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Rs 771.8m tax evasion: Customs issues contravention report against Q-Mobile

Rs 771.8m tax evasion: Customs issues contravention report against Q-Mobile

KARACHI: The Collectorate of Customs Adjudication-I has issued a contravention report against New Allied Electronics (Private) Limited and Digicom (Private) Limited (proprietors of the Q-Mobile cellular phones brand).

The Model Customs Collectorate (MCC) Multan has issued the report on alleged tax evasion of Rs 771.8 million under the head of sales tax, additional sales tax and income tax.

The total imported mobile phones were 2,409,660, including 1,194,385 of the New Allied Electronics and 1,215,275 of the Digicom evading Rs 680.5 million sales tax, Rs 54.22 million additional sales tax and Rs 37.09 income tax.

During the verification, the customs came to know that companies had mentioned smartphones as medium price phones in documents to evade the half of the payable duty on import of smartphones.

Customs authorities have issued notices to the New Allied Electronics and the Digicom under Section 26 of the Customs Act, 1969, asking them to clarify the observation of the customs staff and to provide import documents in terms of SRO 460(I)/2013 and SRO 367(I)/2013.

The representatives of the accused provided two judgments — both dated February 6, 2014, passed by the Sindh High Court (SHC). The court barred the customs authorities from collecting three percent value addition tax on the phones imported by the petitioners until February 20, 2014. However, no other supportive information has been provided by accused.

The importers have also reportedly mentioned incomplete description of the smartphones and succeeded in importing smartphones at a duty of Rs 250 per set instead of the applicable Rs 500 per set.

Sources told Customs Today that these companies have also not been paying sales tax on import of smartphones for more than a year. The importers, however, explained that non-payment of additional sales tax by the importing companies has been supported by the judgments of the SHC.

The Digicom officials have reiterated their arguments that they had paid the duty on the phone sets as per the examination of customs under category B of SRO 460(I)/2013. The customs authorities, however, denied the claim saying that the company was paying Rs 500 duty on A300 which is cheaper than i6 model for which they are paying Rs 250 duty tax.