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ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to issue instructions to field formations regarding point of sale (POS) to clarify prerequisite conditions/qualification for a retail outlet for integration with the FBR’s POS system.

Briefly, the complainant, an individual deriving income from sweets and bakery shop received notice from the FBR, whereby, he was required to integrate with the POS as provided u/s 3(9A) read with 2(43A) of the Sales Tax Act, 1990. Against notice, the complainant submitted a reply, wherein, he informed that his shop area is less than 1,000sqft and the annual electricity bill is less than Rs1.200 million etc but to no avail.

The complaint was later sent to the secretary Revenue Division in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act 2013.

In response thereto, the chief commissioner IR, RTO, Sargodha submitted comments.

On merits, it was contended that the complainant’s reply was received on 20.2.2023 which was under consideration.

Further, the verification of the business premises is also under process. As per Chapter XIV-A of the Sales Tax Rules, 2006, Bakers & Sweets are under obligation to integrate their business with FBR’s POS system Rule 150ZB of the Sales Tax Rules, 2006.

Hence, no element of maladministration was involved in the case.

Both parties were heard and record perused.

Examination of the record and documents submitted by both sides transpired that there was no evidence that the sector “sweets and bakers” must be integrated with the FBR’s POS system.

Further, this forum demanded list of “Sweets & Bakers” integrated with the FBR’s POS system and as per list provided by the department, out of 32 shops nine were integrated with POS. Department insisted that bakeries and sweets shops were obliged to register themselves under Sales Tax Act, 1990 and install POS system, according to Rule 150ZA and Rule 150ZB contained in Chapter XIV of Sales Tax Rules, 2006.

Conditions laid in Section 2(43A) did not apply and bakeries as business sector were supposed to install POS. However, no express specific order from the FBR could be produced from both sides. On the other hand, the AR of the complainant insisted that for installation of the POS system conditions/categories enumerated in Section 2(43A) were a pre-requisite and mandatory.

Accordingly, the FTO has directed the FBR to withdraw the show cause notice dated 07.02.2023. Furthermore, the FBR to issue clear instructions to field formation to follow pre-qualifying criteria regarding the POS integration provided in Section 2943A of the Sales Tax Act, 1990.

Copyright Business Recorder, 2023

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