‘Illegal’ refund to a company: FTO directs FBR to assign ‘organised tax fraud case’ to inquiry team

ISLAMABAD: Federal Tax Ombudsman (FTO) Dr Asif Mahmood Jah has directed the Federal Board of Revenue (FBR) to assign organised tax fraud case to the inquiry team and identify the officers who had facilitated illegal refund to a Chinese company and misled higher authorities.

It is reliably learnt that in a recent landmark public interest case referred by a taxpayer citizen of Pakistan Waheed Shahzad Butt, the FTO ordered that the whole affair of organized tax fraud was in the knowledge of FBR/Corporate Tax Office/Regional Tax Office Lahore as FTO’s Own Motion Case 0003/0M/2022, initiated on 20.01.2022 had kept both formations and the FBR HQs in loop. All tax authorities were apprised about the glaring maladministration but none of them initiated any remedial measure and ultimately the complainant had to approach ATIR Lahore and the office of FTO.

FTO order stated that the complaint was filed against alleged malpractices of tax department in handling of the case of China National Electric Wire & Cable Corporation, at the Appellate Tribunal Inland Revenue (ATIR).

Briefly the complainant alleges that in the aforementioned case the department has brokered an illegal & engineered decision by ATIR. Under the law ATIR can only entertain an appeal u/s 131(1) against an order passed by the CIR (Appeals) u/s 129 but ATIR Order dated 17.06.2022 was passed in absence of any written order. Thus, it is patently illegal being contrary to unambiguous provisions of law in terms of section 129(1)(a), 129(1)(b), 129(4) and 131(1) of the Ordinance. After obtaining the said illegal order of ATIR the department misleadingly presented the same before President of Pakistan, apparently to elicit a favourable decision in representations filed by the department and individual officers of the FBR against the decision of this office in the case of (OM/020012019 and 003/OM/2022).

In response to the notice issued, the Chief Commissioners-IR, RTO and CTO Lahore submitted parawise comments. (Originally the case relates to CTO but since December, 2020 its jurisdiction was transferred to RTO Lahore). The case was fixed for hearing, DR Talat Mehrnood, ADCIR, CTO Lahore attended and he was asked to clarify departmental position.

The complainant also attended the office and submitted his assertions on the said queries.

The above discussions boil down to the following findings, though CIR Appeals had not passed any written order yet the company filed 2nd appeals before ATIR Lahore. Registration Branch, ATIR Lahore has illegally entertained the aforesaid appeals without having any order(s) by the appellate forum CIR Appeals.

Though as per memo of appeal dated 12.05.2022, addressing “CIR, Zone-I, RTO, Lahore” the concerned field formation seems to be in picture yet in Parawise comments CC1R RTO Lahore has denied receipt of any notice for hearing by concerned CIR from ATIR. ATIR passed illegal order on 17th June, 2022 and remanded the case to CIR Appeals Lahore. The order confirms that DR had given the statement before ATIR that department had no objection if case is remanded back However, RTO Lahore in their Parawise comments has categorically disowned the statement given by DR as unauthorized. Comments filed by CTO are completely evasive and fail to explain as how and why CTO’s DR had appeared unauthorized on behalf of RTO Lahore and thus facilitated the said illegal proceedings of case remand to CIR Appeals.

Once the case was illegally remanded to CIR Appeals, CTO Lahore/FBR and individual officers involved in alleged illegal favours to the complainee company filed misleading and engineered representations before the President of Pakistan.

Copyright Business Recorder, 2022