Withholding tax adjustment by CNG stations: FBR circular can’t be applied retrospectively: FTO

ISLAMABAD: The Federal Tax Ombudsman (FTO) has declared that the Federal Board of Revenue’s (FBR’s) circular on adjustment of withholding tax by the CNG stations cannot be applied on refund applications filed retrospectively.

The complaints were filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against delay in issuance of aggregate refund amounting to Rs1.906 million for tax years 2Ol5 to 2019. As all the complaints relate to common issue, i.e., non-issuance of refunds, so same were decided through single consolidated order.

According to an order of the FTO, the FTO has declared that the Circular No 2017 dated 06.09.2017 cannot be applied retrospectively; hence, the said provisions of circular are not applicable for tax years 2015 to 2017. Inordinate delay in disposal of refund applications for tax year 2015 to 2017 in the garb of circular No 2017 dated 06.09.2017 and rest of the refund applications, i.e., for tax years 2018 and 2019 as per provisions of Section 234A and 235 of the Ordinance and not following the uniform policy for CNG Stations as mentioned supra is tantamount to maladministration in terms of Section 2(3) (ii) of the FTO Ordinance.

Accordingly, the FBR through letter No. 4(19) IT-Budget/2017 dated 23.02.2017 issued a clarification regarding refund claims by CNG Stations. The Board has clarified that in case of CNG Stations, advance tax collected or deducted in terms of Section 234A constituted final tax and “a CNG Station is not entitled to claim adjustment of withholding tax collected or deducted under any other head/ provision of this Ordinance even in instances where tax collected/ deducted under any other head is in excess of the final tax liability discharged by the taxpayer under section 234A of the Ordinance”.

The FTO has directed the FBR that the Commissioner-IR, Gujrat Zone, RTO Sialkot to dispose of Complainant’s refund applications for tax years 2015 to 2019 respectively, as per law.

The department stated that the FBR vide Circular No.2017 dated 06.09.2017 has clarified that tax deduction under all the head including tax deducted under Section 235 of the Ordinance constitutes full and final tax liability in case of CNG Stations.

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