ISLAMABAD: The Federal Tax Ombudsman (FTO) has expressed serious concern that Federal Board of Revenue’s SRO 350(I)/2024, issued to curb the menace of fake/flying invoices, practically resulted in non-filing of sales tax returns, disruption of supply chain mechanism and blockage of business operations.

Taking serious notice of hardships caused to sales tax registered persons in submission of sales tax, the FTO is shocked that SRO 350(I)/2024 has caused injustice to the sales tax taxpayers and directed the FBR to remove complexities arising out of this notification for buyers and sellers.

The FTO has directed the FBR to issue guidelines and clarificatory instructions to the Registered Persons how to navigate the complexities arising out of SRO 350(1)/2024.

The FTO has further directed the FBR should direct Member (IR-Operations), and Member (ST-Policy) to update Iris in line with SRO 1130(1)/2024 without further delay and explore the possibility of further facilitation in filing of sales tax returns by the buyers as well as sellers so far as possible and examine the issue of extension in grace period of six days seriously as already allowed to the suppliers.

The FTO’s order revealed that the perusal of problems/difficulties faced by the complainants in juxta position with the provisions subsequently inserted through SRO 1130(l)/2024 reflects that most of the issues, discrepancies and difficulties have been resolved.

It is also observed here that this Forum recognizes basic objective behind issuance of SRO 350(1)/2024 i.e. to curb the menace of fake and flying invoices. However, the corrective measures should have not been done at a high cost in terms of inconvenience, inability to file the returns, disruption of supply chain mechanism and blockage of business operations.

In this vain, the FBR needs to further consider the issues emanating from operation of SRO 350(1)/2024 and must extend facilitation and remove injustices caused to the sales tax taxpayers.

During hearing, some of the complainants stated that though purchases of 3rd Schedule items have been exempted but buyers of other items still suffer. They suggested that in such cases, the buyers should be made withholding agents of sellers. The ARs/complainants further pleaded the FBR should make filing of sales tax returns more flexible to facilitate the taxpayers. They suggested that some mechanism should be developed which enables simultaneous filing of sales tax returns for entities engaged in mutual transactions as buyers and sellers. They also argued that under SRO 1130(l)/2024, a grace period of 6 days has been provided for filing of sales tax returns by the suppliers, which needs to be extended reasonably to provide further facilitation. Also the FBR should develop and implement an automated system that can recognize and accommodate the reciprocal nature of transactions between entities that function as both suppliers and purchasers. They further stated that although FBR has notified SRO 1130(I)/2024, however, Iris software has not been updated accordingly by the PRAL.

The referred omissions and commissions in issuance of SRO 350(1)/2024 and subsequently in its operations constitute maladministration, the FTO order added.

Copyright Business Recorder, 2024