ISLAMABAD: President Asif Ali Zardari has dismissed a representation filed by the Federal Board of Revenue (FBR) against the Federal Tax Ombudsman (FTO), rejecting the tax authority’s demand that taxpayers provide surety bonds before receiving refunds arising from appellate orders.
According to a news report, the case stemmed from complaints filed by a foreign-based company against the Corporate Tax Office in Islamabad over failure to implement appellate orders for tax years 2007 and 2009.
The taxpayer’s refunds remained withheld for nearly a decade despite appellate relief being granted in its favour.
The FTO had directed the concerned commissioner to implement the appellate decisions and process the pending refund applications.
FBR challenged the ruling before the President’s Secretariat, arguing that references pending before the Islamabad High Court automatically suspended implementation of the appellate orders.
The tax authority also argued that the taxpayer should be required to furnish a surety bond before release of the refund, citing an earlier presidential precedent.
However, the President rejected both arguments.
On the issue of surety bonds, the Presidency noted that although such a condition had been imposed in one earlier case, it had not been applied in numerous similar cases decided over the past two years.
The Secretariat said FBR’s reliance on that precedent was inconsistent and lacked merit.
Regarding the pending High Court references, the Presidency upheld the FTO’s position that no stay order or restraining order had been issued against the appellate decisions.
It further clarified that no provision under the Income Tax Ordinance, 2001, automatically suspends implementation of an appellate order merely because a reference has been filed before a higher court.
The Secretariat ruled that FBR’s failure to implement the appellate orders within the two-month statutory period under Section 124(4) constituted delay, neglect and inefficiency amounting to maladministration.
