RTO-II Karachi recovers tax settled under amnesty scheme

KARACHI: Tax authorities have issued demand notices to persons who have availed of Amnesty Scheme – 2012 and paid their outstanding liabilities, sources said on Tuesday.
The sources said that such initiatives would result in increasing the stock of litigation cases and weakening the board position.
In a case, the Regional Tax Office (RTO–II) Karachi issued around Rs4 million tax demand, including the default surcharge and fine / penalty, which was 100 percent of principal amount.
The sources said that the taxpayer received a letter on January 23, 2012 from the Intelligence and Investigation, Inland Revenue, Lahore for the payment of Rs2 million on account of purchases from dummy and non-genuine suppliers during the period August 2008 to March 2010.
However, on June 19, 2012, the intelligence office in Karachi issued another letter to the taxpayer offering to avail of the amnesty issued by the Federal Board of Revenue (FBR) on June 27, 2012 through SRO 774(I)/2012.
The amnesty exempted the whole amount of default surcharge and penalties against persons with the condition to pay 25 percent of the principal amount of illegally adjusted sales tax by June 30, 2012 and pay the remaining amount in five equal installments by December 31, 2012.
The taxpayer taking advantage of the amnesty paid the amount. On receipt of fresh demand of such amount on September 9, 2014 from the RTO-II Karachi, the taxpayer produced evidence.
The RTO Karachi also sent another demand notice of Rs7.2 million, claiming the taxpayer illegal adjusted input against fake invoices.
Interestingly, the tax department despite the evidence provided attached the bank account and recovered Rs9.2 million.
The amount included the default surcharge and fine / penalty that were already waived by the FBR through SRO 774. The taxpayer is moving the court of law for relief.
Tax experts said that due to faulty demand orders, the FBR is facing disappointments before the court of law and it also gave rise to increase in litigation cases. In its report, the Tax Reform Commission said that the rise to litigation was mainly due to substandard assessment orders, which were aggressive, unreasonable and difficult for the departmental representatives defending FBR cases at different legal fora.