The Federal Board of Revenue (FBR) will process refund claims through three channels on the basis of Risk management system (RMS) of FBR's Computerized System to divide claimants in three different categories for speedy refund payments. The three refund processing channels are: Fully Automated Sales Tax e-Refund System (FASTER), Expeditious Refund System (ERS) and Sales Tax Automated Refund Repository (STARR).
The FBR has issued S.R.O. 918 (1)/2019 to propose amendments in the Sales Tax Rules, 2006 here on Thursday. Under the new rules, the refund in respect of goods exported or supplied at zero-rate shall be paid to the extent of the input tax paid on purchases or imports that are actually consumed in such goods as exported or supplied, both in respect of claim by a manufacturer-cum-exporter or a commercial exporter.
After submission of refund claim, in the aforesaid manner, the same shall be processed by Risk Management System (RMS) of FBR's Computerized System. Based on the parameters in RMS, a refund claim shall be routed to any of the following three channels: Fully Automated Sales Tax e-Refund System (FASTER): The provisions related to this channel are prescribed in Chapter V-A.
Expeditious Refund System (ERS): The claims filed by the manufacturercum-exporters under section 10 of the Act that do not fulfil parameters of FASTER channel and the same are considered as involving medium risk by RMS shall be routed to ERS. The RPO for verified amount shall be generated and forwarded to CSTRO for payment.
Sales Tax Automated Refund Repository (STARR): The claims that do not fulfill criteria for both FASTER and ERS channels shall be processed through STARR in the manner as provided in rule 29.
For the refund claims processed through FASTER or ERS, the part of the
refund claim that is not verified or not found admissible shall be subjected to system validation checks every week and RPO shall be generated for the amount found valid during each validation check. After every validation process, the information regarding RPO generated, if any, as well as the objections shall be communicated by the system to the refund claimant and also to the concerned RTO or LTU for information. RPO so generated shall be communicated to the State Bank of Pakistan for payment in the aforesaid manner. After eight validation checks, including the initial one, if any amount still remains un-cleared, the same shall then be processed under STARR channel, FBR said.
The FBR has specified that there shall be established a 'CSTRO' under the Federal Board of Revenue for centralized payment of all refund amounts as due under the Sales Tax Act. There shall be established a Refund Division, headed by an officer, not below the rank of Assistant Commissioner, herein after referred to as officer-in-charge, duly supported by audit staff referred to as processing officers, to examine, process and settle the refund claims filed under these rules. There shall be established a Post Refund Division in each RTO or LTU headed by an officer not below the rank of an Assistant Commissioner to audit the refund claims processed and sanctioned by the Refund Division, FBR said.
For all the refund claims under section 10 and 8B of the Act, for the tax period July, 2019 and onwards, the data provided in the monthly return shall be treated as data in support of refund claim and no separate electronic data shall be required. The amount specified in column 29 of the return, as prescribed in the form STR-7, shall be considered as amount claimed for the purposes of claim under section 10 of the Act, once the return has been submitted along with all prescribed annexures thereof:
Provided that, in case of claims arising from zero-rated supplies including exports, the claimant shall be able to submit his return without Annex-H and the same may be filed separately at any time but not later than one hundred and twenty days of submission of the return without Annex-H. The date of submission of Annex-H shall be considered as the date of filing of refund claim. In other cases of refund, the date of submission of form STR-7A shall be considered as date of submission of refund claim and the same shall be filed within one hundred and twenty days of submission of relevant return: Provided further that in case of a commercial exporter, the claim shall be filed in the aforesaid manner within one hundred and twenty days, either after submission of the return without Annex-H, or after the date of issuance of BCA, whichever is later:
Provided also that the period of one hundred and twenty days, as aforesaid, may be extended for a period not more than sixty days, by the Commissioner having jurisdiction, if the claimant so requests, thereby providing reasons justifying the delay in submission of claim.
The registered person claiming refund in the aforesaid manner shall maintain
and keep all the paper documents relating to the refund claim, such as invoices, credit notes, debit notes, goods declarations, bank credit advice, banking instruments etc. in his office and may not submit the same along with the refund to the concerned Regional Tax Office or Large Taxpayers' Unit. The same shall be presented to the said offices if so required by the officer-in-charge for processing of the refund claim or post-refund scrutiny.
For RPOs, received electronically, through ERS or STARR channels, the officer in-charge of CSTRO and the treasury officer in CSTRO, as designated by the Board, shall sign the crossed cheque in favour of the claimant as signatory and co-signatory. CSTRO shall issue the cheque for the sanctioned amount as mentioned in the RPO and shall mail the same through courier to the registered address of the claimant.
The CSTRO shall also prepare a statement of payment advice of all cheques, for each day on which a cheque or cheques are issued, indicating the declared bank account of the claimant and the same shall be sent to the State Bank of Pakistan duly signed by the signatory and co-signatory.
Where any cheque is returned back by the State Bank of Pakistan or the claimant due to any reason, the treasury officer shall cancel such cheque, if required, and attach such cancelled cheque with the respective counter-foil of the cheque-book.
In lieu of procedure stated in sub-rules (1) to (3) above, the CSTRO may electronically transfer the details of approved RPO or RPOs to State Bank of Pakistan for direct credit to the declared bank account of the claimant and intimation of such advice shall be given to the claimant."
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