There are emerging issues between Sindh Revenue Board and Punjab Revenue Authority on the imposition of sales tax, however, they are not legally authorised to file complaints with Federal Tax Ombudsman (FTO) Office Islamabad. One emerging issue is the levy of sales tax on telecommunication services with SRB taxing the service on the basis of origin of call only while the PRA has legislated taxing the service on the basis of origin as well as termination of calls.
Although the basic understanding has been reached between the PRA and telecom companies that the sales tax would be collected on the basis of origination of call, yet the leverage is with the concerned authorities. Another issue is related to the section 4 of the Punjab Sales Tax Act 2012 regarding concerns of the taxpayers rendering services in Sindh but belong to Punjab. This is creating friction between the two requiring a forum where they can lodge their complaints.
However sources told Business Recorder here on Saturday that the taxpayers registered with the SRB and the PRA would have to file their complaints against any maladministration with the provincial ombudsmen. These provincial ombudsmen are presently handling cases of duties/provincial levies including sales tax and services. There is no specific Tax Ombudsman in provinces but the provincial Ombudsmen can handle sales tax on service related cases which is the domain of the provinces.
The question arises whether there is any mechanism and co-ordination among the provincial ombudsmen for resolution of inter-provincial issues involving both the service providers of the SRB and the PRA. At present, there is no such legislation in their respective provincial laws. The legislators need to be look into this important aspect.
The SRB and PRA have been established under their respective provincial laws. The provincial governments of Sindh and Punjab have established the SRB and PRA respectively. The Sindh sales tax on Services Act 2011 has repealed the Sindh Sales Tax ordinance 2000 and has empowered the Sindh Revenue Board for management, administration and collection of Sindh sales tax on services. Similarly, the Punjab Assembly had passed the Punjab Sales Tax on Services Act-2012 (PSTSA) on June 21, 2012. By virtue of this enactment, Punjab Sales Tax Ordinance, 2000 would stand repealed. The Punjab Assembly has also passed Punjab Revenue Authority Act, 2012 to administer and enforce sales tax on services rendered or acquired in Punjab.
As both the SRB and the PRA are being administered by the respective provincial governments, the registered service providers cannot file their complaints with the FTO Office. The existing laws of the SRB as well as the PRA have also not allowed the service providers of Sindh and Punjab to file their services related complaints with the FTO Office.
Sources said that the FTO can hear cases pertaining to the federal tax matters and the FTO Office cannot entertain cases relating to the provincial tax disputes. The powers and jurisdiction of the FTO office is related to the federal tax issues excluding services sectors which are being administered by the SRB and the PRA. The core function of Federal Tax Ombudsman revolves around the disposal of complaints of tax maladministration promptly, justly, fairly, independently investigated, and to rectify any injustice done to a taxpayer by actions of the tax employees of Federal Board of Revenue (FBR)/Revenue Division. Under the jurisdiction, functions and powers of the Federal Tax Ombudsman, the office can investigate any allegation of maladministration on the part of the Revenue Division or any Tax Employee. The government had established the Federal Ombudsman in 1983 in accordance with the requirements of the Constitution of the country.
Thus, the FTO is directly related to the tax matters of the FBR and provincial Ombudsmen can handle tax disputes pertaining to the complaints of the SRB and the PRA etc, sources added.
Under section 65A of the Sindh Sales Tax on Services Act, 2011, Government may appoint Ombudsmen or may assign duties and functions of ombudsmen to any officer retired or serving not below the rank of BS-21 officer to act as an ombudsmen with regard to the redressal of grievances of the tax payers or the registered persons for inordinate delays, maladministration within the field offices of Sindh revenue Board for delays, ineptitude or for misconduct, and may advise the Board to adopt corrective measures for implementation of such advice. Government may frame rules in consultation with the SRB for implementation of the provisions, section 65A of the Sindh Sales Tax on Services Act, 2011 added.