The Federal Board of Revenue has issued final notices to the textile sector for submission of sales tax refund record for audit of last fiscal year.

Sources told Business Recorder on Thursday that almost all zero-rating sectors including textile have received reminders and notices from different audit units of Regional Tax Office (RTO) Karachi for post audit of the sales tax refund.

The tax department has selected several cases for comprehensive post sanction refund audit under Rules 26 A (8) of the Sales Tax Rules 2006 to ascertain the genuineness of the refund claimed/sanctioned, according to notices issued to textile units.

Initial notices to these units were issued, during December 2011, by the RTO Karachi under section 25 of the Sales Tax Act 1990, asking the textile units to submit sales tax record of the refund claims sanctioned during 2010-11, however a large number of units/exporters have not submitted the relevant documents required during the timeframe given by the tax department.

Sources said after sending one reminder in January 2011, now the RTO has issued final reminder/notice to the textile units, which availed the zero-rating facility on utility bills (gas and electricity), for granting a last chance to submit sales tax refund record with tax office.

For the audit, the RTO is seeking sales tax returns, sales/purchase invoices, sales/purchase registers, bill of entry/shipping bills/goods declaration, bill of lading, item-wise stock consumption statement, item-wise production statement, utility bills, proof of payment and receipts as envisaged in section 73 of the Sales Tax Act 1990 along with bank statement and part ledgers, list of machinery along with production capacity and proof of delivery and receipt of goods to and from manufacturing premises.

Although, all the notices have been issued by different audit units of RTO, the details required by the department are different in the notices while in some notices the tax dept also sought employees' record, bank statement along with proof of payments, income tax return and annual accounts, declaration of business bank account, monthly tax return, monthly production report and purchase orders record.

However, textile sector claimed that among these documents most of the record has already been with RTO and there was no need to issue notices.

These notices have created panic among textile exporters and they are planning a joint strategy to handle these notices.

In the final reminders, the tax department has threatened that necessary action under section 21(2) of the Sales Tax Act 1990 will be initiated against units without further correspondent, they added.