FTO provides relief to taxpayer
SOHAIL SARFRAZ
ISLAMABAD: The Federal Tax Ombudsman (FTO) office has provided a major relief to a taxpayer in a unique case where the Federal Board of Revenue (FBR) was reluctant to issue sales tax refund of Rs539,083,271 despite relief allowed in an appeal by the Appellate Tribunal Inland Revenue (ATIR).
Sources told Business Recorder here on Saturday that the FTO annual report of 2013 has highlighted the case in the performance review of the said office.
According to the report, a complaint was filed against non-issuance of refund of Rs539,083,271 for the tax periods - July 2000 to March 2012. The refunds have gone up on account of excess input tax over output tax and as a result of relief allowed in appeals by the Appellate Tribunal IR vide STA 1332/LB/09 dated 19.11.2010 and Order No.102-110 dated 22.2.2012 by Commissioner IR (Appeals). The complainant requested the Department time and again, and sent reminders on 24.1.2011, 23.9.2011, 20.10.2011, 1.2.2012, 30.4.2012, 8.12.2012, 23.8.2012 and 12.10.2012, but to no avail.
The department contended that while processing the claim for the period Nov-2008 to March-2009, it was observed that the complainant received payments from Wapda against the supply of electricity under the head Energy Purchase Price (EPP), Capacity Purchase Price (CPP) and Supplementary Bonus Income (SBI), but paid sales tax only on the amount received under EPP. The complainant was required to apportion the input tax to the extent of supply that was non-taxable, as per law. However, he claimed the entire amount of input tax regardless of its use in taxable and non taxable supplies.
According to the department, the Appellate Tribunal IR(ATIR), in a judgment STA No.132/IB of 2010 dated 3.3.2011 cited as 2011 PTD (Trib)1306 in the parallel case of IPP namely Fauji Kabirwala Power Company Ltd, had discussed the issue in detail and held that sales tax paid at input stage was required to be apportioned between EPP and CPP. This judgment was later notified by the ATIR through order dated 15.10.2012 (MA (R) STA No.27/IB of 2009), wherein it was held that no apportionment of input tax between EPP and CCP was required. The department challenged the rectification order dated 15.10.2012 and the Islamabad High Court (IHC) suspended the operation of the rectification order vide interim order dated 5.11.2012. According to the department, IHC passed on interim order which was enforceable between Fauji Kabirwala and the department and not to any other company.
Both parties were heard and the record perused. It was held that the interim judgment of the IHC in the case of Fauji Kabirwala did not apply to all other cases of IPPs. The department’s failure to dispose of the complainant’s pending refund claims despite lapse of significant time was considered maladministration as the delay was found unjustified. Even the department’s contention that delay in disposal of the pending refund claims was also due to the objections raised by STARR system was not found convincing. The department ought to have informed the complainant of any deficiencies or discrepancies pointed out by the system, for remedial action by the complainant. The FBR was directed by the FTO to issue refund/ compensation due, as per law. In compliance, the department sanctioned refund due on 29.6.2013, 9.9.2013 and 22.10.2013. The authorised representative of the taxpayer expressed gratitude and appreciation for the valuable support of the honourable FTO in resolving the complainant’s grievance, the FTO annual report added.
