ISLAMABAD, Jan 25: The Central Board of Revenue (CBR) on Wednesday admitted flaws in the Sales Tax Automated Refund Repository (STARR) — an automated system of issuing refunds to exporters — resulting in losses to the national exchequer.

Presiding over a meeting of the sales tax collectors, CBR Chairman M. Abdullah Yousuf pointed out that the STARR system had certain flaws of fundamental nature that were required to be removed urgently to streamline the system and settle issues pertaining to the payment of refunds to the exporters.

“There is an immediate need to review, revise and update the STARR system as its deficiency is causing a considerable loss to the national exchequer,” the CBR chairman added. He said the problem of refunds payment to the exporters had to be dealt through an effective and transparent system to earn good name for the CBR.

Mr Yousuf said the department was supposed to pay the refunds on the receipts of those exports which were actually taken place. But, the CBR chairman noticed, this aspect was not given due care while issuing the refunds.

He directed the collectors to take all precautionary measures in this regard, immediately. “All loopholes have to be plugged without any delay to make the system efficient, effective and transparent,” he maintained.

The CBR established the STARR on October 1, 2002 for detecting fake documents submitted with the tax officials for getting illegal refunds. It is aimed at creating an efficient and effective sales tax refund system through automation, which speeds up genuine refund claims while preventing undue refund payments, claimed by the tax officials at the launching of the system.

This showed that the computer automation could not help in reducing the corruption in the tax administration. It must be followed by changing the mindset of the tax officials who would actually operate these machines for running the businesses.

The CBR chairman also expressed his displeasure over the working of the export collectorate. “The working of the collectorate is not up to the desired standards,” he added. He directed them to come up with solid proposals for improving the system.

Expressing his views on the litigation problem, Mr Yousuf noted that it was an issue which had to be taken seriously and asked the collectors to ensure that the disposal must take place.

He said the past experience revealed that the department had collected not more than five per cent of the total amount involved in the litigation and in terms of value, taking account of time period involved, it was hardly one per cent.