ISLAMABAD: President Dr Arif Alvi on Wednesday censured the Federal Board of Revenue (FBR) for leaking the whistle-blower’s identity to the tax-evading private company which allegedly committed financial irregularities.

The president ordered the FBR to submit a report within 60 days and also explain why the board failed to fully utilise the information provided by the whistle-blower to recover the maximum sales tax amount from the company that caused losses to the national exchequer.

While rejecting a representation filed by the FBR against the order of the Federal Tax Ombudsman (FTO), Mr Alvi said this is abhorrent to the whistle-blower concept and legislation. Instead of taking advantage, the FBR has been very lax in its attitude.”

The whistle-blower had reported large-scale tax evasion by a private company to the FBR by risking his life, and resultantly received threats from the company.

Mr Alvi also directed FBR to revisit its relevant assessment order and provide the whistle-blower with an opportunity for a hearing.

The complainant Muhammad Ilyas, serving as an Accountant in M/s Northern Toolings (Pvt) Ltd, reported to FBR that the company was indulged in various financial irregularities by maintaining bank accounts in the names of its employees, concealing warehouses with undeclared stock, less tax payment, and under-invoicing at import stage using similar names and style of another company, and thus, causing huge losses to the national exchequer.

The FBR initiated proceedings against the company and recovered Rs15.251 million, however, the amount recovered was too short due to the inefficient use of annexures provided by the complainant.

The employee had filed complaints to the FBR chairman regarding tax evasion, however, after not getting any results, he took up the matter with FTO.

During the proceedings of the ombudsman, the FBR raised objections over the jurisdiction of FTO on the ground that the issue related to the determination of liability of tax and interpretation of laws, rules and regulations with respect to which legal remedies were available.

FBR further contended that the whistle-blower had submitted his written statement regarding tax evasion of Rs5m and all the information provided by him was confronted and an appealable assessment order was also passed, therefore, a fresh round of complaints was unwarranted. FTO rejected the stance of FBR and stated that it was a case of not fully utilising the information in a matter where duties and taxes were evaded by using various tactics.

FTO further held that the complainant’s contention regarding tax fraud by the company carried weight and therefore, it was in the interest of justice that he should be given another opportunity to present his viewpoint before FBR. Instead of complying with the order, FBR chose to file a representation with the President against the order of the FTO.

The President in his decision observed that FTO’s order was merely a reiteration of FBR’s responsibilities to conduct re-audit proceedings for the recovery of evaded sales tax by efficiently utilizing the information provided by the complainant and granting him another opportunity to explain his viewpoint in this regard.

Published in Dawn, April 13th, 2023

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