Audit observed that:
i. A contract for the supply of essential and logistic materials for the production of 7.62 x 39mm ammunition at DICON ordinance factory at a contract sum of 74,445, 030.00 (Seventy-four million, four hundred and forty-five thousand, and thirty naira) was awarded to a contractor vide award letter Reference Number DIC/HQ/ADM/REG.27 on the 8th of March, 2018.
ii. The materials were delivered by the contractor vide reference number JAKO/DIC/18/023 dated 27th March, 2018, and approval for payment was given on 30th April, 2018, and
iii. Statutory 5% Value Added Tax (VAT) of 3,722,251.50 (Three million seven hundred and twenty-two thousand, two hundred and fifty-one naira, fifty kobo), and 5% Withholding Tax (WHT) of 3,722,251.50 (Three million seven hundred and twenty-two thousand, two hundred and fifty-one naira, fifty kobo), totaling 7,444,503.00 (Seven million, four hundred and forty-four thousand, five hundred and three naira) were not deducted from the amount paid to the contractor.
The Director-General is requested to:
i. Justify why payments were made to contractors without deducting statutory VAT and WHT.
ii. Recover the sum of 7,444,503.00 from the affected contractors and remit same to the relevant tax authorities.
iii. Forward evidence of remittance to the Public Accounts Committees of the National Assembly, and
iv. Otherwise, apply sanctions relating to failure to provide for VAT and WHT and failure to collect and account for Government Revenue specified in paragraphs 234(ii) and 3112 of the Financial Regulations respectively.
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