Taxpayer urges FTO to initiate action against taxmen for failing to implement recommendation

ISLAMABAD: In an unprecedented case, a taxpayer has filed an application before the FTO for starting defiance proceedings against the concerned tax officers for not implementing the recommendations of the FTO, whereas, the FTO record indicates that the complaint has borne fruit.

The background facts are that a Lahore-based taxpayer had filed a complaint for a refund of excessive sales tax collected by Customs. In the order of the FTO dated 12 March 2020, it is mentioned that the department vide letter dated 03 March 2020 has informed that a sales tax refund has been sanctioned to the complainant taxpayer.

It was further mentioned in the FTO’s order that the grievance of the taxpayer has been redressed by the department with the intervention of the FTO office and the complaint having borne fruit is accordingly disposed of and the file is consigned to record.

However, as per the representation of the taxpayer despite of lapse of more than three years and dozens of follow-up visits the refund payment has not been made.

When contacted, the counsel of the taxpayer Shahid Jami explained that the application for starting proceedings for defiance of recommendation as well as contempt was filed on 17 March 2023 and no action has been initiated by the FTO Secretariat as they are in a fix what to do as FTO order dated 12 March 2020 says that refund has been sanctioned and the file is closed. Jami observed that the file was closed prematurely in disregard of the procedure of actual payment of the refund.

As per Rule 34A of the Sales Tax Rules 2006 where excess sales tax has been collected by the Customs at the import stage the concerned Collector will sanction sales tax refund and send the sanction order to the concerned Commissioner of Inland Revenue for actual payment. Under sub-rule (5) on receipt of such sanction order from the Customs Collectorate by the concerned officer-in-charge in RTO or LTU, he shall make the entry of the sanction order in the Computerized System, and after obtaining permission of the Commissioner concerned, generate RPO of the sanctioned amount for electronic transmission to CSTRO.

Jami stated that though Collector customs, Karachi sent the refund sanction order to the Commissioner Inland Revenue, Zone II, LTO, Lahore yet the Officer In charge of the Refund Division has not generated the RPO for electronic transmission to CSTRO with the result that the taxpayer has not been paid refund amount even after more than three years of the order of the FTO stating that complaint has borne fruit and closed the file.

Jami observed that advisers of the FTO being senior retired officers of the very department should be well versed with the applicable law and should not have closed the FTO file until obtaining confirmation from the taxpayer that the refund amount has been credited to the bank account.

Jami urged that the FTO should take suo motu notice and revise his order under Section 14(8) of the FTO Ordinance and initiate defiance and contempt proceeding against the concerned officer at LTU, Lahore for delaying for over three years payment of sanctioned refund. He further urged that CPD short courses should be held for the advisers of the FTO to enhance their competence and to ensure uniformity as conflicting orders are passed on the same issue.

Copyright Business Recorder, 2023