ISLAMABAD, Aug 4: Top officials in the Federal Board of Revenue (FBR) tried twice in the past three months to waive off Rs47 billion in federal excise duty to be paid by telecom operators on interconnect charges, but got cold feet on the second attempt because of possible scrutiny by the National Accountability Bureau (NAB).

In an effort to save their skin, the officials concerned later wrote back-dated notes on official documents making the release of already signed notification for exemption of duty conditional to the approval of the Large Taxpayer Unit (LTU), Islamabad, documents reveal.

Although the notification was signed on June 30 after a clear note on the official file that the LTU, Islamabad, had verified the claim of the mobile operators for exemption, the notes added on July 2 and subsequent dates said the signed notification might not be issued until confirmation of exemption from the LTU.

The precaution was taken perhaps because the FBR hierarchy got a hint that the NAB was moving to investigate the affair, which it did on July 4, the same day a note was circulated for withholding the release of the signed notification.

Further noting on the file took place on July 5 with signatures.

On July 4, NAB Chairman Admiral (retd) Fasih Bokhari took a suo motu notice to save Rs47 billion. The NAB has also taken the relevant record into its custody from the chief commissioner of LTU, Islamabad, and the FBR.

The interconnect charges are the amount claimed by one telecom operator from the other with termination (receiving) of calls.

The bill of the entire amount is issued to the customer by the telecom operator whose network is used for making calls, while the other operator whose network is used for termination of that call claims its share from the first operator.

There are no interconnect charges on making and receiving a call on the same network.

The issue of interconnect charges was first unearthed by the LTU, Islamabad, in 2010. A demand of Rs28.234 billion was created against interconnect revenue between 2007-08 and 2010-11. The amount was due from the National Telecommunication Corporation (NTC), Ufone-Pakistan Telecom Mobile Limited, Telenor, Mobilink-Pakistan Mobile Communications Limited (PMCL) and Warid.

Of the total amount, the tax officials had recovered Rs2.199 billion from the PMCL in 2008-09 leaving behind an amount of Rs26.034 billion. Over and above these due taxes, the officials have charged over Rs20 billion surcharges. This takes the total amount to over Rs46 billion.

LTU Chief Commissioner Syed Ijaz Hussain told Dawn that the tax on interconnect charges was justified, and due to be collected from the telecom operators. “We have raised the demand and pursued its collection,” he said, adding that more than Rs4 billion had already been collected on interconnect charges.

Mr Hussain claimed that he had written a third letter to the FBR in which he stopped tax officials from giving exemption to the telecom sector.

But contrary to this, the five cellular mobile operators sent a letter to Prime Minister Raja Pervez Ashraf on July 13 to direct the NAB to stop a media trial of telecom companies.

The operators claim that they have paid the due taxes.