Tax ombudsman finds irregularities in jewellery trade, recommends probe against FBR officials – Newspaper

ISLAMABAD: President Arif Alvi has rejected the representation of the Federal Revenue Board (FBR) against the Ombudsman (FTO).

The FBR had appealed to the president against the FTO's recommendations regarding the illegal trade in gold and the initiation of an investigation against tax officials.

The FTO Mushtaq Ahmad Sukhera, exercising his jurisdiction, initiated investigations into the alleged systemic mismanagement in cases detected against gold / jewelry exporters and the FBR's breach in relation to due action against the violation of import and export policy orders under the Customs Act of 1969.

The ombudsman recommended that the RBA initiate a departmental investigation and take disciplinary action against those officials who had not identified or reprimanded those involved in illegal imports and exports.

The FTO findings revealed that gold worth Rs. Billions was exported using the false E-form or, in some cases, was not exported against imported gold.

The FBR, on the other hand, was not happy with the findings of the ombudsman and presented a representation to the president against his recommendations.

The decision issued by the president says that it has been observed that in addressing the matter in the jurisdiction of his motorcycle, the FTO has not committed any violations; rather, the step is laudable, which suggests reforms and improvements in the system.

The statement also said the recommendations are relevant to curb the threat of tax evasion. In addition, he advised the state revenue collection officials to take the necessary measures to implement such recommendations wholeheartedly to improve their functions.

"There is no justification for altering the recommendations of the FTO learned, nor is there any reason to interfere with the aforementioned instructions," observed the president's order.

The jurisdiction of suo moto was taken after a media report alleged misuse of the import and export facilities for gold, jewelry and other precious metals at various customs stations. Reports say that some jewelry exporters did not remit currencies and the Customs Stations Department was unaware of the matter due to a jurisdictional problem.

Prima facie, the FBR did not establish any institutional mechanism to stop abuse of the regulated scheme through concessional SROs issued by the Ministry of Commerce.

Consequently, importers and exporters deceived the department with impunity, especially in cases where the concession was used improperly under the entrust / elf scheme.

The FTO had recommended to the FBR and the Federal Investigation Authority (FIA) to initiate an investigation against all officers, departments and traders involved in the misuse of import and export facilities with respect to gold, jewelry and other metals precious, resulting in a massive loss of income to the national estate.

The FTO noted that the export promotion scheme did not establish an institutional mechanism to stop the abuse of the commission / self-consignment scheme regulated through the concessionary SROs issued by the Ministry of Commerce. Therefore, importers and exporters deceived the departments with impunity, especially in cases where the concession available under the entrustment / auto consignment scheme was misused.

The parcel scheme provides facility for the export of jewelry against imported gold supplied as a partial advance, by the foreign buyer in the manufacture of jewelry to be exported. In addition, exporters should only export eligible and authorized items within 120 days from the date of importation.

Under the self-consignment scheme, the export of gold jewelry is made from gold and precious stones purchased locally and the proceeds from the sale are made in foreign currency. According to the scheme, the registered exporter must request the export authorization from the Commercial Development Association (TDAP) of Pakistan. The proceeds from the sale will be made within 120 days from the date of export and commercial banks will ensure that the proceeds from the sale are repatriated within the same period; otherwise, commercial banks will inform the State Bank of Pakistan, as well as TDAP.

The FTO noted that during a special audit, the General Internal Audit Department detected serious irregularities related to the Customs Model (MCC) Peshawar, MCC Export Port Qasim, Karachi, MCC Islamabad and MCC Preventive Lahore.

It was also noted that exporters also made repeated exports. It is true that the currencies were not repatriated against the E forms, which later turned out to be false.

In addition, it was not explained how subsequent exports were allowed when it was clear that currencies were not repatriated within the specified period.

This reflects the negligence, lack of attention and ineptitude in the performance of duties and responsibilities by the officials concerned.

It is quite strange that the MCCs have not recovered the awarded amount of fine imposed on the clearing agents, who are otherwise licensees of the department. The examination of the file shows that no suspension has been granted or that the period of suspension of the order by virtue of the appeal has also expired.

However, the department had not initiated recovery procedures without which no explanation could be given.

Failure to do so reflects negligence, lack of attention, inefficiency and ineptitude in the performance of duties and responsibilities by the officials / department officials concerned, which amounts to poor administration.

Posted on Dawn, October 23, 2019

Source: https://www.dawn.com/news/1512372/tax-ombudsman-finds-irregularities-in-jewellery-trade-recommends-probe-against-fbr-officials

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