Held-up GST returns: FTO bars FBR from imposing penalties on registered persons

ISLAMABAD: In a major development, the Federal Tax Ombudsman (FTO) has barred Federal Board of Revenue (FBR) from imposing penalties on sales tax registered persons in cases where sales tax returns remained pending due to delay on part of the tax department.

In this regard, the FTO has issued a detailed order against the FBR here on Tuesday.

The FTO has also categorically conveyed to the FBR that there is no legal provision under the Sales Tax Act, 1990 or Sale Tax Rules, 2006 which stops a registered person from filing of sales tax return of the current period.

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Not allowing permission to file sales tax returns, is against the basic rights of the registered person as being on the inactive taxpayers’ list would cause financial losses for the taxpayers as their suppliers would hold payments,“ the FTO stated.

According to the FTO’s order, this is an Own Motion investigation initiated while exercising power conferred under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance).

Briefly, this forum has been receiving a number of complaints on the issue of delay in granting permission to file sales tax returns by the concerned Commissioners Inland Revenue (CIRS), adversely affecting business of the corporate sector.

Consequent to investigation, such inaction/delay has been established in these complaints.

The brief facts of the complaint revealed that if a registered person fails to file his sales tax returns for six tax periods consecutively due to any reason, he cannot file his sales tax return for the next tax period and he has to seek prior permission from the concerned Commissioner-IR having jurisdiction.

The request for permission to file sales tax return is applied electronically through system under section 26AB of the Sales Tax Act, 1990 read with rule 14(3) of chapter II of the Sales Tax Rules, 2006.

In the notice, it has been alleged that if a registered person fails to file his sales tax returns for six consecutive tax periods due to any reason, he cannot file his sales tax return for the current tax period and he has to seek prior permission from the Commissioner-IR having jurisdiction.

It has been further alleged that the requests seeking permission from the CIRS are kept pending in the Login of the CIRS due to their negligence of not addressing such requests timely electronically causing inordinate delay at the cost of “Ease of doing business”.

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