SALEEM TEXTILE, KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2011 P T D 1416
[Federal Tax Ombudsman]
Before Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman
Messrs SALEEM TEXTILE, KARACHI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.14/KHI/ST(03)/91/2010, decided on 11/05/2010.
Sales Tax Act (VII of 1990)---
----S. 10---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 10(3)---Complaint against Sales Tax Department for non-settlement of deferred Sales Tax claim which had arisen due to zero-rated exports---Representative of the complainant had asserted that firm was suffering financially due to non-sanctioning of refund; and that the department by not following the provisions of law had indulged in maladministration---Objection raised by the department with regard to jurisdiction on the point of time in filing the complaint was overruled and time limitation was waived under S.10(3) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 as the complainant firm had been consistently following its claims, but no formal speaking order accepting or rejecting the claim had been passed by the department---Delay and non-responsiveness on the part of the department was found in attending to the claims of the complainant---Charges in jurisdiction or switch over to the STARR, was no justification to delay matters for years, when law provided for the fixed time frame to settle the claims---If refund was held to be not due after careful consideration for any reason, speaking appealable order should have been passed within time prescribed for the purpose---No meaningful efforts were made during the period, delay, inattention and inefficiency on the part of functionaries wasevidentlyestablished---Recommendations were made to Federal Board of Revenue to direct Chief Commissioner to co-ordinate efforts of all concerned to settle the claims due as per law within 21 days; to issue directions to streamline the procedure to handle the pending claims expeditiously; to ensure that all Sales Tax claims filed before 31st December, 2009,weredisposedofby31stAugust, 2010atthe latestandtoreportcompliancewithin30daysinrespecttofirst tworecommendationsand120dayswithrespecttothethirdone.
Mumtaz Ahmed, Advisor, Dealing Officer.
Ahmed Ali Soomro, OIR and Dr. Zulfiqar Mir, Addl. Commissioner, Departmental Representatives.
Rashid Ahmed, Authorized Representative.
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---The complaint has been filed against the Sales Tax Department for the non-settlement of 44 deferred Sales Tax refund claims for the period from April 2003 to June 2008 involving an amount of Rs. 16.1 million. Another 27 claims are such that even objections have not been conveyed to the complainant, but pertain to the period from November 2006 to April 2009 and involve amount of Rs.18 million approx.
2.The refund claims have statedly arisen due to the zero-rated exports. The AR asserted that firm was suffering financiallyduetonon-sanctioning of refund and that the Department, bynotfollowingthe provisions of law and rules contained in S.R.O. 555(I)/2006dated5-6-2006, and section 10 of the Sales Tax Act, 1990, had indulged in maladministration.
3.The Department in their preliminary objections have questioned jurisdiction on the point of time limitation in filing the complaint, in terms of section 10(3) of Establishment of FTO Ordinance 2000. The objection is over ruled and time limitation waived under section 10(3) of FTO Ordinance as the firm has been consistently following its claims, yet no formal speaking order accepting or rejecting the claim(s) has been passed by the Department.
4.During the hearing the DRs attributed delay to the switch over to STARR, objection memos. generated by the system, and changes in jurisdiction. It also came to surface that due to changes in jurisdiction, about 30,000 files relating to different pending claims were yet to be received and that in the complainant's case only 10 files had been received. Giving the latest position of pendency of the claims, the AR on the other hand stated that out of 71 claims 8 only claims had been sanctioned as yet, while the remaining claims were not traceable with the Department. And 20 more claims were lying in the officers 'folio'. However, the AR undertook to provide duplicate copies of non-traceable files.
5.During the discussion, it came to light that factum of filing of claims could be verified from Database Administration and tax profile of the complainant, and then cross verified from the files. Addl. Commissioner representing the Department also confirmed that the examination could then be done manually in the matter of certain claims on the basis of criteria laid down under Sales Tax General Order 1 of 2007.
6.The DRs contended that certain objection memos. were provided to the complainant which pertained to suppliers being blacklisted, blocked, for being non-filers or where input exceeded output or related to consumption of raw material where input tax was claimed but stock availability was disputed. The DRs stated that the claims would be scruitnised and decided on merit in accordance with provisions of law. They further informed that assistance of the Database Administration representing PRAL would also be required.
7.Upshot of the arguments is that a coordinated effort is needed to ensure genuineness of claims.
Findings:
8.There has been delay and non-responsiveness on the part of the Department in attending to the claims at hand. That there had been changes in jurisdiction or switch over to the STARR is no justification to delay matters for years, when law provides for the fixed time frame to settle the claims. If refund is held to be not due after careful consideration for any reason, speaking appealable order should have been passed within the time prescribed for the purpose. As no meaningful efforts were made during the period, delay, inattention and inefficiency on the part of tax functionaries is evidently established.
Recommendations:
9.F.B.R. to -
(i)direct Chief Commissioner to coordinate efforts of all concerned to settle the claims due as per law within 21 days;
(ii)issue directions to streamline the procedure to handle the pending claims expeditiously;
(iii)ensure that all Sales Tax claims filed before 31st December, 2009 are disposed of by 31st August, 2010 at the latest; and
(iv)report compliance within 30 days with respect to Recommendations (i) and (ii) and within 120 days with respect to (iii).
H.B.T./104/FTOOrder accordingly.