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LTU raises tax demand worth Rs3.4b with cigarette company

LTU raises tax demand worth Rs3.4b with cigarette company

KARACHI: Large Taxpayer Unit (LTU) Karachi has raised tax demand of Rs 3.4 billion from a cigarette manufacturing company as it failed to deposit due amount of Sales Tax and Federal Excise Duty (FED) during 2013-14. It was learnt on Wednesday that the unit falls within the jurisdiction of LTU Karachi. Sales tax and FED to the tune of Rs 3.4 billion has been worked out for the whole fiscal year of 2013-14.

The company has strongly agitated against the tax demand, but the LTU Karachi won the case at the first stage of appeal i.e. Commissioner Appeals as he has endorsed the decision of the LTU Karachi. The LTU Karachi under section 40B of the Sales Tax Act 1990 deputed Inland Revenue officers at the manufacturing premises to monitor actual production of cigarettes. The LTU Karachi decided to exercise section 40B of the Sales Tax Act, 1990 for monitoring stocks and clearance of the commodity. The enforcement powers of section 40B of the Sales Tax Act 1990 have been invoked in this case.

The department is legally empowered to use powers under section 40-B of the Sales Tax Act, 1990 to depute these officials at the manufacturing premises. Section 40-B empowers the FBR to post tax officers at the premises of registered persons to monitor their production, sale of taxable goods and stock position. With the presence of tax officers at manufacturing premises, actual production against the declarations made on voluntarily basis are compared. So far, the LTU Karachi has not attached the bank account of the company, they added.