FINDINGS/RECOMMENDATIONS MUSHTAQ AHMAD SUKHERA, FEDERAL TAX OMBUDSMAN. ---Both the above mentioned complaints were filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against delay in issuance of refund for Tax Years 2017 and 2018. The complaints having identical issues are disposed of through a single consolidated order.
2. Precisely, the Complainant, an individual, deriving income from Dyeing business, e-filed Statements of Final Taxation for Tax Years 2017 and 2018 under Section 114(1) of the Income Tax Ordinance, 2001 (the Ordinance) claiming refund amounting to Rs.0.108 and Rs.0.175 million, respectively. According to the AR, the Complainant e-filed refund applications for Tax Years 2017 and 2018 on 07.11.2018 and 08.01.2019, respectively. The refund arose on account of excess deduction of withholding tax on electricity bills under Section 235 of the Ordinance.
However, despite repeated efforts of the Complainant, the Deptt failed to pass orders under Section 170(4) of the Ordinance, within the stipulated time. The Complainant also prayed for additional payment for delayed refund under Section 171 of the Ordinance.
3. The complaints were referred for comments to the Secretary Revenue Division, in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response thereto, the Chief Commissioner-IR, RTO, Multan forwarded through letter dated 10.12.2019 parawise comments of the Commissioner-IR Multan Zone dated 09.12.2019. At the outset, preliminary objection regarding bar of jurisdiction was raised in terms of Section 9(2)(b) of the FTO Ordinance. Reliance was placed on judgment of Hon'ble Lahore High Court in W.P. No.5999/2017 (Shehzadi Polypropylene Industries v.
Federation of Pakistan and others).
4. On merits, it was contended that assessments of the Complainant for tax period 2011, 2012, 2013 and 2014 were completed under Section 33(1) of the Sales Tax Act, 1990 creating sales tax demand and penalty amounting to Rs.1.102 million and Rs.0.240 million, respectively. The Commissioner-IR (DR) (Appeals), Multan vide order dated 23.06.2016, annulled sales tax demand of Rs.1.102 million. However, penalty amounting to Rs.0.240 million was upheld. The Complainant filed second appeal before the Appellate Tribunal-IR (ATIR) with request for stay of demand. The ATIR vide MA Stay No.1649/LB/2016 dated 21.09.2016, granted 60 days stay or till the decision of appeal whichever is earlier. On the other hand, refund proposal for above tax years submitted by the Unit Officer for approval to the Addl. CIR, Range-II, Multan vide letter dated 03.04.2019, was returned with the observation that the electricity bills were not in the name of the Complainant. However, in terms of Section 171(2)(c) of the Ordinance, the Complainant's request for additional payment for delayed refund for the above Tax Years is premature at this stage.
5. During hearing, the AR vehemently contended that no arrears were outstanding against the Complainant as out of sales tax penalty of Rs.0.240, an amount of Rs.0.112 million, was adjusted against the RPO dated 08.11.2018 and the balance of Rs.0.127 million, adjusted against refund for Tax Year 2016. The DR, after considering the above facts, assured to dispose of the Complainant's refund applications for Tax Years 2017 and 2018, within 30 days, as per law.
6. In view of the assurance given by the Deptt to dispose of refund applications of the Complainant for Tax Years 2017 and 2018, within 30 days, as per law, there is no need to go into legal and factual merits of the complaints.
The Deptt is, thus, directed to dispose of refund applications of the Complainant for Tax Years 2017 and 2018, as per assurance of the DR and law.
7. Report compliance within 45 day.