice under Section 11 of the Sales Tax Act 1990. 

These proceedings will be concluded after allowing Millat Tractors Ltd a reasonable opportunity to be heard.

The LTO Lahore confirmed that the audit proceedings have been completed in compliance with the FTO’s recommendations and that the compliance report has been submitted to the FTO office.

Back in February 2023, the Federal Tax Ombudsman (FTO) directed the FBR to conduct a detailed investigation into the Millat Tractors’ claims for an inadmissible sales tax refund and recover an alleged amount of Rs 14.877 billion from the company for the tax period of 2017 till 2022.