Despite unchallenged recommendation issued by Federal Tax Ombudsman (FTO) in favour of an exporter regarding issuance of sales tax refund pending for the last 16 years, Federal Board of Revenue (FBR) has not fully implement the order.
A tax expert told Business Recorder that solely due to judicious intervention of the FTO for the first time in the history of FBR-Pakistan, sales tax refund has been partly issued after a lapse of 14 long years and Refund Payment Order (RPO) pertaining to the year 2000 was issued in year 2014 and 2015.
At the time when Prime Minister Nawaz Sharif would distribute cheques of sales tax refunds to exporters on August 23, such old cases of prolonged delays in issuance of genuine and admissible refunds should also be considered by the FBR.
It is learnt that for the last 16 years a senior citizen of 73 years of age (now deceased) was begging from pillar to post to seek his lawful right of refund from the FBR even after having unchallenged Recommendations issued by FTO, where neither any review has been preferred nor any representation has been filed before President. Part payment of refund was made while balance payment of GST refund and compensation due against long delay of 15 years remained unpaid by the FBR field formation solely to save their skin for this act of severe mal-administration of justice.
In this novel case refund claims were lodged in the Year 2001, verification process started by Sales Tax Department. In the year 2010 refunds were rejected by FBR on being time barred. In the year 2011, Lahore High Court in WP 9532/2012 intervened and vacates illegal order by RTO Lahore. In the year 2012, FBR itself decided that in this case question of time limitation cannot be raised and Refund Rules 2000 shall be applicable instead of Refund Rules 2006. In the year 2012, after the clear verdict from FBR some field officials demanded 50% of the refund as bribe otherwise another round of one decade. In year 2013 C.No 281/2013 was lodged with FTO. Crucial findings & recommendations of binding nature were issued in favour of taxpayer on 02.07.2013. Neither any review application was filed nor any representation was preferred before President
The case of sales tax refund is pending with the department for a long time. Despite passage of considerable time, the department had failed to fully implement the unchallenged recommendations, as the department had neither filed any Review nor any Representation against the FTO's order and as a consequence, it had attained finality.
In his findings/recommendations, it has been specifically observed by the FTO that in any case the statute requires no proof of physical transfer of goods from supplier to buyer as a precondition for making an input tax refund claim and blacklisting cannot be made effective retrospectively especially, when blacklisting is due to irregularities detected in the suppliers dealings with buyers other than the complainant. It is a well-settled principle of law that a past and closed transaction cannot be reopened especially when a beneficiary has no role in the irregularity committed by the other party.
FTO findings further states that there was a protracted delay in the disposal of the refund claims of the complainant. The complainant contends that all the required supporting documents were filed well in time which is evident from the fact that after receipt of the supporting documents the department started verification of tax payments by the concerned suppliers in the year 2001. The complainant was not served with a single notice intimating deficiencies in the documentation filed nor was his explanation sought on any aspect pertinent to the claims.
The complainant contends that after the documents were re-filed, the departmental functionaries started approaching him for payment of illegal gratification to dispose of the refund claims. Protracted delay in issuance of refund tantamount to maladministration and the delay also create the right to receive compensation under Section 67 of the Act. The FTO recommended FBR to ensure that due refund/compensation is promptly issued, as per law, with details of sales tax refund cases pending for more than one year across Pakistan and keep the conduct of ACIR and LDC under watch, the FTO order added.
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