Placement of taxpayers in 'inactive list': SRB protests with FBR

The Sindh Revenue Board (SRB) has strongly protested with Federal Board of Revenue (FBR) against placement of taxpayers rendering services in Sindh province in the "inactive list", and demanded to revive their old status without any further delay. Official sources told Business Recorder that SRB has expressed its firm protest with FBR in black and white and demanded to revive the old status of taxpayers, placed in "inactive list" without further delay.
In a letter to FBR sent a few days back a copy available with Business Recorder, the SRB stated that after promulgation of Sindh sales tax on services act 2011, and consequential repeal of Sindh sales tax ordinance 2000, the service providers operating in Sindh province have got themselves registered at Sindh Revenue Board and are discharging their sales tax liability under the aforesaid act of 2011.
However, several of these taxpayers, who are exclusively operating in the province of Sindh and not filing returns with FBR, have complained/reported that they have been placed by FBR on the list of inactive taxpayers, probably for the reason that they are not filing any sales tax returns with FBR, the letter said.
The recipients of services, when claim input tax adjustment, of the tax paid to the service providers, are denied this transaction benefit as service providers are shown inactive and the e-filing system of FBR treats these SRB registered persons as inactive and rejects input tax claimed against their invoices, despite the fact that they are filing returns and discharging their liability with SRB, the letter added.
It highlighted that the definition of "input tax" as given in section 2 (14) of the sales tax act 1990, includes the provincial sales tax on services and hence all registered persons registered with FBR are entitled to claim credit for such input tax. Therefore, placement of persons exclusively registered with SRB on inactive taxpayers list is leading to denial of legal right of persons registered with FBR and also creating difficulties for persons exclusively registered with SRB. To resolve the said issue, a list of active taxpayers of SRB has been sent to FBR so that the same can be included in the list of active taxpayers with FBR and their status be revived.
Sources said that despite the recent visit to SRB head office by the FBR Chairman Salman Siddique, the officials of FBR are still not replying the letters of SRB on the priority basis and all the current issues including this, have been placed under the carpet as usual, the letter added.