ISLAMABAD: Federal Tax Ombudsman (FTO) Chaudry Abdur Rauf has ruled that delay in issuance of refunds was tantamount to maladministration under Section 2(3)(ii) of the FTO Ordinance.
On his findings, in a refund claim case, FTO recommended the Federal Board of Revenue to direct the Chief Commissioner to issue refunds due, in accordance with law and report compliance within 30 days.
The findings and recommendations of the FTO came about due to a complainant M/s Radian Glass Private Limited Lahore versus the Secretary Revenue Division, Dealing Officer, Authorized representative and department representative. The complainant claimed refunds of Rs 2,146,222 for Tax Year 2012 as per application e-filed on 07.09.2013.
The refund arises as a result of excess deduction of tax at source under sections 148, 153, 231A, 231B, 234, 235 and 236 on imports, supplies, cash withdrawals from banks, registration of motor vehicle, payment of motor vehicle token tax, and in electricity and telephone/mobile phone bills.
As the refund claimed as per return filed/deemed assessment finalized u/s 120(1) of the ordinance was not processed/disposed of within the mandatory 60 days time-frame stipulated in the statute, the complainant sought the intervention of the Federal Tax Ombudsman.
The department had served no notice on complainant to furnish explanation or documentation to clarify the refund claimed. The department filed a reply raising a preliminary objection that as the complainant had an option under the statute to file an appeal before the first appellate authority in case of non disposal of his refund claim, there was no cause for the FTO to assume jurisdiction in the matter Reference is made to President’s decision in complaint No. 1176/2010 disposing of a departmental representation against the FTO’s recommendations.
Furthermore, the department also contends that it has been held by the President in his decision disposing of complaint No.1359-K/2001 that the FTO was not an appellate forum and was not competent to dilate on matters involving the interpretation of statutes.
Therefore, he could also not dilate on the merits or otherwise of statutory provisions governing issuance of refunds.
On merits the complainant contends that the delay in disposal of the refund claim was due to unforeseen delays in verification of the tax payment claims from the deducting authorities.
These delays were stated due to deficient documentation filed by the complainant and also due to discrepancies that have not been satisfactorily explained by him.
The department has referred to decision of the Wafaqi Mohtasib in complaint No.11/289/88118 (Gojra Textile Mills Limited) in which it has been held that the complainant is to blame equally for delays in verification of tax payment claims from the deducting authority.
The FTO heard both sides and examined available record. As held by the Appellate Tribunal Inland Revenue (ATIR) in reported judgment cited as 2010 PTD (Tribunal) 5193 the Commissioner Inland Revenue is under a mandatory obligation to, suo moto, dispose of any refund claim arising as per return of Income filed that has been deemed to have been assessed under section 120(1) of the ordinance within 60 days of the date of deemed assessment and order under section 170(4) of the ordinance must then also be passed within the 60 days timeframe.
If this is not done, a delay in the disposal of the refund claim is evident and compensation for the delay is payable under section 171 of the Ordinance, The deemed assessment under section 120(1) of the ordinance is an assessment order applicable ‘for all purposes of this ordinance’ (emphasis supplied) as stated in the statute itself.
The deemed assessment order is therefore relevant for refund purposes as well. This judgment of the Tribunal is binding on all departmental functionaries.
