KARACHI: As reported on 25th November Millat Tractors Limited fraudulently claimed a sales tax refund amounting to Rs 5.699 billion out of which Rs 1.430 billion had been sanctioned. According to Federal Tax Ombudsman (FTO), the Company had misused the incentives given to the farmers/growers and has become the biggest beneficiary and no benefit whatsoever had reached the genuine farmer/growers. In the wake of the booking of 1001 agriculture tractors and getting full payment in advance amounting to more than Rs 1.25 billion including 5 percent sales tax through ninety-one (91) pay orders. M/s. Millat Tractors Limited (MTL), Lahore, fraudulently delivered only 47 tractors to the complainant from Karachi in the month of June 2022 and failed to deliver the remaining 954 tractors even after the expiry of 60 days, as reported by “National Courier”. There is yet another scandal unearthed by MTL in dealing with a complainant from Sialkot. Informed sources disclosed that MTL’s invoicing was plagued with serious flaws. Apart from the case of M/s. Shahzad Trade Links Karachi another case was under investigation by Federal Tax Ombudsman having Complaint No.3858/SKT/lT/202, Dated: 29.08.2022. The Complainant Mr. Abaid Ullah, District Sialkot had booked a tractor on 03.06.2022 after making full and final consideration of Rs 1.953 million, inclusive of chargeable sales tax.

When the Complainant approached MTL for delivery of a tractor in July 2022 the authorized dealer further demanded an amount of Rs 0.245 million quoting revised taxes on agricultural machinery w.e.f. 01.07.2022 and the Complainant had to deposit Rs 0.245 million. When the complaint was investigated by FTO Regional office in Sialkot it was revealed that the Sales Tax was waived for growers/farmers w.e.f. 1st July 2022 therefore the sales invoice dated 22.07.2022 issued by M/s. Millat Tractors Ltd. also reveals that no sales tax had been charged through said invoice and the whole amount of Rs 2.198 million was accounted for the price value of the tractor. The questions which need to be explained by MTL were; where has gone the sales tax charged at the time of booking? And why it was not declared & deposited by MTL while filing the tax return for the Tax period June 2022? How sales tax component was made part of the price finally charged? Why the authorized dealer had made alleged revised taxes as an excuse for an additional charge when actually ST was waived in the cases of growers/farmers?

The above-referred case revealed another material fact that whenever any booking was made by a genuine grower/farmer through authorized dealers, the payment through banking instruments was made by the buyer/grower himself, and the invoice was issued in his own name. Such genuine instances are clearly distinguishable from the bulk of sales wherein payment was received from someone else and invoices were issued in the names of names lenders/benamidars.

According to FTO thus, the above discussions clearly indicate the neglect, inattention, incompetence, inefficiency, and ineptitude of tax authorities, who though claim to be conducting audits and monitoring of MTL yet thus far failed to unearth this patently illegal invoicing system, which is not only detrimental to the interest of revenue rather it defeats the intent of the legislation to facilitate small growers/farmers.

Published in The Daily National Courier, November, 28 2022

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