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    allama iqbal

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    allama iqbal

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    FaheemKhan88
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    1 views1 page

    allama iqbal

    Uploaded by

    FaheemKhan88
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    © All Rights Reserved
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    of 1

    REPORT IN RESPECT OF M/S REHMAN PETROLEUM AND GAS COMPANY(PVT) LTD,

    Akhone Kaley Tehsil Kabal, Bar Abakhol, Kabal District,Malakand


    NTN: 4225228-8

    The taxpayer/registered person is engaged in the business of


    manufacturing/Distribution of refined petroleum products/ (LPG). The business of
    the registered person is located in Tehsil Kabal, Malakand Agency which prior to 18 th
    Constitutional amendment was exempt from taxation under Article 247 of the
    Constitution of Pakistan being situated in FATA/PATA. Post the amendment the
    exemptions were allowed under the particular laws i.e., Income Tax Ordinance,
    2001 or Sales Tax Act, 1990.

    Preliminary analysis of the sales tax return for September, 2024 reveals carry
    forward amount of Rs. 295,236,493/-. The business flow works as under:

    Sales tax
    deducted by
    supplier as
    supplier
    located in Exempt Sales
    declared in Ex-
    Local Manufacturing /decanting FATA/PATA
    purchase of
    LPG

    Perusal of the return revealed that sales tax was deducted at local purchase
    stage as the suppliers belong to settle area however the registered person did not
    charge sales tax on supplies made to Ex-FATA/PATA by claiming exemption under
    serial No. 151(a) of the Table-I of the sixth schedule of the Sales Tax Act, 1990.
    Resultantly a huge carry forward amount of Rs. 295,236,493/- accumulated up to
    the tax period September-2024. As per ANNEX-F of September-2024, value of stock
    in hand is amounting to Rs. 491,912,400/-
    The registered person declaring all supplies to erstwhile FATA/PATA being
    exempt from chargeability of Sales Tax but at the same time not transferring carry
    forward amount relating to exempt supplies to column 7 of the Sales Tax return,
    which is the violation of section 8(2) read with Rule 25 of the Sales Tax Rules 2006
    (Relevant rule is reproduced for reference).
    . 25. Determination of input tax.—(1) Input tax paid on raw materials relating wholly to
    the taxable supplies shall be admissible under the law.
    (2) Input tax paid on raw materials relating wholly to exempt supplies shall not be
    admissible.

    The supplies of the registered person need to be ascertained whether wholly


    made to ex-FATA/PATA or to settle areas of Pakistan. If the registered person is
    making supplies to taxable areas then attracts the chargeability of Sales Tax
    thereon coupled with default surcharge.
    Maintaining huge carry forward becomes risky for the exchequer because it
    can be used in issuance of fake and flying invoices.
    Action under section 38/40 is proposed to first carry out stock taking
    exercise and proceed further in accordance with the law.

    In view of above, the afore-mentioned act on behalf of the taxpayer qualifies


    as tax fraud under definition of 2(37) of the Sales Tax Act, 1990.

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