Revolving bank guarantee required with refund claims: FBR amends sales tax Rules 2006

The collectors of Large Taxpayer Units (LTUs) would now pay 50 percent of the sales tax refund to the large taxpayers and big corporate entities within five working days. Collectors of LTUs would pay the remaining 50 percent of the refund after processing of refund documents.
Previously, collectors were legally bound to pay 100 percent refund to companies registered with the LTUs within three days period. The FBR has amended Sales Tax Rules 2006 through an SRO.76 (I)/2009 issued here on Thursday.
According to the new procedure for the processing of refund claims in LTUs, the refund claimant registered in a Large Taxpayer Unit, desirous of availing facility, shall file a refund application to the Collector of Sales Tax having jurisdiction along with the following documents:
An undertaking affirming the accuracy and genuineness of refund and a revolving bank guarantee, valid for at least 120 days issued by a scheduled bank, to the satisfaction of Collector of Sales Tax (Large Taxpayers Unit), of an amount not less than amount of the refund claimed. Where the claimant has filed documents, the Collector shall process and allow fifty percent of the refund of input tax within five working days of receipt thereof.
Within fifteen days after the sanctioning of the claim the claimant shall file a complete refund claim along with the supportive documents and soft copy on the prescribed format, which shall be scrutinised in the Large Taxpayer Unit, and objections, if any, related to the refund claim shall he conveyed to the claimant within seven days of the receipt of the claim.
Subject to the provisions of this rule, the refund claim shall be finalised by the LTU within fifteen days of the filing of complete refund claim. Where an amount of refund on account of input credit document or otherwise is unverified, the Collector may require extension in bank guarantee covering such amount as deemed fit.
In case any amount already sanctioned and paid is found inadmissible or remains unverified after six months of the bank guarantee, the same shall be recovered within seven days by encashment of the bank guarantee to the extent of inadmissible amount besides other legal action under the relevant provisions of the Act and rules made thereunder.
The Collector of Sales Tax shall notify an officer, not below the rank of an Assistant Collector, as focal person in the LTU to liaise with other Collectorates regarding the problems or objections encountered on account of purchases and supplies of the refund claimant for speedy solution thereof, new rules added.