MULTAN: Tax authorities has rejected tax refund claims filed by South Punjab cotton processor’s despite initial approval.
According to sources, a cotton processor faced the rejection of their input tax refund by the sales tax department, despite initially securing approval for it. The rejection came after the allotted timeframe had elapsed.
Reportedly, the tax authority continuously raised objections to the refund of input tax, citing various concerns identified by the Computerized Risk-based Evaluation of Sales Tax (CREST). Subsequently, a show cause notice for the refund’s rejection was issued six years after the relevant period, and an assessment order was later upheld by the Commissioner Inland Revenue Appeals.
In response, the taxpayer contested the show cause notice, arguing that any exercise of jurisdiction by an executive authority beyond the period stipulated by statute is illegal. The taxpayer emphasized the importance of adhering to the timeframe set by special statutes for conducting proceedings or actions.
The taxpayer maintained that the issuance of the show cause notice for the rejection of the input tax refund beyond the initial five-year period was impermissible. They stressed that compliance with this timeframe was a mandatory requirement.
Furthermore, it was noted that the department had initiated contravention proceedings in absentia, resulting in the issuance of an assessment order that the taxpayer subsequently challenged.
The taxpayer also pointed out that despite having complete documentation to support their claim for a refund associated with zero-rated supplies, the department chose to act only after many years had passed, which they deemed unjustified.
