Law: Federal Tax Ombudsman Ordinance, 2000

Section: 2(3),9(1),10

Law: Sales Tax Act, 1990

Section: 40B,40C

Law: Federal Excise Act, 2005

Section: 45,45A

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)--Ss.10, 9(1) & 2(3) -- Jurisdiction, functions and powers of the Federal Tax Ombudsman motion Complaint against Department for not realizing full potential of the collectable "Federal Excise Duty" and "Sales Tax" from cigarette manufacturers, by failing to conduct audit and by insufficient monitoring of production - Federal Tax Ombudsman observed that Departmental records revealed, inter alia, that audits had not resulted in major tax detections and Departmental actions under Sales Tax Act, 1990 and Federal Excise Act, 2006 had been diluted to mere physical presence of Department officers at manufacturers' premises without access to record of production Federal Tax Ombudsman gave extensive recommendations to improve monitoring in order to check tax evasion and to increase revenue collected from the cigarette manufacturing sector. FINDINGS/RECOMMENDATIONS: MUSHTAQ AHMAD SUKHERA, FEDERAL TAX OMBUDSMAN:---.--- This is an own motion investigation of systemic maladministration through exercise of jurisdiction under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance). The investigation is based on general Complaints that the Revenue Division/FBR and its field formations aFe not realizing full potential of "Federal Excise Duty" and "Sales Tax" from majority of cigarette manufacturers, operating in the country either by failing to conduct proper audit of these units or ensuring accountal of production of these units in their official record by using monitoring provisions of Sections 45 and 45A of the Federal Excise Act, 2005 read with Sections 40B and 40C of the Sales Tax Act, 1990. 2. The FBR vide its letter C.Nos. 1(2)/STM/2017/3S287-R dated 19.03.2018 and 28.05.2019 furnished following information:- A CIGARETTE MANUFACTURERS OPERATING IN THE COUNTRY: (i) Sales Tax is being charged at the standard rate of 17% on import and local sales of cigarettes. Federal Excise Duty (FED) is being charged @ 65% of the retail price on the imports of cigarettes. FED rates applicable to locally produced cigarettes have changed during the last two years and current financial year as…

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