Federal Tax Ombudsman (FTO) Office has directed Federal Board of Revenue (FBR) to immediately issue admissible sales tax refund of Rs 5,155.782 to a taxpayer who has been harshly treated by the tax department for blocking of his refund claim over one year period.
According to a communication of Muhammad Munir Qureshi Advisor Incharge Regional Office FTO Secretariat Lahore to the FBR in the matter M/s Everfresh Farms Pvt Ltd, the FTO has directed the FBR to implement the findings/recommendations of the relevant FTO order dated Feb, 11 2016.
FTO Office directed Chief CSTRO FBR that the FTO has held the department guilty of maladministration on account of its failure to refund sales tax amount of Rs 5,155,782/- arising as a result of demand wrongly raised that was subsequently rectified/ deleted by the Dept u/s 57 of the Sales Tax Act 1990 vide order dated 20-08-2015 passed by the DCIR Unit-5 Zone-2 RTO-I Lahore. E-RPO has been generated on 25-07-2016 for Rs 5,155.782/- and the matter is now with the Chief CSTRO FBR Islamabad for issuance of cheque.
FTO Office understands that refund claims are routinely queued by FBR 'CSTRO' as per their date of receipt in the office. However complainant's case appears to warrant treatment other than that routinely accorded to normal refund claimants. This is due to the reason that complainant's assessment wherefrom the sales tax demand arose has been found to be erroneous/ defective and was cancelled/deleted/rectified by the department taking cognisance of the patent illegality of the departmental action. Earlier, the Dept had resorted to highly coercive action to realise tax demand raised by attachment realisation of said amount from the Company's Bank Account. The tax demand included amount of Rs 2,577,891/- being penalty levied u/s 33(13) of the STA for alleged tax fraud that was subsequently found to be completely baseless.
Looking to the facts and circumstances of the case it is all too evident that the complainant has been treated very harshly without any justification whatsoever and the Dept is duty bound to refund amount wrongly / illegally realised through attachment of his bank amount at the earliest without subjecting him to placement in queue which is meant for refunds arising as a result of assessments made routinely. Manual RPO was issued by Dept in this case on 10-03-2016 but the same was not accepted by Chief CSTRO who demanded that e-RPO be generated The Dept took more than four months to issue e-RPO for no fault of the taxpayer/complainant, FTO office said.
The FTO's recommendation for settlement of complainant's refund claim within 30 days made in his order dated 11-02-2016 may be implemented in letter and spirit forthwith and compliance reported to the FTO office, FTO Office directions to Chief CSTRO added. Muhammad Afzal, a Lahore-based tax consultant informed the FTO office that the bank account of the company was attached in May 25, 2015. Now more than one year has been elapsed but the company has not been reimbursed the said amount.
The DCIR passed an assessment order of Rs 5155782 dated 17.04.2015 recovered this amount from our bank account on 25.05.2015 (38 days after assessment order). The same DCIR passed a rectified assessment order u/s 57 against the original order & vacated his show cause order as well as deleted all liability against our unit as on 20.08.2015 (87 days after bank attachment). But the department did not reimburse us the amount withdrawn from our bank account, tax lawyer said.
The company resorted to FTO for justice and the FTO advised the department in his recommendations to settle the refund within 30 days and report compliance within one week thereafter, through his order dated 11.02.2016. But to this date, department has not implemented upon the findings/ recommendations of the FTO. Resultantly, the company's business has suffered a great deal by the withdrawal of such a material amount from our business. It was purely a mistake on the part of department whose penalty our unit is paying for last one year, Muhammad Afzal added.
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