ISLAMABAD: Federal Board of Revenue has failed to execute the Federal Tax Ombudsman’s proposals regarding submission of details of sales tax refund cases which have been pending for more than twelve months.
The FTO, on a complaint filed by a citizen Muhammad Rizawan, ordered FBR to submit report on sales tax refund cases across the country and also ordered to keep the conduct of the ACIR and LDC under watch.
It is observed by FTO Dr Suddle that in any case the statute requires no proof of physical transfer of goods from supplier to buyer as a pre-condition for making an input tax refund claim and blacklisting cannot be made effective retrospectively especially when blacklisting is due to irregularities detected in the suppliers dealings with buyers other than the complainant. It is a well settled principle of law that a past and closed transaction cannot be reopened especially when a beneficiary has no role in the irregularity committed by the other party.
According to a Lahore-based tax lawyer, the FTO’s suggestions, if implemented, could help address the grievances of taxpayers. He said the FTO’s recommendations should have been implemented within 30 days period; otherwise, the act would be punishable with contempt under section 16 of the FTO Ordinance, 2000 read with Federal Ombudsmen Institutional Reforms Act, 2013.
As per the FTO’s findings, there was a long delay in the disposal of the refund claims of the above-mentioned complainant, who challenged that all the required documents were filed well in time which was evident from the fact that after receipt of the supporting documents the department started verification of tax payments from the suppliers concerned in the year of 2001. Verification letters issued by the then Assistant Collector, Sales Tax Refund (Commercial Exporter), Lahore, to Assistant Collector, Sales Tax Verification Cell, Lahore, in the year of 2001, specifically letter Nos. 2340 dated 19.03.2001 and 2818 dated 13.07.2001 are self-explanatory.
The complainant filed a Writ Petition No 9532/2012 in the Lahore High Court challenging the departmental rejection of the refund claims. The High Court vide order dated 16.04.2012 directed the Secretary (Exemption) FBR to pass a speaking order after observing that the rejection letter was not a speaking order and was in violation of Section 24A of the General Clauses Act 1897 and Article 10A of the Constitution.
The complainant contends that departmental functionaries started approaching him for payment of illegal gratification to dispose of the refund claims.
