KARACHI: A civil construction company has reportedly obtained sales tax refunds worth millions of rupees from Federal Board of Revenue through tax reforms projects on fake claims, official sources said.
A Housing Enterprise had availed of zero–rated sales tax on services provided to the revenue body and other government departments and obtained refunds of Rs 133 million by presenting its contracts as international tender.
Regional Tax Office (RTO)–II, Zone-1 detected the scam in post-refund audit in the sales tax refunds issued to the company on purchases for refurbishment of the Model Customs Collectorate, Karachi, the officials said.
On the contract, the company obtained Rs 47.5 million on taxable supplies of Rs 464.8 million on the basis of concession available in the Sales Tax Act 1990, which exempts sales tax on international tenders.
In this case, RTO-II officials approached FBR Headquarters for verification about the company, which was awarded the tender in the category of international tender. On this, the Federal Board of Revenue through a letter on March 3, 2011 revealed that the contract awarded to Housing Enterprise through national competitive bidding (NCB) did not qualify as international tender, thus, it was not entitled for zero-rating, the officials said.
On FBR instructions, the RTO–II initiated proceedings against the company and asked the principal officer of the company to explain the position but so far no reply has been received from the company.
The officials said that some corrupt officials at the regional tax office deliberately avoiding taking action against the company and even no show-cause notice has been issued for the recovery.
Prior to the latest contract, FBR had awarded contracts to the company under tax reforms project, including Rs 13.07 million sales tax issued against contract awarded in April 2002 for interior development work furnishing and refurbishment of model sales tax house and large taxpayers unit Karachi; Rs 11.81 million sales tax refund issued on the project of refurbishment of medium taxpayers unit at Karachi, Dispute Resolution Complex at Karachi and Model Customs Collectorate in Karachi.
The officials said that both the projects were funded by the World Bank under the procurement method i.e. NCB and did not qualify for the international tender.
The company has been approached for its version but despite constant contact for three business days at the company’s official phone, no one was available to comment on the issue.
