LAHORE: The Federal Tax Ombudsman (FTO) has placed a comprehensive mechanism for the Federal Board of Revenue (FBR) to refund excess payment of sales tax deposited by over 9,000 customers on purchase of vehicles up to 1000cc.
According to the details of the case released by the FTO Office, a number of complaints were filed against FBR Islamabad and vehicle company, in terms of section 10 (1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) for charging sales tax @17% on purchase of vehicles up to 1000 cc as against 12.5%,which was the actual rate at that time. In this way the taxpayers were constrained to pay in excess of being legislated in the Finance Act 2021.
The Federal Tax Ombudsman examined the facts and legality of the complaints in terms of changes made vide Finance Act, 2021 in Sales Tax rate with change in definition of time of supply in the Sales Tax Act and it was held that amount paid in excess of 12.5% was refundable.
LTO Karachi was directed to refund the differential amount of tax between 17% and 12.5% to the complainants collected from them at the time of booking of vehicles.
President of Pakistan also upheld the decision of the FTO and rejected FBR’s plea in such cases.
Subsequently, on FTO’s efforts the company provided a list of 9,155 customers who had booked vehicles before 1st July, 2021 and paid sales tax at the rate of 17% but delivery to them was made after June 30, 2021. Therefore, in order to provide relief to all the customers under the law, an own motion investigation was initiated by FTO.
Resultantly, FTO while disposing of the investigations has devised a comprehensive mechanism of all related similar applications in the following terms: i) On filing of the complaint by any aggrieved person with any Regional Office of FTO, he shall be required to submit a copy of invoice/receipt of payment of the price and delivery to confirm genuineness of the refund claim. After their receipt, the complaint shall be processed by the concerned Regional Office without referring to FBR or LTO, Karachi for comments on each complaint application and forward the draft to the FTO Office by mentioning the Own Motion read with
The President’s order on approval and signing of the order, the same shall be dispatched by Headquarter to the Chief Financial Officer of the company, Karachi, the FBR and the Chief Commissioner-IR, LTO, Karachi for processing the claim.
On receipt of the Order, the company will furnish the refund claim under section 66 of the Sales Tax Act, 1990 to LTO Karachi in respect of refund due to the complainant along with the relevant invoice and proof of tax paid on the invoice.
On receipt of the refund claim from the company, LTO Karachi will process it as per law and issue refund to the company.
iv) The company will remit the amount sanctioned by concerned officer of LTO, Karachi to the complainant and submit proof of payment to LTO Karachi and to the concerned regional office of the FTO; as compliance of the order.