ISLAMABAD: The Federal Board of Revenue (FBR) has overstepped its legal domain by unilaterally restoring sales tax exemption on imports by diplomatic missions and privileged persons without referring to parliament or issuance of a Presidential Ordinance.

According to an order issued by the Federal Tax Ombudsman (FTO), the FBR on its own has assumed the “Review Jurisdiction” of an Act of Parliament unilaterally. While doing so FBR has clearly overstepped its legal domain and its decision is an act of maladministration being contrary to law in terms of section 2(3)(i)(a) of FTO Ordinance, 2000.

The FTO has directed the FBR to avoid any such recurrence in future and also identify the involved officers, who have created an embarrassing position for the Ministry of Foreign Affairs.

Raw materials, finished goods’ tariffs: FBR to remove anomalies from federal tax laws

Details of the case revealed that the Own Motion investigation is based on Federal Tax Ombudsman jurisdiction/ powers under section 9(1) of the Federal Tax Ombudsman Ordinance, 2000, taking cognizance of FBR’s U.O No. 4/I-STB/ 2022, dated February 4, 2022, whereby exemption on imports by diplomatic missions and privileged persons has been restored by FBR without any legal authority.

In the instant case it has been observed and FBR was accordingly confronted u/s 10(4) of FTO Ordinance, 2000 that that aforementioned U.O confirms that through omission of S.NO.46 of the Sixth Schedule to the Sales Tax Act, 1990, through Finance (Supplementary) Act 2022, the imports by diplomats, diplomatic missions and other privileged persons were rendered taxable.

Copyright Business Recorder, 2022