FTO asks FBR to issue refunds order over taxpayer complainant

Federal Tax Ombudsman (FTO) rejected Federal Board of Revenue (FBR) orders stance that it said was based on “maladministration” and has directed the Bureau to refund the tax payers as per complaint who was conceived by the private firm and his case remained pending since 2019 with FBR. According to a six-page order of the FTO, available with Daily Times, as complainant has filed applications stating that condonation applications have been rejected despite the by the Inland Revenue Department Gujranwala, working under FBR, that he said was a discrimination. “The complainant was deprived of his fundamental right as duly enshrined in the Constitution of Pakistan, 1973. Such discrimination is tantamount to maladministration and falls under the ambit of FTO,” reads the order. Muhammad Saleem, Prop: M/S. Saba KitchenWare filed a complaint in FTO to redress their tactics related grievances. The FTO orders stated that case sales tax refund procedure was changed and a new system, FASTER, was introduced to process and sanction exporters’ refund expeditiously that requires a completely different approach than the previously adopted manual system. The sales tax returns filed under FASTER were facing different problems as data of previously filed returns were not being matched, adding that the relevant department didn’t carry forward the refund claimed in previous before introduction of FASTER was for processing. According to the complaint RTO for resolution of the issue and revealed that revision of returns were required for matching the data. To resolve the issue, the Complainant applied for condonation of delay in filing of sales tax returns but FBR refused to condone the delay in filing of sales tax returns. In response to the notice issued under Section 10(4) of the FTO. Ordinance, read with Section 9(1) of Federal Ombudsman Institutional Reforms Act, 2013, the Commissioner-IR, Zone-I, RTO Gujranwala submitted parawise comments dated 29.03.2023, wherein it is stated that the FBR has introduced refund processing system namely ERS/FASTER for all the registered persons. The FBR claimed that the complainant has not mentioned the issue being faced in the system. Later on, applied for condonation of delay for revision of sales tax returns for various periods and FBR rejected the same grounds. The FTO after hearing the stance of both parties issued its orders. It said that both AR and DR reiterated the stance taken in the complaint. From July 1, 2019, the sales tax refund procedure was changed and a new system viz “FASTER” was introduced that required a completely different approach from the previously adopted system. While switching over to the new system, Complainant faced different problems specially carrying forward of sales tax refund from the previous system to the new one. “Hence, the observation of FBR is totally misconceived and against the report of the CCIR/CIR. In fact the CCIR / CIR has clearly explained the reason and have given justification for condonation of delay which has not only been ignored but facts have been misreported,” the order further reads.n The issuance of said Circular could not resolve the issue of the taxpayers regarding carry forward / credit of refund from previous system to FASTER, hence FBR had to issue another Sales Tax General Order No.9/2023(Operations) vide 2023/ 42340-R dated 15.03.2023, wherein it was again admitted that FASTER system is still malfunctioning and detailed instructions have been issued to streamline the system. The upshot of the above discussion is that Refusing the requests of complainant for revision of sales tax returns by the FBR on account of delay in the presence of its own above referred Circulars, wherein it is admitted that FASTER is malfunctioning and condoning delay in some cases is tantamount to maladministration in terms of Section 2(3) of the FTO Ordinance. FBR to FBR to direct Member-IR (Operations) to revisit condonation order and condone the delay and to settle the issue of sales tax refund /direct Member-IR (Operations) to revisit condonation order and condone the delay and to settle the issue of sales tax refund / credit claimed resultantly becoming due, if any, for the relevant tax periods expeditiously; and report compliance within 45 days.