The Sales Tax department was established under the Federal
Board of Revenue in early nineties after the successful implementation of the
Value Added Tax in the United Kingdom. Its executive posts were filled through
posting of officers from the customs and excise group while the line or support
staff that is the auditors and senior auditors were recruited separately.
The officers of the customs and excise department tried to run this department
on the pattern of customs department and assigned roles to the auditors and
senior auditors some of whom were recruited on political considerations. It
witnessed rampant corruption during that period when fake and flying invoices
were order of the day in the department. The official files of the department
were lying in the houses of these auditors (bugs). All deals relating to
assessment, refunds, registration, deregistration were taking place in the
houses of these auditors.
In that stage of history, the taxpayers started preparing two sets of record for
income tax and sales tax purpose. One department was not allowed to examine the
record of another department. Auditors became billionaires through direct or
indirect bribes and the so called consultancy.
The World Bank in its report for reforming the federal board of revenue stated
that Income Tax Ordinance and Sales Tax Act are applied on the audited accounts/
record of the same business and taxpayer. It further stated that if these two
laws are applied simultaneously by the same officer then the writ of the
department would improve. It cited the examples of the success of the Inland
Revenue Service, Inland Revenue Authorities around the world.
Almost a decade ago, the two departments were merged through the creation of the
Inland Revenue Service mandated for the collection of Income Tax, Sales Tax and
the Federal Excise Act. This move of the government was coined as clipping the
wings of the unbridled auditors of the defunct Sales tax department.
The Inland Revenue department through its programs for modernization introduced
the concepts of e-filing of the Sales Returns and adoption of the Integrated Tax
Management System software for audits and retrieval of other information
relating to Income Tax, customs, Sales tax and federal excise including
withholding tax. It also developed CREST software for bringing an end to the
concept of fake and flying invoices. The IRS officers introduced the concept of
zero rating of various sectors for successfully bringing an end to the so called
refunds processed by the Sales tax auditors. These developments ruined the
consultancy services and other corrupt practices of the Sales Tax Auditors. They
lost their desire for work as they were not used to signing a single piece of
paper without accepting bribes.
The sales tax collection witnessed a record increase through effective
monitoring, audits conducted simultaneously for the purpose of Income tax and
Sales Tax and cross matching of various data by IRS officers without the help of
Sales Tax auditors. The concept of fake and flying invoices in vogue during the
defunct sales tax collectorates came to an end.
The auditors contrary to the above, filed cases in various courts and tribunals
for up gradation of their posts. It was in a short period of time that they
managed to obtained up gradation with arrears in a couple of years without
visible improvement in their performance.
The auditors filed another case for encaderment in the executive class in a
court which granted them the same without even looking at their appointment
letters as auditors and their promotion path as assistant, deputy and Manager
The rich and influential auditors of the Federal Board of Revenue have their
relatives as parliamentarians of the Pakistan Tehrik Insaf. They are running
from pillar to post for the reestablishment of the defunct Sales Tax
Collectorates for restarting the corrupt practices on the name of reforms in the
Federal Board of Revenue which would be a deviation from the concept of clubbing
domestic taxes and promoting ease of business.
The premier of the state is requested to take notice of the above state of
affairs. We can`t undo the good steps taken by the previous governments. The
future of Pakistan lies in a corruption free, empowered, resourceful Inland
The writer is a senior Journalist He can be reached at [email protected]
Mobile No, +60109301521