Anti-corruption drive: FBR blocks payment of bogus refunds

Tax body rejects companies’ request to get accounts audited by external auditors.

Shahbaz Rana August 03, 2011


The Federal Board of Revenue (FBR) on Wednesday turned down a request of cement, cigarette and beverage companies to get their accounts audited by external auditors for expeditious payment of refunds, blocking a move that could result in issuance of billions of rupees in bogus refunds.

The policy decision was taken during a meeting of the Board-in-Council at the FBR headquarters.

The Board-in-Council decided to treat these companies through normal channels. “FBR has taken a policy decision by virtue of which the refund claims of cement, beverage and cigarette manufacturing companies will be cleared through normal adjudication process,” said FBR Chairman Salman Siddique.

There were apprehensions in FBR that the permission to these companies to get their accounts audited by external auditors may lead to bogus payments in connivance with some tax officials. A cement company has already filed a claim of Rs750 million in refund payments. To the surprise of high-ups, a section in the board is supporting the claim and the other is declaring it fake.

Several other cement manufacturing companies have prepared their claims. The day FBR would clear the Rs750 million refund claim, these companies would file their cases too on the same grounds that may lead to bogus payments of billions of rupees, said a senior FBR member on condition of anonymity.

The member expressed apprehension that an important FBR official may have taken kickbacks to get the refund claims cleared.

FBR is marred with allegations of receiving four per cent commission for clearing rebate claims. Finance Minister Dr Abdul Hafeez Shaikh has claimed on the floor of the National Assembly that last year refunds worth Rs46 billion were issued without commission.

The government launched an expeditious refund system in September last year for swift payment of rebate claims. After the introduction of the system, cheques are issued from the FBR headquarters. However, authorities still do not rule out the possibility of kickbacks at the field formation level.

FBR Inland Revenue Service has already issued instructions for carrying out post-refund audit after noticing abnormal payment of refunds in Karachi. Authorities will review the situation today (Thursday) during a conference of chief commissioners.

Published in The Express Tribune, August 4th, 2011.