ISLAMABAD: The Federal Board of Revenue (FBR) has accused Karachi Electric Supply Company (KESC) of hiding withholding tax (WHT) on purchases of Rs42 billion.
According to a top FBR official, the KESC purchased Rs42 billion worth of items but did not deposit the due taxes into national kitty.
Under effective enforcement strategy of WHT, the FBR has detected massive short filing of withholding tax by the power distribution companies (DISCOs). Alone four DISCOs have collected Rs36 billion from electricity consumers but did not deposit into FBR’s accounts.
Under article 161 and 162, the FBR is going to generate tax demands against KESC. Failure to pay tax collected or deducted.— (1) Where a person – (a) fails to collect tax as required under Division II of this Part 5 [or Chapter XII] or deduct tax from a payment as required under Division III of this Part 6 [or Chapter XII] 7 [or as required under section 50 of the repealed Ordinance]; or (b) having collected tax under Division II of this Part 8 [or Chapter XII] or deducted tax under Division III of this Part 9 [or Chapter XII] fails to pay the tax to the Commissioner as required under section 160, 10[or having collected tax under section 50 of the repealed Ordinance pay to the credit of the Federal Government as required under sub-section (8) of section 50 of the repealed Ordinance,] the person shall be personally liable to pay the amount of tax to the Commissioner 1 [who may 2 [pass an order to that effect and] proceed to recover the same.] 3 [(1A) No recovery under sub-section (1) shall be made unless the person referred to in sub-section (1) has been provided with an opportunity of being heard. (1B) Where at the time of recovery of tax under sub-section (1) it is established that the tax that was to be deducted from the payment made to a person or collected from a person has meanwhile been paid by that person, no recovery shall be made from the person who had failed to collect or deduct the tax but the said person shall be liable to pay 4 [default surcharge] at the rate of 5 [ twelve ] per cent per annum from the date he failed to collect or deduct the tax to the date the tax was paid.]
(2) A person personally liable for an amount of tax under sub-section (1) as a result of failing to collect or deduct the tax shall be entitled to recover the tax from the person from whom the tax should have been collected or deducted.
Article 162: Recovery of tax from the person from whom tax was not collected or deducted.— (1) Where a person fails to collect tax as required under Division II of this Part 6 [or Chapter XII] or deduct tax from a payment as required under Division III of this Part 7 [or Chapter XII,] the Commissioner may 8 [pass an order to that effect and] recover the amount not collected or deducted from the person from whom the tax should have been collected or to whom the payment was made. (2) The recovery of tax under sub-section (1) does not absolve the person who failed to deduct tax as required under Division III of this Part 9 [or Chapter XII] from any other legal action in relation to the failure, or from a charge of 10 [default surcharge] or the disallowance of a deduction for the expense to which the failure relates, as provided for under this Ordinance.
