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ISLAMABAD: The Islamabad High Court (IHC) issued contempt notices to the Chief Policy Federal Board of Revenue (FBR) and Commissioner Inland Revenue Large Taxpayer Office (LTO) Islamabad for coercively collecting funds from the accounts of the Islamabad Electric Supply Company (IESCO).

The said department has also refused to return the funds after Court had taken cognizance and brought the matter to their attention to take corrective action.

It is reliably learnt that the development took place solely due to strict intervention by the IHC on the petitions moved by IESCO against LTO Islamabad through bank account attachments.

LTO refunds over Rs2bn to IESCO on IHC’s order

When contacted, tax lawyer Waheed Shahzad Butt informed that earlier, the IHC has summoned Member (Operations-IR) and Chief CIR, LTO Islamabad to appear in person before IHC, for violation of the order passed by IHC in tax recovery matters, by the field formations, specifically LTO, Islamabad, while this time IHC has forwarded copy of order to the Chairman FBR for compliance.

Waheed Butt further added that IHC took exception to the non-implementation of its order and ordered “The last such refund in the amount of Rs.2.387 billion was sanctioned but such refund has actually not been issued. A further refund of Rs.2 billion has been sanctioned.

He states that these refund orders are of no value to the petitioner to the extent that the money is actually not credited to the account of the petitioner.

IHC order stated that there are two issues before the Court. One relates to the refund of amounts illegally recovered by FBR.

The other is the contemptuous manner in which the injunctive order issued by this Court has been treated by FBR and continuous to be breached by refusal of FBR to make whole the taxpayer in relation to the amounts illegally recovered during the pendency of an injunctive order.

The Court by order dated 22.02.2024 had directed that a list of officers be filed, who had affected illegal recovery or who had refused to take corrective action since the Court had taken cognizance of the matter and issued notices. Primary officer, who was involved is one Masood Akhtar, who is presently posted as Chief (Policy) in FBR. Section 4 of the FBR Act, 2007 specifies the powers and functions of the FBR and obliges FBR to, inter alia, “to adopt modern effective tax administration methods,” “to take appropriate measures including internal controls to combat corruption within the organizations under the Board,” “to introduce and maintain a system of accountability of performance, competence and conduct of the employees,” and “to setup mechanism and processes that facilitate removal of grievances and complaints of taxpayers.”

Field formations working under the hierarchy of FBR might be involved in maladministration and abuse of the authority vested in them, where Commissioners in the field are operating as recovery agents and not public officials, who are obliged to apply the laws, to comply with the same in letter and spirit. Let notices under the Contempt of Court Ordinance be issued to Masood Akhtar, Chief (Policy) FBR, and Reema Masud, CIR, to satisfy the Court as to why penal action should not be taken for: (a) coercively collecting funds from the accounts of the petitioner illegally during the pendency of an injunctive order, and (b) inaction and refusal to return the funds after this Court had taken cognizance and brought the matter to their attention to take corrective action.

Let Chairman FBR also file a report to establish that refusal to abide by stay orders issued by the courts and other adjudicatory forums under tax law is not an extension of a policy and practice tacitly approved by the FBR, and FBR has taken steps to curb such practice and take disciplinary action against delinquent officer in discharge of its responsibilities. Let the matter be fixed for 28.03.2024. Let the office send a copy of this order to Chairman FBR for compliance, IHC ordered.

Copyright Business Recorder, 2024


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