LAHORE: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to deregister small jewellers, who were compulsorily registered to integrate with the FBR’s online system of point of sales (POS).
The latest order issued by the FTO revealed that the complaint was filed against alleged illegal compulsory registration in sales tax and issuance of show cause notice dated March 3, 2023 to impose penalty of Rs 0.500 million on failure to get the business integrated with FBR’s computerised system for real time reporting. Briefly, the complainant is an individual running business of jewellery under the business name of “Niazi Jewelers”.
The Tax department compulsorily registered the complainant in sales tax due to suspected use of debit or credit machine and later on issued a show cause notice on 03.03.2023 to impose penalty of Rs 0.500 million on failure to integrate business with Board’s computerised system (POS).
Perusal of the compulsory registration order showed that the complainant was compulsorily registered in sales tax due to involvement in taxable activity as “Tier-1 Retailer” whereas Tier-1 Retailers has been defined under Section 2(43A) of Sales Tax Act 1990.
As per sales tax provisions, a jeweller if not operating as a chain of store or in an air-conditioned shopping mall must qualify the conditions.
The complainant submitted that no such payments had been received through debit or credit card machines since 2014 and the respective account had already been closed. Secondly, the size of the shop not more than 300 sq ft. Thus, it appears that the complainant does not qualify the conditions of Tier-1 Retailer. Therefore, the order for compulsory registration and show cause notice to impose penalty of Rs 0.500 require fresh reappraisal in the light of the documentary evidence. However, the complainant already has submitted application for deregistration vide letter dated March 27, which is pending for disposal.
The FTO order declared that passing impugned compulsory sales tax registration order and issuing show cause notice for imposing penalty when the complainant does not qualify for “Tier-1 Retailers” tantamounts to “maladministration” in terms of Section 2(3)(i) & (ii) of the FTO Ordinance.
The FTO has directed the FBR that the Commissioner-IR, Zone 1, RTO-1 Karachi should dispose of deregistration application on its merit in accordance with law after affording proper opportunity of hearing to the complainant.
