In a major move to facilitate sales tax refund applicants, Federal Tax Ombudsman (FTO) Mushtaq Ahmad Sukhera has asked the Federal Board of Revenue (FBR) to consider amending relevant section of the Sales Tax Act, 1990 for inclusion of a specific period for deciding refund applications.
According to an order issued by the FTO here on Friday, the complaint has been examined in the light of written and oral submissions of the parties and documents available on record. The authorized representative (AR) committed to providing documents as identified by the department. The departmental representative (DR) undertook to finalize the matter upon submission of requisite information by the complainant. It is evident that the matter has been pending before the department for the last nine months but since no timeline is provided in the Act for passing orders on refund applications, no case of maladministration is made out.
In view of supra, the department is advised to finalize the proceedings expeditiously and preferably within 45 days. The FBR is also advised to consider for amending relevant Section of the Act, for inclusion of a specific period for deciding refund applications.
The complaint has been filed in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against MCC Appraisement (West) Karachi (the department) for delay in the refund of customs duty and additional customs duty which the complainant paid due to inadvertence at the time of importing 7 consignments when he failed to claim exemption under the fifth schedule of the Customs Act, 1969 (the Act) or SRO 1178(1)/2015 dated 30.11.2015.
The complaint was referred for comments to the secretary Revenue Division in terms of Section 10(4) of the FTO Ordinance. In response, MCC Appraisement (West) Karachi filed comments informing that Pioneer Cables Limited imported consignments of polyethylene viscole from Austria and got released 7 GDs after the payment of CD @ 11 % and additional 1 %.
Furthermore, at the time of filing of GDs, the importer neither claimed any benefit of "5th Schedule" of the Act nor that of SRO 1178(1)/2015 dated 30.11.2015. He filed for refund of overpaid customs duty and additional customs duty for the above mentioned 7 consignments.
The complainant replied that since he was claiming refund for customs duty only, therefore, he needs not to produce documents regarding claim of input tax adjustment for sales tax. However, since under the provisions of the Customs Act, refund can only be sanctioned on proving that the incidence of customs duty has not been passed on to the end consumer. It was also informed by the department that M/s Pioneer Cables Limited has not submitted the sufficient reasons, confirming their stance that, the incidence of customs duty and other levies have not been passed on the buyer or consumer. The complainant has tried to prove that incidence of overpaid duty and taxes have not been passed on to buyer or end consumer by submitting the certification made by M/s Rehman Sarfraz Raheem Iqbal Rafiq Charted Accountants Karachi. Whereas Section 19A of the Act does not prescribe such certificate by chartered accountants. The department needs to examine its record to determine the input to output ratios of the imported raw materials and the finished goods manufactured there from, as the unit of measurement in GDs is mentioned in kilogram whereas, in sales tax invoices, it is provided in meters and determine whether the incidence of duties and taxes has been passed on the final consumer. It is, therefore, requested that the importer may be asked to provide all relevant documents to the department for making these calculations and deciding whether refund is due or not.
During the hearing, the authorized representative averred that complete documents have been submitted to the department and in case any specific document is required, the same may be identified and intimated. The departmental representative averred that the complainant has not submitted sufficient information to ascertain the admissibility of refund. The departmental representative was accordingly directed to inform the complainant about specific information/documents required to finalize the claim, Mushtaq Ahmad Sukhera added.
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