KARACHI: Sindh Chief Minister Syed Murad Ali Shah has said that the Sindh government has been facing frequent arbitrary and unauthorized deductions over past years by Federal Board of Revenue (FBR) through State Bank of Pakistan in connection with withholding tax and sales tax on goods from the provincial Consolidated Fund (PCF), in utter violation of the constitution provisions.
This he said while presiding over a meeting to review the at source deduction by FBR here at the CM House on Monday. The meeting was attended by Minister Excise & Taxation senior officers of finance department.
The chief minister who also holds the portfolio of finance department had worked out the figures said that in 2012-13 Rs633.119 million were unconstitutionally deducted by FBR from PCF in respect of 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 have been take away from Sindh.
The chief minister was told by his finance team that that the FBR has also deducted various other amount from the Provincial Consolidated Fund, in respect of claims over different departments of the Sindh government with respect to Sales Tax.
It was pointed out that the FBR during the year 2014-15 at source deducted Rs816.267 million from Excise department, Rs11.878 million from Board of Revenue, Rs6.662 million from Mines and Mineral department and Rs1.704 million Transport & Mass Transit Department. The total Rs881.513 million. In 2015-16 the FBR deducted Rs6,127.116 million from Excise & Taxation department, RS1.700 million from Information dept, Rs11.878 million from P&D, Rs7.229 million from Board of Revenue, Rs59.069 milion from Mines & Mineral dept, Rs122.324 million from Prisons and Rs87.750 million from Education department. The total of 2015-16 deduction comes to Rs6,417.076 million. In 2016-17 FBR deducted Rs76.870 million from Excise department, Rs11.119 health department, 290.499 million from Home department, Rs415.891 million from Finance department, Rs12.834 million from Board of Revenue and Rs9.821 million from Mines & Mineral department. This totoal comes Rs401.560 million. The over all 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 FBR is a clear violation of the constitution. He said that Article 121(d) of the constitution specifies that the expenditure can only be made from PCF for any sum required to satisfy any judgement, decree or award against the province by any court or tribunal.
Murad Ali Shah said that the deduction made upon executive orders of the FBR functionaries, therefore such order cannot be treated as authorized under the constitution. He expressed satisfaction that the State Bank of Pakistan in its letter of April 3, 2017 addressed to FBR authorities.
The chief minister said that the Sindh government has taken up the matter in the CCI with the contention that the FBR authorities have illegally drawn the money from PCF in contravention of the constitution.
The chief minister also decided to write a letter to the prime minister with the request to direct Ministry of Finance to refund the amount of Rs7.054 billion to Sindh government with respect to withholding tax which has been unconstitutionally deducted by FBR from PCF.
Chief Minister Murad Ali Shah said that from 2014-15 to 2017-18 the FBR has over all deducted Rs9.831 billion. The amount must be refunded to the Sindh government. The chief minister would send letter to PM by tomorrow morning.