During the data-driven analytic exercise of sales tax returns filed by major businesses, it was observed that significant fraudulent practices are being employed by some of their authorized representatives and CFOs and that they are not exercising due diligence. Even the analysis within sectors and sub-sectors shows huge discrepancies. It is noteworthy that such discrepancies could not exist if the authorized representative and CFOs of the companies had exercised due diligence. Against this backdrop, it was decided by FBR that CFOs/authorized representatives will submit an affidavit along with a sales tax return regarding its correctness.
Since then, several representations have been received from various trade bodies including FPCCI that affidavits for CFOs/authorized representatives of the companies about the correctness of the sales tax return in terms of section 26 of the Sales Tax Act, 1990, have caused hardship.
It is clarified that the said affidavit was only introduced by the Board to sensitize the authorized representatives/CFOs about existing provisions of the Sales Tax Act and that the said Affidavit only reiterates the legal obligations of the persons filing the return for any tax period and informs them about the criminal liability that they may incur if such returns contain false information.
However, on request of trade bodies and to take all stakeholders in confidence, it has been decided that:
a) The filing of an affidavit will not be required for return filing for the tax period of September 2024 to be filed in October 2024.
b) FBR will receive alternative proposals from stakeholders until 31 October to curb the menace of falsified sales tax returns.
c) The Board may modify the particulars of the affidavit where valid concerns of stakeholders do exist.
However, it is again emphasized that no new legal obligation arises out of the “affidavit” and that the registered taxpayers should always be aware of the fact that declaration of fake or flying invoices and suppression of sale is a cognizable offense under the sales tax law and all registered persons need to exercise extreme caution while filing returns to avoid financial and criminal liabilities under section 33 of the Sales Tax Act, 1990.
