FBR may prosecute a Lahore restaurant for denying officials to monitor sales

[Naveed Yaseen]

SOHAIL SARFRAZ
ISLAMABAD (May 11 2009): The Collectorate of Sales Tax, Lahore, has decided to invoke prosecution provisions of Sales Tax Act, 1990 against the owner of a restaurant located in the posh area of Defence, Lahore, where sales tax officials were denied monitoring its daily turnover/sale for calculating sales tax.

Sources told Business Recorder on Saturday that sales tax officials had approached a restaurant in Defence, Lahore, to monitor its sales and turnover under section 40-B of Sales Tax Act. However, the staff of the restaurant refused to allow the sales tax officials to enter the premises of the unit for monitoring purposes. The collector of sales tax, Lahore, has now decided to initiate prosecution provisions of Sales Tax Act to initiate strict action against the unit.

The collector would exercise powers under section 37 of the Sales Tax Act to summon persons to give evidence and produce documents in inquiry. The collector may invoke powers under section 37A and 37B to arrest and prosecute the owner of that restaurant. The authorised sales tax official, who on the basis of material evidence has reason to believe that any person has committed a tax fraud or any offence warranting prosecution under Sales Tax Act may arrest such person.

The Collector of sales tax would also access the premises, stocks, accounts and records of the restaurant under section 38 of the Sales Tax Act. The section 38 provides for free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under Sales Tax Act.

It is important to mention that the action has been taken by the same collector of sales tax Lahore, who was made OSD for deputing sales tax officials at another restaurant owned by influential people. He remained OSD for around one week, but was reinstated as collector of sales tax Lahore. The transparent exercise to improve revenue collection by plugging the loopholes has been resumed by the collector of sales tax, Lahore.

The collector of sales tax, Lahore, is determined to pursue the monitoring exercise under section 40-B where massive revenue leakage is taking place. He would continue to monitor sales and turnover where confirmed evasion of sales tax and federal excise has been witnessed at restaurants and bakeries etc in Lahore, sources added.

It is worth mentioning that the Collector Sales Tax Lahore has also deputed sales tax officials at bakeries and sweet shops indulging in massive evasion of sales tax under section 40-B of the Sales Tax Act, 1990. Sales tax officials were deputed at Lahore-based restaurants involved in under-reporting and suppression of sales to evade sales tax. The collector recovered a huge amount of Rs 10 million from one restaurant only and Rs 20 million was recovered from a bakery involved in massive evasion of sales tax.

A bakery's sales tax declaration increased from Rs 6 million to Rs 10 million in the return. A luxurious club of Lahore has shown three times more recorded sales following deputation of sales tax officials under section 40-B of the Sales Tax Act.

Following compliance, the sales tax officials were removed from certain restaurants and bakeries with the commitment that they would accurately file their sales tax returns and deposit the due amount of sales tax in future.

In case of violation, the collector of sales tax Lahore would again invoke provisions of section 40-B of the Sales Tax Act for physical monitoring of these units within their business premises.

http://www.brecorder.com/index.php?id=36872