The sales tax department has imposed taxes on the full amount of undeclared sales reported by an aluminum extrusion company under the ‘amnesty’ program after the company failed to provide proof of tax payment. The company had invoked confidentiality as a defense, citing the Assets Declaration Ordinance, 2019, to avoid providing evidence of the tax payment.
Details revealed that the Directorate of Intelligence and Investigation-IR informed the taxation officer that the company was committing tax fraud by conducting taxable transactions without charging or paying the required sales tax and additional tax, and without proper sales tax registration. Moreover, the company’s electricity meter indicated a substantial electricity bill, suggesting a high level of business activity.
In response, the company registered for sales tax and agreed to a voluntary deposit of a certain amount. It later filed for amnesty under the Assets Declaration Ordinance, 2019, declaring millions of rupees in previously undeclared sales with the tax payment deferred. However, the tax department demanded proof of tax payment, which the company refused to provide.
The department calculated the recoverable amount and issued a show-cause notice. During investigations, it was discovered that the company had underreported its sales under the tax amnesty scheme and failed to pay the required tax on undeclared supplies, including default surcharges, into the national treasury.
Despite the company’s arguments, the appellate forum ruled that while Section 14 of the Ordinance 2019 prohibits the department from disclosing any amnesty claims, it does not allow the taxpayer to use this provision to avoid proving tax payment. In the absence of tax payment, the claimed amnesty becomes void, and thus, the department taxed the full value of the undeclared sales.
