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LAHORE: The Federal Tax Ombudsman (FTO) has taken strong exception to delay in clearance or refunds on preconceived notion by tax authorities instead of proceeding with the matter in the light of factual position.

According to him, the department prefers to declare a refund claim as inadmissible in case the claimant claims refund of excise duty in the mode of sales tax. He said he has recently concluded a refund matter where the taxpayer had claimed refund of excise duty under the provisions of Sales Tax Act.

According to him, the taxpayer had paid federal excise duty on local purchased raw material of cooking oil for producing cooking oil but paid the duty on its supplies under sales tax mode.

The adjudicating officers adjusted the matter without giving proper hearing under preconceived notion. Neither the department processed the claim not any hearing opportunity was provided with the registered person despite the supply of soft copy data by him, he added.

According to him, the department acted arbitrarily despite due verification of all the taxes by the concerned desk along with stock production and supplies under the relevant period.

He continued that most of the assessment orders are manifestation of a slipshod exercise of legal discretion instead of dilating upon the allegations maintained in the show-cause notices. The assessment officers prefer to draw a jaundiced inference and pass order under this scheme of action without sticking to available facts.

It is imperative to mention the fact that the available tax record is never repudiated nor rebutted on the legal touchstone. Instead, he said, a hollow standpoint is held in hostility to legal rational and factual introspection while alleging the taxpayer of unfounded and cooked up allegations of non-provision of record. Accordingly, he said, most of the orders in original as well as those of appeal speak off the fact that the entire episode from issuance of show-cause notice to the passage of order is structured on surmises and conjectured.

It may be noted that the vegetable oil and cooking oil are exempt from sales tax. However, both are dutiable under Federal Excise Duty in sales tax mode at the rate of 16% within entitlement of adjustment/refund of it in sales tax mode. Therefore, rejection of refund claim is a contradictory order between the sale tax and Federal Excise Acts, he said.

The FTO said a large number of refund claimants are found aggrieved of assessment orders passed under such situation where they made wrong application of law and the department turned it down instead of proceeding with the matter in the light of factual position. They simply declare any such claim as inadmissible through a single stroke of pen, which leads to a lengthy series of litigation causing wastage of resources of both the department and taxpayers.

He deplored that the department authorities are found deliberately mixing the genre of product, which is distinguishable from import to local purchases. He said the assessment officers act carelessly while I’m conceiving tax credit and mix it up with the exemption, which adds to the miseries of taxpayers.

Copyright Business Recorder, 2023


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