Refund claims' settlement: deliberate delay won't be tolerated, FTO tells FBR

Federal Tax Ombudsman (FTO) Dr Muhammad Shoaib Suddle has directed the Federal Board of Revenue (FBR) to write to all field units that deliberate delay in settling genuine refund claims shall not be tolerated and concerned tax officials shall be held personally responsible for any such act of gross maladministration.
It was learnt here on Monday that the FTO Dr Suddle had taken serious notice of unlawful borrowing from Large Taxpayer Units (LTUs) to show higher than real collection of the FBR for 2010-2011 and there is around 270 percent increase in the amounts of pending refunds plus drawback since June 2009 to June 2011.
FTO has categorically conveyed to the FBR that the systemic maladministration also results in artificially inflated figures of revenue collection. There are reasons to believe that disbursement of legitimate refunds is purposefully held back by the field units in pursuance of the 'modus operandi designed by the FBR for reporting higher than real net collection of revenues.
According to the FTO's instructions to the FBR, the FTO Secretariat has referred to the suo motu investigations being held in the office of the Federal Tax Ombudsman in complaint No 101/ISD/Suo-Motu(06)/962/2011 involving, inter alia, systemic delay in payment of refunds to the claimants and to state as follows:
Firstly, the Federal Board of Revenue has, vide its C.No 5(33)IR-Jud/2011 dated February 16, 2012, communicated the outstanding amounts of refunds and duty drawback pending on the June 30, of 2009, 2010 and 2011 which revealed the following position: Secondly, it is evident from the figures of pending refunds that the outstanding pendency has exponentially increased from little over Rs 53 billion as on June 30, 2009 to about Rs 144 billion as on June 30, 2011. That reflects around 270 percent increase in the amount of pending refunds plus drawback since June 2009 to June 2011.
Thirdly, the exorbitant increase in pendency of outstanding refunds adversely affects the liquidity position of businesses, industries and exporters by way of blocking their capital and increasing the associated costs. It also damages taxpayers' faith in the revenue collection system.
Fourthly, the systemic maladministration also results in artificially inflated figures of revenue collection. There are reasons to believe that disbursements of legitimate refunds are purposely held back by the field units in pursuance of the 'modus operandi designed by the FBR for reporting higher than real net collection of revenues.
Sixthly, the phenomenon obviously being in contravention of the FTO Ordinance needs to be curbed forthwith. Liquidating the pendency of refunds and drawbacks of old cases sooner rather than later is also FBR's statutory obligation under Section 7 of the Federal Board of Revenue Act, 2007, sources said.
The FTO has further directed the FBR to intimate the latest details about aggregates of outstanding refunds and drawbacks in respect of income tax, sales tax and customs by May, 5, 2012, together with a schedule for liquidation of pending claims. The timelines so fixed shall strictly be monitored and a monthly progress report about reduction in pendency submitted to this Secretariat by the 5th day of each month.
FBR is also required to write to all field units, under intimation to the FTO Secretariat, that deliberate delay in settling genuine refund claims shall not be tolerated and concerned officials shall be liable to any such act of gross maladministration, sources added.