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FBR Decides To Apply Track-And-Trace system : Steel Sector

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to implement the Track-and-Trace system on the manufacturing units of steel sector for electronic monitoring of production and supplies of steel products.

The FBR has issued S.R.O. 541(i)/2022 here on Friday to amend Sales Tax Rules, 2006 to check sales tax evasion in the steel sector.

Sources told this scribe that the FBR has included steel sector into the list of sectors subjected to the electronic monitoring through Track and Trace system following issues raised by the Federal Tax Ombudsman (FTO) within the steel sector.

According to the amended rules, the steel products, if brought from non-tariff areas as defined in the Federal Excise Act, 2005, shall be treated as imported goods. After inclusion of the steel sector into the list of electronic monitoring, the said sector would now be required to install a track and trace system at their manufacturing premises, the sources said. Under the revised rules, the procedure shall apply to electronic monitoring, tracking and tracing of production, import and supply-chain of steel sector; tobacco products; beverages; sugar and fertilizer; cement and petroleum products.

Provided that any or all of the said specified goods above shall be monitored, tracked and traced in the manner provided in this procedure and any other instructions, procedures and orders issued by the Board.

Provided further that the specified goods, if brought from non-tariff areas as defined in the Federal Excise Act, 2005, shall be treated as imported goods for the purposes of this procedure, FBR added.

A tax expert told Business Recorder that the Federal Tax Ombudsman (FTO) has already directed the FBR to conduct a special audit into cases related to steel melters. FTO, while exercising own-motion power, has taken notice of gross misuse of sales tax special procedure rules after an initial inquiry confirmed glaring instances of organised fiscal fraud in the handling of cases of the steel sector.

The FTO’s report revealed instances of misuse of powers, negligence, inattention, delay, incompetence, inefficiency and ineptitude of FBR officers in the administration of duties while working on cases regarding steel melters at Lahore.

FTO has directed FBR to conclude the unending trail of ‘fact finding inquiries’ and formal administrative proceedings based on observations made by an external audit besides ordering an inquiry against the officers who have been wrecking havoc with the state exchequer.

In addition, it also directed the FBR to conduct a special audit of all steel sector cases at not only Lahore but also other stations to gauge the quantum of similar loss in other cities