Customs Reforms & Automation failed to update WeBOC to facilitate declaration of retail price of imported items

KARACHI: Despite lapse of over a year, Directorate of Reforms and Automation has failed to incorporate changes in WeBOC regarding collection of sales tax on retail price at import stage causing losses to the national exchequer.

Vide the Finance Act, 2019, Sales Tax on certain consumer items in the Third schedule to the Sales Tax, Act 1990 has been made chargeable on the basis of retail price in the light of amendment in Sales Tax Act 1990.

Through the said amendment, retail price taxation has been made applicable to imported goods and such goods are required to be assessed on the basis of declared retail price. In order to ensure proper collection of Sales Tax at import stage on the basis of retail price, Board issued Custom General Order No.12 of 2019 prescribing implementation and monitoring procedure.

However, changes were also required to be incorporated in the automated customs clearance system WeBOC by the Directorate General of Reforms & Automation (Customs) to facilitate the declaration of retail price of imported items notified in the Third Schedule to the Sales Tax Act, 1990 at the time of filing of Goods Declaration.

The necessary changes have not been be deployed in the system by the Directorate of Reforms & Automation (Customs) so far.

The Directorate General of PCA has been mandated to scrutinize the cleared GDs for ascertaining correct levy and collection of the Sales tax on retail price basis on import stage on items notified in the Third Schedule to the Sales Act 1990 under the above said CGO.

Subsequently, this Directorate General initiated audits to ascertain correctness of payment of Sales Tax on the basis of retail prices at the import stage.

During audit process it has been observed that a number of items mentioned in the Third Schedule to Sales Tax Act have been assessed by the clearance Collectorates without charging due Sales Tax on retail price at import stage due to the reason that necessary changes for determination of Sales Tax on retail price have not been deployed into the WeBOC system.

Furthermore it has also been observed that neither the importers are declaring goods on the basis of retail price not the system has been enabled to calculate the Sales Tax on retail price.

In case of yellow and red channel, the Sales fax determination on the basis of retail price has been left to the discretion of the assessing officers while in case of green channel, the same can only be detected and applied by way of post clearance audits.

This lack of system based determination of sales tax on retail price has caused not only revenue loss at import stage but number of inconsistencies in assessment patterns on determination of retail packing value addition etc piling up the post clearance audit work unnecessarily.

At present, more than five thousand GDs have been targeted for audit to ascertain collection of sales tax on retail price.

Despite the Human resource constraints, Additional Director PCA Farrukh Sajjad and Deputy Director Shoib Reza has been able to recover more than Rs65.38 million in such cases.

Director PCA Ashraf Ali has advised Federal Board of Revenue that Directorate General of Reforms and Automation may be directed to deploy necessary changes for system based determination of sales tax on retail price in WeBOC system immediately, enabling correct and uniform assessments of sales tax on retail price at import stage.

It may be mentioned here that the WeBOC system has many flaws and causing losses to the national exchequer.  

Tagged , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.