Refund officer’s non-compliance with orders: FTO seeks CTO Islamabad’s response

ISLAMABAD: The Federal Tax Ombudsman (FTO) has issued a notice to the Chief Commissioner Inland Revenue, Corporate Tax Office (CTO) Islamabad, seeking comments on allegations of non-compliance and defiance by the Refund Officer in respect of binding orders of the FTO.

The order of the FTO was duly upheld and confirmed by the President of Pakistan. The matter pertains to the verification of withholding tax (WHT) and processing of refund claims.

Talking to Business Recorder, tax lawyer Waheed Shahzad Butt said that the conduct of the concerned officer was “not only regrettable but also a blatant violation of settled law and established judicial discipline”. It is a well-established legal position that persons who deduct advance tax under the withholding tax regime act as agents of the FBR. Therefore, if these withholding (WHT) agents fail to furnish confirmation to the Commissioner within the stipulated time frame, the lapse lies with the Commissioner and not the taxpayer.

Waheed clarified that complainants never paid such tax directly, rather, the advance tax was deducted at source and deposited in the Federal Treasury by withholding agents, including Customs at the import stage. A plain perusal of the Rule 42 certificates confirms that the entities involved in deduction and deposit of tax were largely corporate sector organizations and state-owned entities. Their records are fully traceable within FBR’s domain through the integrated tax management system (ITMS) system.

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