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Defiance of binding directives: FTO awakens FBR chief to negative tendency

Defiance of binding directives: FTO awakens FBR chief to negative tendency

ISLAMABAD: The Federal Tax Ombudsman (FTO) has written in to the FBR chairman, reminding him of the blatant violation of FBR’s letter No-1 (337) S(TO-II)/2013 by the field formations.

Through the letter, the FTO Registrar urged the FBR chairman to look into the matter personally and redress the grievances of taxpayers against maladministration and curb the tendency of inaction and defiance of FTO’s recommendations by the field formations of the FBR.

The FTO Registrar has made a specific reference to the violation of the FTO recommendations vide order dated July 2, 2013 issued in C.No.164/LHR/ST(34)281/2013. The recommendations have not yet been implemented despite a lapse of almost 9 months although the department neither filed a review application nor any representation as such the recommendations attained finally but unfortunately, the recommendations have not yet been implemented.

The FTO Registrar stated that “the situation is still bleak as frequent complaints are pouring in from the affected taxpayers/complainants and the advisors regarding indifference and inaction of the tax offices. Unjustified delay by the field formations in implementation of FTO recommendations where neither representation nor review petition is filed, detracts much of the confidence of aggrieved taxpayers in the FTO mechanism for prompt redressal of their grievances, against tax maladministration.

According to reports, fresh assessment cannot be made without prior implementation of the FTO recommendations and field formations of the FBR are bound to comply with recommendations in letter and spirit. However, FBR officials are disobeying the binding instructions issued by their parent agency vide C No.1(337)S(TO-II)/2013 dated January 23, 2014. The FTO has also observed that the department must implement the FTO’s recommendations within the given timeframe unless it has filed a Review Application before the FTO. In case representation before President is filed, the implementation remains suspended for a period of 60 days.

When findings/recommendations attain finality, then fresh assessment cannot be made without first implementation of the recommendations. It is to be noted that earlier former FTO Dr Suddle in C No.164/LHR/ST(34)281/2013 recommended the FBR to submit details of sales tax refund cases, pending for more than one year across Pakistan, issue refund and monitor the conduct of IRS officers. In his landmark order it is specifically observed by the FTO that in any case the statute requires no proof of physical transfer of goods from supplier to buyer as a pre-condition for making input tax refund claim and blacklisting cannot be made effective retrospectively.

Findings of the FTO further states “the complainant contends that all the required supporting documents were filed well in time which was evident from the fact that after receipt of the supporting documents the department started verification in the year 2001. The complainant was not served with a single notice intimating deficiency in the documents filed nor was his explanation sought on any aspect pertinent to the claims. On 17.10.2011 department informed that in absence of supporting documents the refund claims had become time-barred. The complainant filed a W.P 9532/2012 in the High Court, who directed the FBR to pass a speaking order after observing that the rejection letter was not a speaking order and was in violation of Section 24A of the General Clauses Act 1897 and Article 10A of the Constitution. In compliance with the High Court directions the dept passed an order dated May 18, 2012, clarifying that any question regarding expiry of limitation of time to file supporting documents did not arise.

The complainant contended that after refilling of the documents, the officials concerned started approaching him with the demand for illegal gratification to dispose of the refund claims. The FTO recommended FBR to ensure that due refund/compensation is promptly issued as per law with details of sales tax refund cases pending for more than one year across Pakistan and keep the conduct of ACIR and LDC under watch, FTO order added.

The FTO has conveyed through letter dated January 13, 2014 general and specific complaints of the Advisers of the FTO Secretariat against the officers of Inland Revenue about their persistent resistance to implement the recommendations. As a result thereof necessary instructions to this affect were issued to all the field formations through letter dated January 23, 2014. The FTO has, therefore, desired FBR Chairman to look into the matter personally, to curb the tendency of inaction and defiance of recommendations of this forum by the field formations of the FBR, the FTO Registrar added.