CHICAGO METAL WORKS (PVT.) LTD., MULTAN VS The SECRETARY, REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2089 (2016)

Income Tax Ordinance (XLIX of 2001)---

----Ss.170 & 171---Refund---Maladministration---Refund claim was due on account of tax withholdings/payments, but was not settled---Authority stated that verification process had been started and refund voucher would be issued on its completion---Department, had to complete the verification process within time as prescribed under S.170(4) of Income Tax Ordinance, 2001---Verification process, was not an open ended exercise, and could not be allowed to continue indefinitely---Delay in settling refund claim within prescribed time would tantamount to maladministration under S.2(3)(ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Ombudsman directed that Federal Board of Revenue should direct the Commissioner to ensure that refund claim be settled within 3 weeks along with compensation due under S.171 of Income Tax Ordinance, 2001 for delayed payment of refund; and to give compliance report within next 7 days thereafter.

Muhammad Daud Khan, Advisor Dealing Officer.

Riaz Ahmad Raja, ITP Authorized Representative.

Abid Hussain Gulshan, DCIR Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.--This complaint is regarding non payment of refund of Rs.966,344 for the tax years 2015. The refund is due on account of tax withholdings/ payments under sections 147 (Advance Tax), 148 (Import of Goods), 153 (Payment for Goods, Services and Contract), 231A (Cash Withdrawal from Banks), 235 (Electricity Bills) and 236 (Telephone and Internet Tax Withholdings) of the Income Tax Ordinance, 2001 (the Ordinance).

2.The complaint was sent for comments to Secretary Revenue Division, in terms of Section 10(4) of the Federal Tax Ombudsman Ordinance, 2000. In response, the FBR submitted its comments vide letter dated 20.05.2016.

3.The AR contended that necessary papers/documents in support of verification of the tax, original electricity, phone bills etc were provided to the Deptt but refund claim was not settled. He referred to Circular No.5 of 2003 dated 30.06.2003 whereby, in item No.(iv) of Para 7, it was provided that "refund rejection order shall not be passed merely for want of tax verification where original challans of tax or evidence of tax deducted/collected has been furnished by the taxpayer. In such cases order shall be passed within stipulated period even if tax verification process had not been completed ...... "

4.In the written comments, submitted by the concerned CIR, it was stated that the taxpayer had not furnished requisite documents to process the refund claim. However, during the hearing, the DR stated that verification process had now been started and the refund voucher would be duly issued on its completion.

5.Both the parties have been heard and facts of the matter have been looked into. Deptt has to complete the verification process within time as prescribed under section 170(4) of the Ordinance. Verification process is not an open ended exercise and cannot be allowed to continue indefinitely.

Findings:

6.Dely in settling refund claim within prescribed time is tantamount to maladministration under section 2(3)(ii) of the Federal Tax Ombudsman Ordinance, 2000.

Recommendations:

7.FBR to?

(i)direct the Commissioner to ensure that refund claim is settled within 03 weeks along with compensation due under section 171 of the Ordinance for delayed payment of refund; and

(ii)report compliance within next 07 days thereafter.

HBT/71/FTOOrder accordingly.