BILAL SAEED VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2012 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 437 (2011)

Sales Tax Rules, 2006---

----R.28(1)---Complaint against non-issuance of refund---Complainant's claim of refund of amount for the tax periods March and June, 2010, which refund arose on account of wrong deduction of input tax on purchase of stationery incorrectly described as "advertisement services" by the buyer---Application of the complainant was rejected by the department informing him that refund claim could not be admitted unless application for refund was submitted as per R.28(1) Sales Tax Rules, 2006 (S.R.O. 555(I)/2006 dated 5-6-2006)---Supplies of stationery from the complainant, having been wrongly described as 'advertisement services' by the purchaser and input tax was wrongly deducted at an excessive rate, excess amount so deducted and deposited in government treasury, needed to be refunded---Relevant document filed by the complainant had not been specifically commented upon by the department---Tax profile of the complainant also reflected the excess amount refundable to the complainant---Incomplete compliance with the requirements of Sales Tax Rules, 2006alone could not be made the basis for rejection of a refund claim which otherwise was in order---Summary rejection of the complainant's refund claim without passing a formal order was not legally tenable---Claim had not been evaluated on merits and had been rejected on technicalities, which was tantamount to maladministration under S.2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue was recommended to direct the Commissioner to reappraise the claim strictly on merit and pass a speaking order in accordance with law, after hearing the complainant within 21 days and to report compliance within 7 days thereafter.

Muhammad Munir Qureshi, Advisor Dealing Officer.

M. Bashir Malik, Authorized Representative.

Sultan M. N. Nasir,ACIR Departmental Representative.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---This complaint is against non-issuance of refund.

2.The complainant claims refund of Rs.210,399 and Rs.59,620 for the tax periods March and June, 2010 respectively. Application for the refund claim was submitted before the concerned officer on 20-8-2011, along with supporting documentation on CD. The refunds statedly arose on account of wrong deduction of input tax on purchases of stationery incorrectly described as 'advertisement services' by the buyer: Messrs Azhar Corporation (Pvt.) Ltd. Faisalabad. The complainant's application was rejected by the Department vide Letter No.226 dated 17-9-2011. He was informed that the refund claim could not be admitted unless application for refund was submitted as per Rule 28(1) of S.R.O. 555(I)/2006 dated 5-6-2006. The complainant contends that the Departmental contention was arbitrary as the Department was told that the Principal Company, Messrs Azhar Corporation (Pvt.) Ltd. Faisalabad, had wrongly deducted excess amount of sales tax as input tax on purchases made from him.

3.When confronted, the Department filed a reply contending that the complainant had rightly adjusted input tax and so no refund was due. It was also the Departmental contention that the complainant had failed to submit the refund application in the prescribed manner consistent with the requirements stipulated in S.R.O. 555(I)/2006.

4.The matter has been given due consideration. As supplies of stationery from the complainant to Azhar Corporation Ltd. have been wrongly described as 'advertisement services' by the purchaser and input tax wrongly deducted at an excessive rate, the excess amount so deducted and deposited in Government treasury needs to be refunded. The relevant documentation filed by the complainant has not been specifically commented upon by the Department. The tax profile of the complainant also reflects the excess amount refundable to him. Incomplete compliance with the requirements of S.R.O. 555(I)/2006 alone cannot be made the basis for rejection of a refund claim otherwise in order.

Findings:

5.The summary rejection of the complainant's refund, claim without passing a formal order is not legally tenable. The claim has not been evaluated on merits and has been rejected on technicalities, which is tantamount to maladministration under section 2(3) of the FTO Ordinance.

Recommendations:--

6.F.B.R. to direct the Commissioner to--

(i)re-appraise the claim strictly on merit and pass a speaking order, in accordance with law, after hearing the complainant, within 21 days; and

(ii)report compliance within 7 days thereafter.

H.B.T./7/FTOOrder accordingly.