The audit of Millat Tractors Ltd (MTL) by the Large Taxpayer Office (LTO), Lahore, has uncovered significant sales tax discrepancies amounting to Rs13.28 billion. Alongside this finding, the LTO has imposed a penalty of Rs5.41 billion on the company. The audit report, available with Dawn, indicates that MTL was issued a show-cause notice by LTO Lahore for the tax year 2022 to explain these discrepancies.
The issue stems from alleged inadmissible sales tax refunds exceeding Rs12 billion for the period of 2018-2022, prompting the President of Pakistan to direct the Federal Board of Revenue (FBR) to reinstate investigations against MTL. Despite representations from both FBR and MTL, the president upheld the Federal Tax Ombudsman’s order to initiate recovery proceedings against the company.
LTO Lahore has informed the FTO that quasi-judicial proceedings are ongoing following the show-cause notice under Section 11 of the Sales Tax Act 1990. The notice allows MTL an opportunity to present its case before a decision is made. The audit process has concluded, and the LTO has submitted a compliance report to the FTO office as per its recommendations.
