Federal Board of Revenue (FBR) has suspended Shell Pakistan’s sales tax registration. The reason for the suspension is because Shell Pakistan knowingly committed tax fraud to avoid paying tax.
For deliberate tax fraud of Rs 3 billion, FBR has banned & suspended Shell Pakistan registration. Now Shell Pakistan cannot perform any business activity in Pakistan as its registration has been canceled.
Shell Pakistan did not the reveal the real sales value of its products and paid less tax. Asma Aftab said that when sales tax were inspected available at FBR’s E-portal it was revealed that Shell hid lubricating oil stock in Annexure J of Sales Tax and Federal Excise Returns in the period from Dec 2016 to Feb 2018.
In the period mentioned Shell Pakistan sales recorded were Rs 7.684 billion. Principal sales tax on this value is Rs.1.46 billion. Now along with this tax, FBR has imposed an increase of Rs. 142.503 million and a penalty is given to Shell Pakistan of Rs. 73.003 million at 5% rate.
Shell Pakistan was evading tax for three years as revealed by FBR.
Large Taxpayer Unit issued the order to suspend the registration of Shell Pakistan after it was settled that ‘oil company has concealed the stock of lubricating oil in Returns filed during the period of Dec-2016 to Feb-2018, which comes to the meaning of tax fraud’.
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The notification said, “It is noteworthy that the Registered Person continued the fraudulent practice till last Return filed for the month of March 2018, in order to safeguard the Government Revenue, this office immediately order for suspension of Sales Tax Registration of M/s. Shell Pakistan Limited under Section 21(2) of Sales Tax Act, 1990 read with Rule 12 (a) (i) of the Sales Tax Rules 2006 read with SRO SSS (1)/2006 dated 05-06-2006.”
In response to the suspension of its registration, Shell Pakistan has responded.
Here is the response by Shell Pakistan:
“Shell Pakistan Limited (SPL) had received a notification from the FBR requiring the company to explain a tax discrepancy, SPL was allowed by the FBR to respond by 30 April 2018. The company had earlier clarified that the relevant amount of tax had been paid in full therefore there was no shortfall in the payment of tax. However, FBR proceeded with the suspension of SPL’s GST license before the stipulated time given to the company to respond. The suspension of registration was hence not justified, SPL, therefore, took the matter to the Honorable High Court of Sindh which has suspended the directive of FBR and ordered that it be reinstated with immediate effect. SPL complies with all statutory requirements of the Country and strives to conduct its business in accordance with the applicable laws of Pakistan. SPL will continue to work closely with the tax authorities to resolve this issue.”