Late delivery: FBR asked to direct car maker to pay KIBOR+ 3pc/annum

06 Jul, 2022

ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to direct a car manufacturer to pay KIBOR plus three percent per annum against late delivery of cars exceeding 60 days of initial booking.

Briefly, the complaint was filed against the RTO and the car manufacturer company. The vehicle was delivered to the complainant by the said company through its authorized dealer, after a delay of more than five and a half months against the permissible period of 60 days.

The rate of ST and FED was enhanced to 17 percent and 2.5 percent respectively, on vehicles exceeding an engine capacity of 850CC, vide Finance (Supplementary) Act, 2022, at the time of supply of vehicle, vide Section 5 of the Sales Tax Act, 1990 and was accordingly charged, complainant prayed that additional amount as sales tax and the FED should be refunded to him and action to be taken against the car manufacturer company for not meeting the delivery requirements.

During the hearing, complainant AR from the company and DR from Customs Wing appeared. The DR from the company stated that the provisional booking order, issued to the complainant by the company includes a customer declaration on behalf of the complainant, which reads, “I hereby declare that I have read and understood all terms and conditions contained on reverse side of this provisional booking form and accept the same in total without any reservation and undertake to abide by the same and amendment thereby”.

The complainant stated that he had suffered a lot of mental and financial hardship on account of extra financial burden due to delayed delivery of the vehicle which was finally delivered to him on 17.05.2022 and the company was responsible for the same.

He also invited attention to Revenue Division’s Customs Notification SRO 656(I)/2006 and its amending notification SRO 837(I)/2021 dated 30.06.2021, wherein, it had been clearly notified that the importer-cum-assembler or Original Equipment Manufacturers (OEM) shall pay KIBOR plus three percent per annum to the customer against delayed delivery exceeding 60-day of initial booking.

Arguments of both parties were heard and written, Tax Ombudsman observed that Car was provisionally booked on 27.10.2021 and was to be delivered within 60-day of provisional booking with the end date on 26.12.2021, much before the enforcement of the Finance (Supplementary) Act, 2022, the FED @ 2.5 percent was imposed on vehicles upto 1300cc. Similarly, an amendment regarding sales tax was made in the Eighth Schedule to the Sales Tax Act, 1990.

The FTO’s finding also stated that the car manufacturer company Karachi is bound and liable to pay to the Complainant KIBOR+ 3 percent per annum against late delivery exceeding 60 days of initial booking on the whole of the deposited amount.

Hence, Tax Ombudsman directed Chief Customs (Tariff & Trade), FBR, to direct company of Karachi, to pay to the complainant, compensation of KIBOR+ three percent per annum on whole of the deposited amount at the time of initial booking within a period of 45 days and submit statement details to EDB or IOCO, as per law and Member Customs (Ops) to issue directions to all Customs field formations to withdraw the facility of special exemptions/concessional rate of Customs duty at import stage provided vide para 1 of SRO 656(I)/2006 in case the due amount of KIBOR +3 percent is not paid to the Complainant by the company Karachi within the given time frame and as per law.

Copyright Business Recorder, 2022

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