Daily Times

KARACHI: The Computerized Risk-based Evaluation of Sales Tax (CREST), Federal Board of Revenue (FBR) software to facilitate taxpayers, has identified suspicious activities of hundreds of registered persons, who are declaring continuous carryforwards without making any payment of sales tax, Daily Times has learnt.

The FBR is capturing transactions by registered persons to identify where a registered person is denied benefit admissible under the Sales Tax Act. Accordingly, the FBR has developed CREST that checks information in monthly returns, import / export data and cross matches for every registered person.

According to a copy of a letter written by Crest Project Director Asim Majid to the Member Inland Revenue (operations) available with Daily Times, the CREST has initiated forecasting for the tax trend on the basis of empirical evidences.

In the letter, the project director states that his office has carried out an exercise and observes that certain registered persons are showing continuous amount of carryforwards in sales tax return for the tax periods of May, June and July 2018.

“During scrutiny of data, it was found that there are cases wherein registered persons are declaring continuous carryforwards without making any payment of sales tax. Further scrutiny of the data of the said registered persons reveals that there are certain commercial importers, who are declaring supplies to registered persons only. The said practice of the certain commercial importers is quite unusual as the commercial importers normally declare most of their supplies to unregistered persons,” reveals the CREST.

The project director has sent the details of top 100 registered persons who are involved in said practice to the regional tax offices (RTOs) concerned.

Majid says in the letter that it is feared that this trend and gap will continue and increase in coming months unless immediate remedial measures are not taken. Therefore, in order to timely address the abnormal trend in carryforward, the RTOs need to focus their attention to take strict action to stop the leakage of revenue, he added.

In view of above-mentioned, the CREST office has proposed that the field formations concerned may be directed to take up the matter on urgent basis.

Khan has urged the RTOs to scrutinise the record of the suspicious registered persons in order to ascertain the causes of increasing carryforwards and recovery of evaded amount of sales tax. “The stock taking of the commercial importers should be performed to verify their closing stocks while the income tax record of the registered persons should also be compared with their sales tax record”. The CREST system has the in-built capacity to verify the veracity of reply received from registered persons.

Published in Daily Times, October 18^th 2018.