Chief Commissioner Hafiz M Ali Indhar says RTO not only achieved a huge target of Rs 16.468 billion for June 2015 but also exceeded it by Rs 100 million
Hafiz Indhar says Section 40B of Sales Tax Act helped bring in extra revenue
KARACHI: Regional Tax Office Chief Commissioner Hafiz Muhammad Ali Indhar has expressed his satisfaction over the overall performance of the Karachi RTO, which not only achieved a huge target of Rs 16.468 billion for the month of June 2015 but also exceeded it by more than Rs 100 million. During the fiscal year 2014-15, the RTO collected Rs 147.653 billion as compared to Rs 122.831 billion of financial year 2013-14.
In this way, this RTO collected 20.2% more revenue in this financial year (ended 30-06-2015) as compared to the previous financial year. Therefore, the growth of the Karachi RTO remained at 20.2%, which is more than the national growth of about 14% to 15% during this financial year. While examining the tax collection in separate heads like income tax, sales tax and FED, direct tax collections (income tax) increased by 25.2% over the previous financial year, while sales tax increased by 18.6% during the month of June 2015. The overall growth of all taxes of Karachi RTO remained at 20.2%.
To a question regarding any specific assignment during the financial year 2014-15, the chief commissioner said, “We worked hard in all fields such as assessment of income, demand, creation and collection, collection out of arrears as well as demand and detection of concealment cases in both income tax and sales tax. However, I will specifically mention the action where we invoked Section 40B of the Sales Tax Act, 1990 by posting staff on the business premises of the taxpayers’ firms and business centres to monitor sales of taxable goods, their stock position and genuinity of their inputs claims. Specifically to mention, we placed our staff on the business premises of taxpayers for a period of one month to three months.”
He said that those taxpayers where the sales tax staff was placed include M/s Khaadi, M/s Junaid Jamshed, M/s Portia, M/s Life Style Collection, M/s New Paradise Store, M/s Towellers, M/s SS Fashion, M/s Zahid Garments, M/s NM Enterprises, M/s U&I Garments (Almirah), M/s Shaper (Pvt), M/s Mottas Departmental Store and M/s Wardrobe.
He further stated that this exercise resulted in extra collection of sales tax amounting to Rs 250 million to 300 million (approximately) on one hand, while on the other hand it became as a deterrent for those who were claiming wrong input in the sales tax.
In reply to another question regarding resistance by taxpayers against the RTO for taking action under Section 40B of Sales Tax Act, 1990, Hafiz Muhammad Ali Indhar said, “What we have done is absolutely legal, so taxpayers had no reason to organise any protest against this action. This action is provided under Section 40B of the Sales Tax Act, 1990, which stipulates that where the department has any doubt or information that taxable sales are not properly recorded or any wrong input tax is being claimed by the taxpayers, in a such situation the department has been authorised to take action to monitor and examine the claims of the taxpayers through Section 40B.”
“We also posted our best staff of high integrity, strictly instructing them not to bother the taxpayers while sitting on their premises so that no complaint would be received. In this exercise, senior officers like commissioners and additional commissioners also visited the business premises of the taxpayers from time to time to personally check the behavior of the staff sitting on the premises. Due to these strict actions there was no complaint from the taxpayers at all. Initially, some taxpayers resisted and threatened to approach the high court against the action but after assurance of the undersigned to the taxpayers that nobody would harass the taxpayers and the staff would perform their legal duties assigned to them under Section 40B, they agreed.”
He said that after the assurance and the best behaviour of the staff with the taxpayers, no one protested or filed a suit before the high court for stay. “This exercise continued from February to June 2015. This law can be exercised again if any information is received regarding embezzlement in the future as well,” he added.
To yet another question on some “much publicised” cases like M/s Axact Pvt Limited and supermodel Ayyan Ali, which fall under his jurisdiction, RTO Chief Commissioner Hafiz Indhar said that as far as the issue of supermodel Ayyan Ali was concerned, dollars equal to Rs 56.100 million were recovered at the Islamabad airport from her custody. This amount had been treated by the department as untaxed and the department passed a provisional order under Section 123 of the Income Tax Ordinance, 2001, creating a tax demand of Rs 18.857 million against her.
Out of this tax demand, the department successfully recovered Rs 3.536 million from her bank account by invoking Section 140 of the Income Tax Ordinance, 2001.
He further said that in the case of M/s Axact Pvt Limited, the taxpayer had been filing returns since 2008 and claiming exemption of its receipts under Clause 133 of Part-I of Second Schedule to the Income Tax Ordinance, 2001, on the ground that these receipts were relating to the export of software.
Before the story of M/s Axact Group was published in the daily New York Times, the department had already confronted with the taxpayer on the question of exporting of software and the inquiries revealed that M/s Axact Pvt Limited was not exporting any software and was claiming wrong exemption. He said the department had already initiated the inquiries and its previous years’ cases were being reopened. He said that the company was being taxed and this process would be completed soon.
