The Federal Tax Ombudsman’s (FTO) inspection team of the green leaf thrashing units (GLT) found massive tax evasion at GLTs stage, reflecting alleged maladministration of FBR’s field force due to defective monitoring of GLTs.
The FTO has issued an Inspection report’ for inspection of the office of commissioner Inland Revenue, Regional Tax Office Peshawar holding jurisdiction over monitoring of green leaf thrashing units (GLT).
The internal analysis also indicated massive tax evasion at GLTs stage, evident from the simple fact that as per FBR,s own findings, there is an alarming gap between Tobacco produced (as per data maintained by Pakistan Tobacco Board) and Tobacco used in declared cigarette manufacturing. (as per Tax record). The comparative analysis reflects
the huge volume of annual loss.
Federal Tax Ombudsman (FTO) has recommended the Federal Board of Revenue (FBR) to implement real-time and verifiable issuance of invoices blocking all types of post seizure verifications or data fudging/forgery.
The FTO has recommended the FBR to immediate implementation of Rule 89 especially sub-rules (2) & (3) read SRO 1149 (1) dated 18th September, 2018. Non-implementation of this Rule, despite a lapse of 3 years, is the root of most of the enforcement hazards in the Tobacco/Cigarette sector. This implementation alone would minimize most of the risks currently confronting FBR’s machinery.
The FBR is directed to identify the officers, to be proceeded against, who have deliberately delayed the implementation of Rule 89, SRO 1149 and thus brazenly compromised the interest of revenue;
Unit officers Tobacco/Cigarette Squads RTO Peshawar, who have miserably failed in implementing law, rules and prescribed procedure need to be identified, questioned for fixation of responsibility and necessary disciplinary action taken thereof.
FTO has further directed the FBR is directed to conduct a yearly analysis of cigarette tobacco produced in Pakistan vis-a-vis declared consumption of tobacco by all cigarette manufacturing units, for 2019-20 onwards, so as to gauge the loss of revenue caused by un-accounted for tobacco.
IREN KPK Hub needs serious reorganization on professional lines and through assigning exhaustive jurisdiction of all GLTs so as to ensure a uniform pattern of compliance, monitoring and enforcement. Officers & officials with sectoral know-how, professional competence, and aptitude may be assigned the important task of monitoring & enforcement of this sector.
Being the core stakeholder in the Track & Trace project, FBR must cater for necessary training and development of core staff deputed for the Tobacco/Cigarette Sector, Tax Policy Wing, IR to conduct a periodic review of this sector so as to plug the newly emerging loopholes in cigarette/Tobacco sector.
Similar inspections of GLTs assessed at LTOs Islamabad and Karachi are urgently warranted. Rule 89(2) & (3) read with SRO 1149 is related to the Issuance of Tax Invoice Unmanufactured Tobacco, Stock Transport Advice Cigarette and Sales cum Transport Invoice all bearing unique and distinguishable numbers to be generated through FBR’s portal.
This check inserted in the regulatory regime of Tobacco/Cigarette in September 2018 has yet not been implemented. This well-conceived pre Track & Trace monitoring mechanism can be easily configured in FBR’s portal Iris, yet, even after a lapse of almost 3 years, this Rule has not been implemented; reasons best known to FBR management.
If this single Rule 89 is implemented, it would ensure;
- Real-time and verifiable issuance of invoices blocking all types of post-seizure verifications or data fudging/forgery.
- The job of IREN becomes much easier as while intercepting any vehicle or checking any warehouse/depot/storage accuracy and timing of all invoices presented can be cross-checked from the system.
- Commissioners concerned can have an updated online data of all clearances giving ample time for any remedial/ corrective strategy.
- Genuine invoice holders would be saved against any administrative excess or harassment.
- The need and utility of Physical monitoring and its related hazards can be minimized through this electronic intervention.