The National Bank of Pakistan (NBP) has challenged the tax recovery of more than Rs. 36 billion by the Federal Board of Revenue (FBR) against alleged compensation claims of the bank, reported a national daily.
The NBP, which is registered at the Large Taxpayers Office (LTO) Karachi for assessment and audit, had filed an appeal with the Sindh High Court (SHC). Consequently, the SHC has granted a stay against any tax recovery action by the authorities.
The news report quoted the FBR sources saying that the LTO had selected the bank for multiple years for audit and it had discovered discrepancies of approximately Rs. 57 billion.
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After adjusting the refund claims of the bank, orders had been issued for the recovery of Rs. 36 billion. This is the collective amount of the rejected claims that could not be verified by the LTO.
The withholding tax statements and the cash payment receipts presented by the bank did not match, and, therefore, could not be verified.
The NBP’s statement in response to this detailed that during the time under concern for the audit, the taxation officer had issued show-cause notices to the bank to withdraw compensation on delayed refunds that had already been given to the bank.
The bank said that it had also questioned the issuance of refund orders that had already been issued to it for several years which had become past and closed transactions, and, thus, legally fall outside the scope of rectification.
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It said, “The amount involved is Rs. 14.8 billion and Rs. 21.25 billion respectively. These notices being totally illegal were challenged by the bank before the SHC which instructed the taxation officer not to take adverse action”.
The NBP has also filed an appeal to the CIR(A), and the hearing may take place after the SHC decides the outcome of the petitions filed in favor of the bank.
The NBP’s statement added that the SHC had quashed the show-cause notices in the past on the grounds that they were time-barred.
However, the Supreme Court on tax office appeal had subsequently allowed the taxation officer to initiate proceedings through fresh notices, subject to certain directions.
