On the intervention of the Federal Tax Ombudsman (FTO), the Federal Board of Revenue (FBR) will have to pay compensation for delayed payment of sales tax refund in a case where the compensation exceeded the principal amount of refund involved and settled the case pending since year 2000.
A tax expert told Business Recorder here on Thursday that solely on the interference of the office of FTO for the first time in the history of FBR, sales tax refund has been issued after a lapse of 14 years and Refund Payment Order (RPO) for Rs.6.2 Million has been issued by the RTO-I Lahore.
When contacted, Waheed Shahzad Butt who represented the case before the FTO told this scribe that the office of the FTO has proved to be of great help in redressal of genuine grievances and hardship caused to the aggrieved taxpayers of Pakistan as a result of maladministration of justice and corrupt practices on the part of the Revenue Division Employees. For the last one decade a senior citizen of 71 years of age is begging from pillar to post to seek his lawful right of refund from the FBR, even after having unchallenged Recommendations by the FTO.
He added that under Sales Tax Act, 1990 where a refund due is not paid within the time specified from the date of filling the refund claim, it shall be paid to the claimant in addition to the amount of refund due to him, a further sum equal to KIBOR per annum of the amount of refund due. Sources further added that in a very crucial issue of highhandedness of FBR Lahore functionaries for seeking lawful right of refunds, various representations were moved to FBR and later the matter was forwarded to the FTO for intervention to seek legal right of refund/compensation due to long delay in issuance of refunds for tax periods November 2000 to September 2001. The FTO recommended FBR to submit details of sales tax refund cases pending for more than one year across Pakistan and monitor the conduct of IRS officers.
Sources further said that earlier on the issue of refund former FTO Dr Suddle had directed the 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. FTO also criticised the FBR for piled-up tax refund cases and observed the 'colonial' hangover tradition plagued public bureaucracy and FBR had exceeded the limits of deficiencies, which pushed the refund cases into a long backlog.
Tax expert added that the tax officials responsible for delay in payment of refund and compensation should be held personally responsible and the amount of compensation should be recovered from salaries of IRS officials of RTO-I Lahore involved in the matter. The complainant contends that departmental functionaries started approaching him for payment of illegal gratification to dispose of the refund claims. The protracted delay in issuance of refund tantamount to maladministration and the delay also created the right to receive compensation under Section 67 of the Act. The FTO recommended the FBR to ensure that refund/compensation due is promptly issued, as per law, submit details of sales tax refund cases pending for more than one year across Pakistan and keep conduct of ACIR and LDC under watch, FTO order added.
Tax lawyer further added that in a way in legal semantics the term 'Zero Rated' provided in section 4 of the Sales Tax Act, 1990 means a 'Nil' liability created by the legislature itself in the shape of this statutory provision. It is something stronger than the exemption awarded either by the FBR or the Federal Government under section 13. The goods exported are totally immune from the sales tax and once it is established that goods were exported, there is no question of taking any proceedings against the taxpayer but the attitude of RTO-I Lahore functionaries speaks louder than the intention of the legislature provided in the statue book i.e., Sales Tax Act, 1990. All instructions/directions issued by the FBR are binding on all functionaries but they had miserably failed to follow the same.
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