ISLAMABAD: The Federal Board of Revenue (FBR) has surpassed revenue collection target for the first 10 months (July – April) 2021/2022 (FY22) and collected Rs4.86 trillion, a statement said on Saturday.
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LTO Karachi posts 41% collection growth in 10 months
The Large Taxpayers Office (LTO) in Karachi, the flagship revenue collection arm of the Federal Board of Revenue (FBR), has achieved an extraordinary 41% growth in revenue collection during the first 10 months of the current fiscal year (July – April).
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FBR issues sales tax refund rules for tractor manufacturers
ISLAMABAD: The Federal Board of Revenue (FBR) on Friday April 29, 2022 issued sales tax refund rules for agriculture tractor manufacturers.
The FBR issued SRO 563(I)/2022 dated April 29, 2022 to insert new rules in the Sales Tax Rules, 2006.
Refund to Agricultural Tractor Manufacturers
READ MORE: FBR transfers senior IR officers in major reshuffle
390. Application.— (1)This Chapter shall apply to existing and future refund claims as filed by the registered agricultural tractor manufacturers engaged in supply of agricultural tractors.
(2) The provisions of these rules shall apply only if the incidence of tax sought to be refunded has not been passed on to the consumers.
39P. Definition.— In this chapter, unless there is anything repugnant in the subject or context,-
(a) “agricultural tractor” means a tractor used by farmers or growers engaged in production of agricultural produce through tractor; and
READ MORE: IR offices to observe extended working hours for collection
(b) “eligible person” means manufacturer of agricultural tractors who supplies tractors to a person holding a valid proof of land holding such as agriculture pass book and copy of record of rights of agricultural land duly verified from Provincial Land Revenue Authorities.
39Q. Condition on supplies of agricultural tractors.— Only eligible persons shall qualify for availing reduced rate under the Sr. No. 25 of Table-1 of the eighth schedule to the Sales Tax Act, 1990.
39R. Filing of refund application.—The eligible person shall file a refund claim through STARR/RCPS system and refund application to the Commissioner Inland Revenue having jurisdiction, along with the following documents, namely:—
(a) a copy of tax paid and e-filed sales tax return;
(b) an undertaking affirming the genuineness of refund as per Sales Tax Act, 1990 and relevant rules made thereunder;
(c) a revolving bank guarantee valid for at least one hundred and twenty days issued by a scheduled bank, to the satisfaction of the Commissioner Inland Revenue having jurisdiction of an amount not less than the average monthly refund claim during last twelve months; and
(d) name, CNIC of buyers along with valid proof of land holding, ledger of already purchased agricultural tractors against each buyer.
39S. Pre-refund audit.— Where the processing officer or the officer-in-charge is of the opinion that any further inquiry or audit is required in respect of refund claim or for any other reason to establish genuineness and admissibility of the claim, he may make or cause to make such inquiry or audit as deemed appropriate, after seeking approval from the concerned Additional Commissioner and inform the refund claimant accordingly. Audit under this rule shall be completed within thirty days of initiation of the proceedings.
39T. Refund of input tax.— The refund of admissible excess input tax shall be allowed and issued within seven days of the completion of proceedings initiated under rule 39S and in case no pre-refund audit is conducted, within fifteen days of filing of the refund claim. In any case the refund of admissible excess input tax under these rules shall not be processed through FASTER module.
39U. Filing of complete refund claim.— Within fifteen days of the sanctioning of refund, the eligible person shall file a complete refund claim along with the requisite supportive documents prescribed under Chapter V of the Sales Tax Rules, 2006.
39V. Post Refund Audit.— Post refund audit of the refund claims processed under these rules shall be carried out by the concerned division based on the documents submitted by the eligible person and any other relevant documents called by the concerned officer to ascertain the admissibility and genuineness of the refund processed and issued under rule 39T. The proceedings under this rule shall be concluded within sixty days of filing of a complete refund claim by the refund claimant under rule 39U.
39W. Cost Audit.— In order to determine that the incidence of excess input tax claimed as refund under these rules by an eligible person has not been passed on to the consumers,
(a) annual cost audit will be conducted by a Cost Accountant authorized by the Board; and
(b) cost audit for a tax year shall be conducted on the basis of twelve sales tax returns for the tax year, documents filed for refund under these rules, and any other documents called by the Cost Accountant.
39X. Amount if found inadmissible.— In case any amount already sanctioned and paid is found inadmissible, the same shall be recovered within seven days of completion of proceedings initiated under rule 39V by encashing the bank guarantee to the extent of adjudged liabilities.
39Y. Section 8B not applicable.— The provisions of sub section (1) of section 8B of the Sales Tax Act, 1990 shall not be applicable on refund claims of admissible excess input tax filed under these rules.
39Z. Repeal.— The refund claims of Recognized Agricultural Tractor Manufacturers Rules, 2012 are hereby repealed.”
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FBR transfers senior IR officers in major reshuffle
ISLAMABAD: The Federal Board of Revenue (FBR) has transferred senior officers of Inland Revenue Service (IRS) following change of its chairman.
The new government appointed Asim Ahmad as FBR chairman, who assumed the charge on April 27, 2022. Asim replaced Dr. Muhammad Ashfaq Ahmed.
After this key transfer, the FBR made major reshuffle by notifying transfers and postings of senior IRS officers.
READ MORE: IR offices to observe extended working hours for collection
The FBR notified transfers of the following officers of BS-19 and BS-20:
01. Aqeel Ahmed Siddiqui (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, Benami Zone-III, Karachi from the post of Commissioner Inland Revenue (Appeals-V), Karachi.
The officer will assume charge after charge relinquishment of Najeeb Ahmad Memon, proceeding on NMC w.e.f 09.05.2022.
02. Adnan Inamullah Khan (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, (WHT) Regional Tax Office, Islamabad from the post of Commissioner, (WHT) Regional Tax Office, Sargodha.
03. Ms. Humaira Maryam (Inland Revenue Service/BS-20) has been transferred as Commissioner Inland Revenue, (Audit-I) Corporate Tax Office, Lahore from the post of Commissioner, (Legal) Corporate Tax Office, Lahore.
The officer will assume charge of the post on charge relinquishment of Ms. Laila Ghafoor, proceeding on NMC w.e.f 09.05.2022.
READ MORE: Asim becomes 32nd FBR chairman
04. Dr. Erfa Iqbal (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, (Legal) Corporate Tax Office, Lahore from the post of Chief, (Legal-II) Legal-IR Wing Federal Board of Revenue (Hq), Islamabad.
05. Zulfiqar Ahmad (Inland Revenue Service/BS-20) has been transferred and posted as Chief, Admin Pool Federal Board of Revenue (Hq), Islamabad from the post of Commissioner, (Enforcement) Large Taxpayers Office, Islamabad.
06. Naeem Babar (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, (Enforcement-II) Corporate Tax Office, Lahore from the post of Commissioner, (Chenab Zone) Regional Tax Office, Faisalabad.
The officer will assume charge of the post on charge relinquishment of Ms. Iram Shabbir, proceeding on study leave w.e.f 15.05.2022.
07. Ms. Shabana Mumtaz (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, (Enforcement) Large Taxpayers Office, Islamabad from the post of Commissioner, (Legal) Large Taxpayers Office, Islamabad.
08. Saleem Akhtar (Inland Revenue Service/BS-20) has been transferred and posted as Chief (IMC), Federal Board of Revenue (HQ), Islamabad from the post of Commissioner, (Zone-I) Regional Tax Office, Sargodha.
09. Mohy ud Din Ismail (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue AEOI Zone, Islamabad from the post of Commissioner, (ICTO Zone) Regional Tax Office, Islamabad.
10. Rehan Safdar (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, (Lyallpur Zone) Regional Tax Office, Faisalabad from the post of Commissioner, (WHT) Regional Tax Office, Faisalabad.
READ MORE: POS service fee issue hampers sales tax return filing
The officer is also assigned the additional charge of the post of Commissioner-IR (WHT), Regional Tax Office, Faisalabad, as per Rules.
11. Sajjad Azhar (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue, (Legal) Large Taxpayers Office, Islamabad from the post of Commissioner, (WHT) Regional Tax Office, Islamabad.
12. Abdul Hameed Shaikh (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-V), Karachi from the post of Chief, (IR-Formations) Inland Revenue Operations Federal Board of Revenue (Hq), Islamabad.
13. Ms. Sajida Kausar (Inland Revenue Service/BS-20) has been transferred and posted as Chief, Admin Pool Federal Board of Revenue (Hq), Islamabad from the post of Commissioner Inland Revenue AEOI Zone, Islamabad.
14. Murtaza Siddique Khan (Inland Revenue Service/BS-19) has been transferred and posted as Chief, (OPS) (SPR&S-I) Strategic Planning Reforms & Statistics Federal Board of Revenue (Hq), Islamabad from the post of Additional Commissioner, Regional Tax Office, Gujranwala.
15. Fazli Malik (Inland Revenue Service/BS-19) has been transferred and posted as Commissioner Inland Revenue, (OPS) (Chenab Zone) Regional Tax Office, Faisalabad from the post of Additional Commissioner, Regional Tax Office, Peshawar.
16. Basit Saleem Shah (Inland Revenue Service/BS-19) has been transferred and posted as Chief, (OPS) (IR-Formations) Inland Revenue Operations Federal Board of Revenue (Hq), Islamabad from the post of Additional Director, Directorate General of Intelligence & Investigation (Inland Revenue), Islamabad.
The officer is also assigned the additional charge of the post of Chief (OPS) (Analysis), Inland Revenue Operations, FBR (HQ), Islamabad, as per Rules.
17. Muhammad Asif (Inland Revenue Service/BS-19) has been transferred and posted as Commissioner Inland Revenue, (OPS) (WHT) Regional Tax Office, Sargodha from the post of Additional Director, Addl. Directorate of Internal Audit (Inland Revenue), Peshawar.
READ MORE: IR officers’ bid to deny tax refund adjustment criticized
18. Pervez Ahmad Shar (Inland Revenue Service/BS-19) has been transferred and posted as Commissioner Inland Revenue, (OPS) (WHT) Regional Tax Office, Bahawalpur from the post of Additional Commissioner, Regional Tax Office, Sukkur.
19. Ms. Adeela Yusuf Khan (Inland Revenue Service/BS-19) has been transferred and posted as Chief, (OPS) (Reforms) Reforms & Modernization Federal Board of Revenue (Hq), Islamabad from the post of Additional Director, Addl. Directorate of Internal Audit (Inland Revenue), Rawalpindi.
20. Attique-ur-Rehman Mughal (Inland Revenue Service/BS-19) has been transferred and posted as Commissioner Inland Revenue, (OPS) (Jhang Zone) Regional Tax Office, Faisalabad from the post of Additional Commissioner, Large Taxpayers Office, Lahore.
21. Tauqeer Ahmad (Inland Revenue Service/BS-19) has been transferred and posted as Chief, (OPS) (POS) Inland Revenue Operations Federal Board of Revenue (Hq), Islamabad from the post of Additional Commissioner, Large Taxpayers Office, Islamabad.
22. Rehmatullah Khan Durrani (Inland Revenue Service/BS-19) has been transferred and posted as Commissioner Inland Revenue, (OPS) (Zone-II) Regional Tax Office, Quetta from the post of Additional Commissioner, Regional Tax Office, Sukkur.
23. Ihsan Ullah (Inland Revenue Service/BS-19) has been transferred and posted as Additional Commissioner Inland Revenue, Regional Tax Office, Islamabad from the post of Additional Commissioner, Regional Tax Office, Rawalpindi.
24. Qadir Nawaz (Inland Revenue Service/BS-19) has been transferred and posted as Additional Commissioner Inland Revenue, Regional Tax Office, Faisalabad from the post of Additional Commissioner, Corporate Tax Office, Lahore.
The FBR said that the officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.
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IR offices to observe extended working hours for collection
The Federal Board of Revenue (FBR) has issued a directive for the extension of working hours at Inland Revenue (IR) offices on April 29 and 30, 2022 (Friday and Saturday) for revenue collection.
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Asim becomes 32nd FBR chairman
ISLAMABAD: Asim Ahmad has assumed as the 32nd chairman of the Federal Board of Revenue (FBR) from April 27, 2022.
It is second term of Asim Ahmad to serve the apex tax agency of Pakistan. Prior the present posting, he served as FBR chairman during April 09, 2021 to August 24, 2021. He is the 10th FBR chairman since June 30, 2017.
Asim Ahmed replaced Dr. Muhammad Ashfaq Ahmed. Ashfaq served the FBR as chairman for eight months. He was chairman during August 24, 2021 to April 27, 2022. Dr. Ashfaq was 7th FBR chairman during PTI government.
1) Mr. Asim Ahmad (Current Chairman) 27.04.2022 . 2) Dr. Muhammad Ashfaq Ahmed 24.08.2021 27.04.2022 3) Mr. Asim Ahmad 09.04.2021 24.08.2021 4) Mr. Muhammad Javed Ghani 07.07.2020 09.04.2021 5) Ms. Nausheen Javaid Amjad 08.04.2020 06.07.2020 6) Ms. Nausheen Javaid Amjad (Acting Chairperson) 06.01.2020 08.04.2020 7) Syed Muhammmad Shabbar Zaidi 10.05.2019 06.01.2020 8) Mr. Mohammad Jehanzeb Khan 29.08.2018 10.05.2019 9) Ms. Rukhsana Yasmin 02.07.2018 29.08.2018 10) Mr. Tariq Mahmood Pasha 04.07.2017 02.07.2018 11) Dr. Muhamad Irshad 19.01.2017 30.06.2017 12) Mr. Nisar Muhammad Khan 17.11.2015 18.01.2017 13) Mr. Tariq Bajwa 02-07-2013 17.11.2015 14) Mr.Ansar Javed 10-04-2013 30-06-2013 15) Mr. Ali Arshad Hakeem 10-07-2012 09-04-2013 16) Mr. Mumtaz Haider Rizvi 21.01.2012 10-07-2012 17) Mr. Salman Siddique 24.12.2010 21.01.2012 18) Mr. Sohail Ahmad 18.05.2009 18.03.2010 19) Mr. Moinuddin Khan 02.01.1998 06.11.1998 20) Mr. Hafeezullah Ishaq 11.11.1996 02.01.1998 21) Mr. Shamim Ahmed 28.08.1996 11.11.1996 22) Mr. Alvi Abdul Rahim 13.07.1995 28.08.1996 23) Mr. Sajjad Hasan 24.07.1991 03.10.1991 24) Mr. Ahadullah Akmal 16.08.1990 24.07.1991 25) Mr. Ghulam Yazdani Khan 22.01.1989 11.08.1990 26) Syed Aitezazuddin Ahmed 20.08.1988 02.01.1989 27) Mr. I.A. Imtiazi 11.08.1985 20.08.1988 28) Mr. Fazlur Rahman Khan 14.12.1980 11.08.1985 29) Mr. N.M. Qureshi 12.11.1975 14.12.1980 30) Mr. M. Zulfiqar 01.10.1974 12.11.1975 31) Mr. Riaz Ahmad 17.11.1973 30.09.1974 32) Mr. M. Zulfiqar 11.10.1971 17.11.1973 -
POS service fee issue hampers sales tax return filing
KARACHI: Karachi Tax Bar Association (KTBA) has raised the issue that taxpayers are unable to file sales tax return for the month of March 2022 as online system is denying taxpayers without payment of POS service fee.
The KTBA in a letter sent to FBR chairman on Wednesday urged to take urgent note of the matter and extend the date for filing sales tax return for the tax period March 2022. Further, allow a mechanism to upload the evidence of POS service already paid to enable them to file the Sales Tax Return for March 2022.
READ MORE: IR officers’ bid to deny tax refund adjustment criticized
Through its SRO 1279/(I)/2021 dated 30 September 2021, the FBR levied Point of Sale (POS) service fee of Re1 (one rupee) per invoice on all invoices raised through POS integrated with Board’s computerized system.
It also specified that the above amount collected by the Tier-1 retailers from the customers shall be deposited along with the monthly sales tax returns (STR) in a designated bank account.
However, even before such levy was introduced through the above SRO, the Board vide S.R.O.1006(I)/2021 dated August 9, 2021 had already issued a standardized format for issuance of invoices by Tier-1 retailers through POS.
READ MORE: KTBA recommends separate tax fraud proceedings
The above format provided for separate line/row for collection of the POS service fee.
Further a procedure for operationalization of SRO 1006(1)/2021 dated 9th August 2021” was issued carrying the following directions:
“2. The POS Service Fee of Re1 per invoice shall be collected by T-1Rs from the customers and shall be deposited along with the monthly Sales Tax return which is being amended to include a row for “POS Service Fee”. This row shall be auto populated by the system based on the invoices generated and recorded at the Board’s computerized system. The POS Service Fee collected each month shall be deposited by the T-1 Retailer in a separate head of Account.”
READ MORE: FBR urged to remove irritants in sales tax refund
Subsequently, the taxpayers were intimated through IRIS of the following designated Bank Account for the purpose of deposit of POS service fee charged by them –
Account Title: IRS Common Pool Fund
Account No: PK76ABPA0010002165980013
Bank Name: Allied Bank Limited
Branch Name and Address: Allied Bank Plaza, Blue Area, Jinnah Avenue Islamabad
Branch Code: 07024
The KTBA sought clarification
READ MORE: Unified sales tax law for all tax authorities sought
“Applicability of POS service fee on invoices issued from 01 October 2021
As explained above, since the above service fee was levied through S.R.O.1279/(I)/2021 dated 30 September 2021, we understand that the chargeability of POS service fee is applicable with effect from 01 October 2021.
However, we have been informed by our members that notices are being issued to the taxpayers requiring them to make payment of the POS service fee from August 2021 based on SRO 1006 referred above.
We, therefore, request your office to kindly take notice of the above matter and direct the field offices not to issue notices and demand the T-1 Retailors to deposit the POS service fee in relation to periods prior to October 2021.”
“Adjustment of POS service fee in the STR
As discussed above, the Board directed the T-1 Retailors to collect POS service fee and deposit the same in the designated bank account notified by it. However, the T-1 Retailors are unable to file the Sales Tax Returns (STR) for the tax period March 2022 due to the reasons that IRIS has placed an objection to pay the POS Fee from the date of integration irrespective of the fact that the same has already been deposited in the designated bank account / its applicability from October 2021. Further, the IRIS is not permitting the return to be submitted unless the newly designed payment challan is paid by the taxpayers.”
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FBR makes tax stamps mandatory for fertilizer bags
ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday made tax stamps mandatory for packing and supply of fertilizer bags.
The FBR issued Sales Tax General Order (STGO) No. 15 of 2022 to implement track and trace system under SRO 250/2019 related to fertilizer bags.
The FBR said that the provisions of Section 40C (2) of the Sales Tax Act, 1990 read with Rule 150ZF of the Sales Tax Rules, 2006 mandate the revenue body to notify the date for the implementation of Electronic Monitoring of production and sales of goods in the manner prescribed in the law on all manufacturing sites of notified sectors.
READ MORE: FBR directed to bring entire sugar supply chain into tax net
The board further said in exercise of the powers conferred under Section 40C(2) of the Sales tax Act, 1990 and Rule 150ZF of the Sales Tax Rules, 2006 it is hereby notified that no fertilizer bag shall be allowed to be removed from a production site, factory premises or manufacturing plant or import station without affixation of tax stamps/Unique Identification Markings (UlMs) with effect from July 01, 2022, which are to be obtained/procured from FBR’s Licensee M/s. AJCL/MITAS/Authentix Consortium.
Under SRO 250/2019 it has been made mandatory for goods to be affixed with tax stamps, banderoles, stickers, labels, barcodes, etc.
READ MORE: IR officers’ bid to deny tax refund adjustment criticized
It said that every package, including a tin, container or bottle, of the specified goods whether manufactured or imported shall be affixed or printed a tax stamp, banderole, sticker, label, barcode etc.
Provided that in respect of such specified goods which are exempt or meant for export tax stamps shall not be required to be affixed thereon, but shall be clearly, legibly and indelibly marked as “Exempt Goods” or “For Export”, as the case may be.
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FBR directed to bring entire sugar supply chain into tax net
ISLAMABAD: President of Pakistan, Dr. Arif Alvi has directed the Federal Board of Revenue (FBR) to bring entire supply chain of sugar sector into to tax net.
Dr Arif Alvi directed the tax authorities to bring into the tax net the unregistered wholesalers, dealers or distributors of sugar buying huge quantities from sugar mills to broaden the tax base, according to a press statement issued on Monday April 25, 2022.
READ MORE: President Alvi retains major penalty on NAB official
The President observed that despite making huge monetary transactions and the availability of their data with FBR, these unregistered buyers of sugar largely remained outside the tax net and were evading the prime national responsibility of paying taxes.
He passed these directions while upholding a decision of the Federal Tax Ombudsman (FTO) directing FBR to bring unregistered buyers of sugar in bulk into the tax net to improve the collection of sales tax and reporting compliance within 90 days.
As per details, FTO had initiated an Own Motion investigation against the failure of FBR to bring into the tax net the unregistered buyers of sugar from M/s Naudero Sugar Mills (Pvt) Ltd.
READ MORE: President Alvi directs bank to refund unfair recovery
The FTO observed that non-NTN holders had been buying huge quantities of sugar from sugar mills and their data was fully accessible by the FBR but this huge potential for tax collection remained unutilized.
In its report, the FTO highlighted that during the last four years sugar worth Rs 2.7 billion was supplied by the said mills to various unregistered buyers, only three buyers held NTN, and FBR had not paid due attention to broadening the tax base.
It further observed that this low hanging fruit had not yet been harvested and despite making huge monetary transactions, unregistered buyers of sugar remained outside the tax net.
READ MORE: President Alvi rejects FBR plea in maladministration cases
The FTO underscored that unregistered persons were easily identifiable because sugar mills were required to maintain records of supplies made during the tax period and issue tax invoices indicating names, addresses, description, quantity, values of goods, CNIC or NTN of persons to whom the supplies were made under the Sales Tax Act of 1990.
Based on these findings, FTO had directed the Chief Commissioner, Large Taxpayers’ Office, Karachi to enforce compliance after obtaining data of unregistered persons from the sugar mills.
The FBR filed a representation with the President against this order of FTO. President Dr Arif Alvi disposed of the matter with the observations that FBR’s field formations were not vigilant in collecting information related to unregistered buyers and were content with just whatever was being submitted in the monthly sales tax returns of mills.
READ MORE: Dr. Alvi orders action over misconduct with 82-year taxpayer
He regretted that the data of unregistered buyers was not being examined for the purpose of broadening the tax net. He noted that FBR’s field formations held jurisdiction over sugar mills and could secure the complete particulars of all buyers by proper and timely analysis of withholding statements.
Serious negligence and inefficiency on part of the field formations of FBR in the discharge of its duties was tantamount to maladministration, he added.
He observed that FTO’s recommendations were only a reiteration of the duty of FBR to strictly deal with unregistered sugar dealers to bring them under the tax net.
READ MORE: Dr. Alvi rejects banker’s plea in woman harassment case
He directed that FTO’s recommendations must be applied to the entire sugar sector to increase compliance with taxes and to enrol those who were escaping the prime national responsibility of paying taxes.
The President disposed of FBR’s representation with the direction to submit a comprehensive implementation report to FTO within 60 days.
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IR officers’ bid to deny tax refund adjustment criticized
Karachi Tax Bar Association (KTBA) on Monday has strongly criticized the bid of officers of Inland Revenue (IR) to reject adjustment of tax refund against liability.
The tax bar in a letter to the chairman of the Federal Board of Revenue informed that a large number of notices for tax returns filed for tax year 2021 were issued by the IR officers for rectification under Section 221 of Income Tax Ordinance, 2021.
READ MORE: KTBA recommends separate tax fraud proceedings
The tax bar informed that the legal position of provisions of Section 221 of the Ordinance, which empower a Commissioner to amend any order passed by him.
The issue of adjustment of previous years refund, however, does not come within the ambit or scope of rectification of mistake as provided for under Section 221 of the Ordinance. Section 221 of the Ordinance, states that a Commissioner may rectify “ANY ORDER PASSED BY HIM”, while in the instant case, no formal order, using application of mind, has been passed by the learned Commissioner Inland Revenue himself or by any of his learned predecessor. “It would not be out of context to elaborate here that clause (b) of sub-section (1) of section 120 of the Ordinance provides that a return filed to be taken as an assessment order passed by the Commissioner Inland Revenue.”
READ MORE: FBR urged to remove irritants in sales tax refund
The purpose of this letter is to apprise your office, of the illegality, which has been allowed to permeate through the whole process, the KTBA said.
It is by virtue of this deeming provision and the fiction of law, the return filed is treated as an assessment order, which however, by any stretch of imagination, cannot be treated as formal assessment order, which would have factually been passed by a CIR.
It further said it would equally be critical to highlight here that refund becomes due when the assessment order under Section 120 of the Ordinance come into existence and thereafter the refunds of previous years can very much be adjusted against the liability of current year. This legal notion has been endorsed by the judgements of the superior courts as well.
READ MORE: Unified sales tax law for all tax authorities sought
It is a trite law, which the superior courts have held time and again that only those mistakes, of either fact or law, pointed out in the Assessment Order will be treated as mistake liable for rectification for which no further argument or further investigation is required. In case of any controversy, whether factual or legal, exists or where are more than one opinion on the matter, the same does not fit squarely in the definition of “Mistake” liable for rectification as enunciated by courts.
Therefore once after it has been cleared that a Deemed Order cannot be rectified and then the Courts and consequently the Board itself has allowed to adjust the refunds, the mistake pointed in the Notices cannot be called as A “Mistake”. A plain perusal of notices reveals that the Commissioners have embarked upon verification and further investigation or to put in other words necessitates verification and further investigation before any conclusion is drawn. It cannot simply be called a case of Rectification of Mistake. Hence, it falls out of the scope of rectification of mistake given under section 221 of the Ordinance.
READ MORE: Proposals for recovery of sales tax on bad debts
At this juncture we feel it imperative to reposition the stance of our Tax BAR that we completely endorse that any short fall of payment of tax is ought to be made at full and where there has been proved any erroneous adjustment of tax refunds, the same should very much be recovered and paid without any resistance, but only and strictly according to the given and due process of law.
Be that as it may, if there was any shortfall in the return including a short payment of tax and/or incorrect adjustment of tax or incorrect adjustment previous year refund, the correct course of action should have been issuance of notice under sub-section (3) of section 120 of the Ordinance, which provides that where a return is not complete, the CIR shall issue a notice to the taxpayer informing him of the deficiencies in the return of income including short payment of tax payable and asking him to provide such information.
READ MORE: Proposal for withholding on purchases from unregistered
“You would appreciate that where no such notice has been issued in the first place, the Tax Return filed will be taken to be complete and without any deficiencies and, therefore, any assumption of jurisdiction under Section 221 of the Ordinance would fundamentally be incorrect.”Based on above, it should be abundantly clear that the current exercise is without due sanction of law and against the reported judgments of Superior Courts.