REFUND APPLICATIONS: FTO asks FBR to amend laws for deciding cases within timeline


KARACHI: Federal Tax Ombudsman (FTO) has advised Federal Board of Revenue (FBR) to amend laws for a time-line to decide refund applications.




The FTO made these observations in a refund case of M/s. Pioneer Cables versus Revenue Division filed on September 18, 2017.

The company as complainant argued against MCC Appraisement (West) Karachi for delay in the refund of customs duty and additional customs duty which the complainant paid due to inadvertence at the time of importing seven consignments, when he failed to claim exemptions under Fifth Schedule of the Customs Act, 1969 or SRO 1178(I)/2015 dated November 30, 2015.

The customs collectorate in its reply submitted that the company imported consignments of polyethylene viscole from Austria and got released seven goods declaration (GDs) after payment of customs duty at 11 percent and additional duty at one percent.

The collectorate further informed the FTO that at the time of filing of GDs, the importer neither claimed any benefit of fifth schedule of the act nor that of SRO 1178(I)/2015 dated November 30, 2015.

It is further informed the FTO that the importer filed for refund of overpaid customs duty and additional customs duty for the seven consignments. In response a letter sent by the department to the importer asking for a separate confirmation for claiming input from the sales tax amount paid on imported consignment from sales tax department.

The collectorate informed the FTO that the complainant replied that since he was claiming refund for customs duty only, therefore, there was no need to produce documents regarding claim of input tax adjustment for sales tax.

The FTO has been informed that since under the provisions of the Customs Act, refund can only be sanctioned on proving that the incidence of customs duty had not been passed on to the end consumer.

The collectorate said that the complainant M/s. Pioneer Cables Limited had not submitted the sufficient reasons, confirming its stance that, the incidence of customs duty and other levies had not been passed on the buyer or consumer.

It is submitted by the collectorate that the complainant had tried to prove that incidence of overpaid duty and taxes had not been passed on to buyer or end consumer, by submitting the certification made by M/s. Rehman Sarfaraz Raheem Iqbal Rafiq Chartered Accountants, Karachi. Whereas Section 19A of the Act does not prescribe such certificate by chartered accountants, the collectorate replied.

The collectorate said that the importer had been asked to provide record in specific format as such in the sales tax invoices to determine whether the incidence of duties and taxes had been passed on the final consumer.

Authorized Representative (AR) of the complainant informed the FTO that complete documents had been provided to the department and in case any specific document is required, the same may be identified and intimated.

The FTO after hearing both the sides, observed that the complainant was committed to provide documents as identified by the department. Further, the department undertook to finalize the matter upon submission of requisite information by the complainant.

“It is evident that the matter is pending before the department for the last nine months but since no time line is provided in the Act for passing orders on refund applications, no case of maladministration is made out,” the FTO observed.

The FTO directed the department to finalize the proceedings expeditiously, and preferably within 45 days. “FBR is also advised to consider for amending relevant Section of the Act, for inclusion of a specific period for deciding refund applications,” the FTO observed.

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