Sales tax refund process: FTO underlines need to solve maladministration problem

Federal Tax Ombudsman (FTO) has found the issue of pending sales tax refund claims reconciled, but stressed the need of solving maladministration problem in the sale tax refund process.
According to textile sources, the FTO in reply to complaints lodged by Pakistan Apparel Forum and Site Association of Industry against the Revenue Division, Government of Pakistan regarding unsettled issue of sales tax refund claims, has showed concerns over the maladministration, which is causing problems in expeditious disposal of the refund claims.
Both the associations had filed a list of sales tax refund claims with the FTO under section 10 of the Sales Tax Act 1990 on the basis of long standing pending tax cases. Pakistan Apparel Forum had submitted 160 pending claims and SITE association 45 claims amounting to Rs 974.642 million and Rs 288.322 million, respectively, sources said.
In response to the complaints, the FTO conducted a probe to ascertain the facts and status of the issue, they said. They added that the Revenue Department stated the Regional Tax Office had sanctioned 70 cases against the total 169 cases of Pakistan Apparel Forum. Whereas, it said, 90 percent claims of the Site association had already been settled.
However, the department still wanted the associations to provide it with the complete monthly details of the refund claims along with supporting evidences to settle the issue as per the law, sources said. They said in the case of Pakistan Apparel Forum, the department had accepted 67 claims were pending amounting to Rs 410.215 millions but the forum said the number of claims were 77 with outstanding amount of Rs 559.307 million. Similarly, they said, after reconciliation meetings, the claims of Site association reduced to 15 with an amount of Rs 57.997 million due to be refunded.
In its findings, the FTO said that the maladministration had made the process difficult for disposing of the sales tax refund cases, despite the issue was settled after the intervention of the office. The FTO recommends the Federal Board of Revenue (FBR) to direct chief commissioners to clear all the more than two months old pending sales tax refund claims as per law within four weeks.
The office has asked FBR to put in place an efficient and fool-proof mechanism of expeditious disposal of bona fide refund claims. The office has also asked Pakistan Apparel Forum and Site Association to file a monthly statement with registrar FTO on more than two months old pending claims with a copy to the concerned chief commissioner to enable the office to monitor this issue on a regular basis. Meanwhile, in a letter to the FTO, Pakistan Apparel Forum has assured it to follow the instructions for filing a report on a monthly basis with the registrar of the office regarding more than two months old pending sales tax cases.