FBR revokes suspension of Hascol’s sales tax registration

KARACHI: The Federal Board of Revenue (FBR) on Friday deferred the suspension of sales tax registration of Hascol Petroleum Limited on a court order, giving the oil marketing company a temporary relief from an action against an alleged tax evasion.

“Upon directions of the Sindh High Court, the Commissioner Inland Revenue, Federal Board of Revenue has by order dated 3rd May 2019 provisionally revoked the suspension of the sales tax registration of the company with immediate effect,” Hascol said in a filing with the stock exchange.

“Consequently, the sales tax registration of the company is operative and effective as of date.”

The oil marketing company had filed a constitution petition before the Sindh High Court against the FBR inter alia challenging the order issued by the Large Taxpayers Unit (LTU) Karachi for suspension of sales tax registration of the company.

The FBR last month suspended the sales tax registration of Hascol Petroleum Limited for suppressing huge amount of sales and subsequently evading around four billion rupees of taxes.

The LTU Karachi said Hascol concealed and evaded sales tax amounting to Rs3.69 billion and further tax amounting to Rs280 million.

“Therefore, the company is being charged with contravention under provisions of Sales Tax Act 1990 and Rs3.97 billion is recoverable along with default surcharge and penalty,” the tax office said in a separate statement.

The Zone-III of the LTU Karachi found that the company understated the tax liability after scrutiny of record for July 2016 to December 2018.

The oil marketing company declared self-sales by issuing flying invoices to conceal tax on supplies of lubricants and other related items.

The unit said purchases of the company increased 15 percent, whereas sales rose five percent during July 2018 to March 2019 over the corresponding period a year earlier.

“If purchases increased at 15 percent then supplies were required to be increased by 15 percent as well,” the LTU Karachi said.

This anomaly showed that the company was evading supplies by accumulating into carry-forward of input tax which resulted in short payment of sales tax.

The commissioner of Zone-III of LTU Karachi, using powers under Sales Tax Act 1990, had suspended the registration of Hascol Petroleum Limited on the preceding grounds. The taxpayer was considered as non-active taxpayer.

LTU Karachi sources said the status of non-active taxpayer bars a company from undertaking any business activity.

The unit had issued notices for recovery of the evaded tax amount. If a taxpayer fails to pay the amount then the unit might resort to freezing bank accounts and selling of properties to recover the amount, the sources said.

Sales tax laws empower the tax authorities to arrest chief executive officers and directors of a company for committing fraud.