The Auditor General of Pakistan (AGP) has raised questions over the lack of transparency in the Federal Board of Revenue (FBR) during the issuance of the SROs granting customs duties exemptions/concessions at the import stage.
The AGP has strongly recommended the FBR to immediately withdraw the questionable SROs on the import stage.
The audit report of the Auditor General of Pakistan (AGP) of FBR for the audit year 2021-22 revealed that the process of issuing customs SROs granting exemptions and concessions lacks transparency and appropriate legal cover.
Moreover, there are no internal monitoring reports by the FBR with regard to the objectives and performance of such SROs. Therefore, it is currently impossible to cost of the effectiveness of such exemptions in stimulating existing and new investment, employment generation, and new technology.
The AGP further objected that the arbitrary use of discretionary powers conferred by the law on the federal government and the FBR is evident in both the issuance and application of several SROs granting exemptions and concessions.
No proper mechanism of monitoring and supervision by the senior management is available to prevent misuse of the SROs in the field. Customs authorities does not apply exemptions with precision, which is obvious from the audit observations of Rs 6.25 billion, AGP added.
The AGP has recommended that the federal government and the FBR should review all active SROs issued under section 19 of the Customs Act 1969 and withdraw those that are not covered by the express mandate of the said section.
It further recommended that the parliament should amend section 18 of the Customs Act 1969 to provide for a transparent and structured procedure for decreasing or removing regulatory duties and additional customs duties so that the SROs under this section cannot be issued arbitrarily or with any ulterior motive.
FBR should hold an inquiry and fix responsibility regarding the issuance of SRO1455(I)/2018, under section 181 of the Customs Act 1969, that allowed the release of smuggled mobile devices seized before December 31, 2018, on payment of applicable duties and taxes without the imposition of zero-fine.
The FBR should strengthen its internal controls in the field formations so that the concessionary SROs are applied only to eligible importers and eligible items and dutiable items do not escape the application of levying SROs.
