ISLAMABAD: The tax audit of a leading tractor manufacturing company has detected serious sales tax discrepancies of up to Rs13.28 billion.

The audit of Millat Tractors Ltd (MTL) conducted by Large Taxpayer Office (LTO), Lahore, has been submitted to the Federal Tax Ombudsman (FTO). The LTO has also imposed a penalty of Rs5.41bn, besides a sales tax demand of Rs13.28bn.

The copy of the audit report available with Dawn revealed that the LTO Lahore had issued a show-cause notice to the tractor manufacturing company (for tax year 2022) to explain sales tax discrepancies amounting to Rs13.28bn during an audit.

The background of the issue revealed that the President of Pakistan had directed the Federal Board of Revenue (FBR) to restore the investigation against MTL into alleged inadmissible sales tax refunds of over Rs12bn for the tax period 2018-22.

The president had dismissed representations filed by the FBR and the MTL and endorsed the FTO order to initiate recovery proceedings against the company.

The LTO Lahore further informed the FTO that the quasi judicial proceedings are underway after the issuance of the show-cause notice under Section 11 of the Sales Tax Act 1990.

The said notice shall be concluded after allowing the registered person a reasonable opportunity to be heard. Since audit proceedings have concluded, as per the FTO’s recommendations, compliance has been made with the said recommendations.

The instant compliance report has been submitted to the FTO office, added the LTO Lahore report.

Published in Dawn, June 22nd, 2024