ISLAMABAD: Federal Tax Ombudsman Abdur Rauf Chaudhry rejected the Transparency International Pakistan allegations levelled against FBR officials, alleging that these officials had bypassed rules and regulations of international supply tenders by granting GST zero rating to particular individuals, causing Rs 12 billion loss to national exchequer.
However, FTO Chaudhry ruled that the Federal Board of Revenue had failed to explain its legal stance in this regard, which was tantamount to maladministration.
In his judgment on the Transparency International Pakistan complaint, the FTO directed FBR to inform all its field formation offices about the legal status and rules and regulations regarding such matters so that there could be no confusion in such cases and a consolidated policy could be adopted.
FBR had taken the stance that through a letter written on April 13, 2010, the GST zero rating had been announced on international supply tenders and the facility was equally available to all supplies including local ones.
The reason explained by FBR for writing the letter was that according to Section (iv) of Fifth Schedule of Sales Tax Act 1990, the GST rate on contracts of international supply tenders was reduced to zero from 1997 to June 2012. Later, the duration, under some qualifications, was extended to 2013. However, the field formations could not be conveyed the development which caused confusion and problems for the field formations.
During the hearing of the Transparency International complaint, it came to light through information provided by various LTUs and RTOs that in the matter of supplies, a similar and linear policy was not being acted upon.
FBR maintained that the Transparency International Pakistan was informed of the situation through a letter to which neither it had sought any explanation, nor did it raise any objection.
Transparency International Pakistan maintained that some FBR officials, without taking into consideration the legal status of the letter written by FBR in 2010, acted under pressure and issued Orders-in Original. The agency submitted in its complaint that letters were dispatched to FBR twice for seeking explanation regarding the abovementioned matter but no reply was received.
On the other hand, FBR was of the view that it had responded to the agency in writing including the letter written to the FBR Chairman.
