CM demands return of ‘Rs9.831bn deducted at source by FBR’

Sindh Chief Minister Syed Murad Ali Shah has said the provincial government has been facing frequent arbitrary and unauthorised deductions for the past some years by the Federal Board of Revenue (FBR) through the State Bank of Pakistan in connection with the withholding and sales taxes on goods from the provincial consolidated fund (PCF) in utter violation of the constitution provisions.

This he said while presiding over a meeting at the CM House on Monday to review at source deductions by the FBR. The meeting was attended by the minister excise & taxation and senior officers of the finance department.

The chief minister, who also holds the portfolio of finance department, worked out the figures and said that in 2012-13, Rs633.119 million were unconstitutionally deducted by the FBR from the PCF in respect of the withholding tax, in 2015-16, Rs6,127.115 million were deducted and in 2016-17 another Rs294.5 million were deducted. In this way during the last three financial years, Rs7,054.734 million had been taken away from Sindh, he added.

Shah was told by his finance team that that the FBR had also deducted various other amounts from the Provincial Consolidated Fund in respect of claims over different departments of the government with respect to the sales tax.

It was pointed out that the FBR during the year 2014-15 at source deducted Rs 816.267 million from the excise department, Rs11.878 million from the Board of Revenue, Rs6.662 million from the mines and mineral department and Rs1.704 million from the transport & mass transit department.

In 2015-16 the FBR deducted Rs6,127.116 million from the excise & taxation department, Rs1.700 million from the information department, Rs11.878 million from the P&D, Rs7.229 million from the Board of Revenue, Rs59.069 million from the mines & mineral department, Rs122.324 million from the prisons department and Rs87.750 million from the education department. The total 2015-16 deductions added up to Rs6,417.076 million.

In 2016-17, the FBR deducted Rs76.870 million from the excise department, Rs11.119 from the health department, 290.499 million from the home department, Rs415.891 million from the finance department, Rs12.834 million from Board of Revenue and Rs9.821 million from the mines & mineral department. This total was Rs401.560 million.

The overall deduction has been worked out at Rs9.831 billion. The chief minister, quoting Article 119 of the constitution, said that the custody of the provincial consolidated fund and the authority to withdraw money from it rests with the provincial government. He added that any arbitrary withdrawal of money from the PCF by the FBR was a clear violation of the constitution.

He said that Article 121(d) of the constitution specifies that the expenditure can only be made from the PCF for any sum required to satisfy any judgement, decree or award against the province by any court or tribunal.

Shah said that the deduction was made upon executive orders of the FBR functionaries; therefore, such orders cannot be treated as authorised under the constitution. He expressed satisfaction over the letter of the State Bank of Pakistan of April 3, 2017, addressed to the FBR authorities.

The chief minister said that the Sindh government had taken up the matter in the CCI (Council of Common Interests) with the contention that the FBR authorities had illegally drawn the money from the PCF in contravention of the constitution.

He also decided to write a letter to the prime minister with the request to direct the Ministry of Finance to refund the amount of Rs7.054 billion to the provincial with respect to the withholding tax which had been unconstitutionally deducted by the FBR from the PCF.

Shah said that from 2014-15 to 2017-18 the FBR had overall deducted Rs9.831 billion, and the amount must be refunded to Sindh. He said he would send a letter to the PM in this connection by Tuesday.