PR gets notice for Rs 46.9m tax evasion

LAHORE: The Punjab Revenue Authority (PRA) has issued a show cause notice to Pakistan Railways on Rs 46.92 million sales tax on services evasion during the tax year July 2015 to January 2017.

According to the notice, a copy of the notice is available with The News, the intercity carriage of goods by rail services are chargeable to sales tax under the Punjab Sales Tax on Services Act 2012, while the railways has provided taxable services attracting the Punjab sales tax amount of Rs46.924 million, which was not declared to the PRA nor deposited to the provincial exchequer.

The notice stated that the Pakistan Railways provided the taxable services to M/s Fauji Fertilizer Company and M/s Engro Fertilizer Limited. The Pakistan Railways has neither paid any amount to the PRA nor filed any sales tax returns during the tax period while the Pakistan Railways is bound to file monthly sales tax returns along with deposit of the due amounts of the Punjab sales tax on taxable services under sections 3, 10 ,11, 18, and 25 of Punjab Sales Tax Act 2012.

The Pakistan Railways has provided Rs124.047 undeclared value of taxable services to the Fauji Fertilizer Company Ltd and Rs169.229 million undeclared value of taxable services to Engro Fertilizers Ltd against which Rs19.847 million and Rs 27.076 million taxes, respectively are owed by the Pakistan Railways.

The show cause stated the tax evasion was intentional and committing the tax fraud defined in the Punjab sales tax act 2012 and liable for penalties and imprisonment of directors’ up to 5 years upon conviction.

The PRA has summoned the Pakistan Railways to appear to the official concerned of the Authority on March 13, 2017.A PRA official said that so far no tax was paid by the Pakistan Railways while they have using the tactics for further delay. He said if the Pakistan Railways delayed the dues further after lapse of the period given in the Act, then further proceedings will initiate. However, he was of the view that the railways will pay the dues to the PRA as its legal department has approached the authority.

Quoting the example of Sahiwal Coal Power Plant, he said that those who withheld the taxes while acquires services of good transport from the railways are regularly submitting it to the provincial exchequer, so the Sahiwal Coal Power Plant is regularly depositing millions of rupees sales taxes on services to the PRA as it withheld the Punjab sales tax on services from the Pakistan Railways dues.An official of the railways said that they were perusing the matter with the official concerned of the finance department and others. He hoped the issue will be settled soon.