RTO Lahore issues sales tax refund after 14 years

LAHORE: The Regional Tax Office (RTO) Lahore has issued a sales tax refund after a lapse of 14 years, owing to the intervention by the Federal Tax Ombudsman, The News learnt on Monday.


Industry sources said that various representations were moved to the Federal Board of Revenue and then to FTO for judicious intervention into a long delay in the issuance of refunds for tax periods – November 2000 to September 2001.


The FTO recommended the FBR to submit details of sales tax refund cases pending for more than one year across Pakistan and monitor the conduct of Inland Revenue Service (IRS) officers, including ACIR Basit Langrial and his staff.


Waheed Shahzad Butt, a Lahore-based tax lawyer who represented the case before the FTO, talking to The News said the office of the FTO proved to be of great help in redressal of genuine grievances and hardship caused to the aggrieved taxpayers as a result of maladministration of justice and corrupt practices on the part of the revenue division employees.


For the last one decade, a senior citizen of 71 years of age is running from pillar to post to seek his lawful right of refund from the RTO Lahore even after having unchallenged recommendations issued by FTO against the RTO Lahore functionaries.


The FTO’s recommendation is legally binding to the FBR and the law must take its course. The FTO’s recommendation must be implemented after the expiry of the 30 days. Otherwise, it would be treated as defiance, which may be punishable with contempt under section 16 of the FTO Ordinance, 2000.


The officials said that the eight IRS officials at RTO Lahore had been transferred with the apparent motive to defeat the implementation proceedings. In this unique case of refund/compensation, without filing any review or representation against the recommendations issued by FTO, field formations of the FBR are frequently transferring the IRS officers to avoid the implementation of the FTO order. However, due to strict lawful intervention by the Implementation and Monitoring Adviser, refund payment orders for partial claim pertaining to 2000 and 2001 have been issued in June 2014. The balance claims of lawful refunds are still pending with RTO Lahore on lame excuses, they added.


The FTO observed that in any case the statute requires no proof of physical transfer of goods from supplier to buyer as a pre-condition for making an input tax refund claim. Doubts expressed by the department on the actual physical transfer of the goods to the complainant are baseless, it said.


The complainant pointed out that the goods in question have all been exported and payment in foreign exchange received in Pakistan. Thus, their availability with the complainant prior to export cannot be doubted.


The complainant contends that departmental functionaries started approaching him for payment of illegal gratification to dispose of the refund claims. The protracted delay in issuance of refund tantamount to maladministration creates the right to receive compensation under Section 67 of the Act.


The FTO recommended the FBR to ensure that refund/compensation due is promptly issued, as per law, submit details of sales tax refund cases pending for more than one year across Pakistan and keep the conduct of ACIR Basit Langrial and LDC under watch, the FTO order added.


The tax lawyer further added that in a way in legal semantics, the term zero-rated provided in section 4 of the Sales Tax Act, 1990 means a ‘Nil’ liability created by the legislature itself in the shape of this statutory provision. It is something stronger than the exemption awarded either by the FBR or the federal government under section 13.


The goods exported are totally immune from the sales tax, and once it is established that the goods were exported, there is no question of taking any proceedings against the taxpayer but the attitude of RTO Lahore functionaries speaks louder than the intention of the legislature provided in the statue book.


All instructions/directions issued by the FBR are binding on all functionaries but they miserably failed to follow the same.


The IRS officials should be held accountable for non-observance of these instructions and non-compliance thereof should be treated as misconduct and the defaulting IRS officers must be proceeded against under Efficiency and Discipline Rules, 1973, Waheed believed.

Source: The NEWS