LAHORE: Federal Tax Ombudsman (FTO) has ruled that the oil & gas sector being a highly regulated segment of national economy is strictly governed by the designated regulator, i.e., Oil & Gas Regulatory Authority (Ogra).
On the issue of compensation on delayed refund to an importer and seller of the liquefied Petroleum Gas (LPG), the FTO’s new order said that the preliminary objection regarding the bar of jurisdiction raised under Section 9 (2) (a) of the FTC Ordinance has been examined and observed that Oil & Gas sector being a highly regulated segment of national economy is strictly governed by the Ogra. All activities in this sensitive sector are properly regulated, licensed and monitored by the Ogra.
Under section 9(2) (a) of FTO Ordinance, 2000 no further investigation is mandated. Case files assigned to record, FTO order said.
The said complaint has been filed in terms of Section 10(1) of the Federal Tax Ombudsman (FTO Ordinance) against non-issuance of appeal effect order in compliance to ATIR decision and subsequent issuance of income tax refund and additional compensation.
Briefly, the complainant is an AOP engaged in the business of import and sale of liquefied petroleum gas (LPG). The complainant e-filed Return of Income for Tax Year 2016 along with refund application on 08.11.2016 claiming refund at Rs 271,430,856/- based on deductions under Section 148 of the Income Tax Ordinance (the Ordinance) as adjustable. The Additional Commissioner-IR (ADCIR) amended the deemed assessment order under Section 122(5A) of the Ordinance, holding the complainant as commercial importer (FTR) and not manufacturer vide order dated 03.03.2017.
The complaint was referred to the Secretary, Revenue Division for comments, in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response thereto, the Chief Commissioner-IR, LTO Karachi vide letters dated 12.10.2022 & 21.10.2022 forwarded comments of Commissioner Audit-Ill and Commissioner Enforcement-I, LTO Karachi.
The Commissioner Audit-Ill vide letter dated 10.10.2022 submitted that appeal effect order under section 124 of the Ordinance in compliance to decision of ATIR dated 13.12.2017 had already been given, determining income tax refund of Rs. 270,511,998 vide order dated 10.10.2022.
On the other hand, the Commissioner Enforcement-I raised objection against issuance of refund contending that the legal issue whether complainant was a manufacturer or commercial importer had been pending before Sindh High Court (SHC). In addition, the Deptt challenged the order of ATIR dated 13.12.2017 before SHC vide ITRA no. 77/2018 which is still pending. Hence, the issue being subjudice is barred on the point of jurisdiction under Section 9(2) (b) of the FTC Ordinance.
However, it was concluded that since the matter of treating income tax collected on import stage as adjustable or final tax is sub-judice before the Sindh High Court; hence, any refund application filed by the complainant will be processed as per law upon final decision of the High Court of Sindh.
