Tax dept accused of sending faulty recovery notices

KARACHI: Tax professionals on Tuesday said a Federal Board of Revenue’s (FBR) department is sending recovery notices to wrong taxpayers out of desperation to meet revenue shortfall for the current fiscal year.

A tax practitioner, referring to a notice, said a recovery was demanded against a refund claim, which was never paid to the taxpayer.

“This is tantamount to inefficiency and misconduct,” said the practitioner. A FBR official said the department may suspend an official in case of inefficiency or misconduct and initiate a disciplinary action. 

“The authority has a mechanism to take action against the officials who are involved in harassing the taxpayers,” the official said. “In case of an unintentional mistake, the tax authorities take lenient view.”

Tax practitioners said the Regional Tax office-III Karachi issued the refund claim notice by invoking Section 33 of the Sales Tax Act, 1990. Recovery notices are issued under Section 48 of the Act, they added.

Zeeshan Merchant, member of Karachi Tax Bar Association said it was a defective notice and the tax department should take corrective measures to avoid harassing taxpayers.

The tax departments are issuing notices in all heads of Inland Revenue, including sales tax, income tax and federal excise duty. The notices are part of a drive to recover outstanding amount and to bridge the revenue shortfall.

The FBR collected Rs1,452 billion during the first half of the current financial year of 2016-17 as against the target of Rs1,594 billion, registering a shortfall to the tune of Rs142 billion. The FBR will have to achieve a gigantic task of collecting Rs2,152 billion during the second half (Jan-June) in order to meet a highly ambitious annual target of Rs3,604 billion. Merchant said the taxpayers should be facilitated rather than discouraged. “There should be a remedy against the highhandedness of tax authorities.” In a recent judgment on the selection of audit cases, the Lahore High Court observed that a taxpayer should be allowed to make an appeal to the FBR chairman if he is wrongfully selected for auditing.