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C.No.08/ISD/IT(04)/257/2013
FEDERAL TAX OMBUDSMAN SECRETARIAT
ISLAMABAD
Complaint No.08/ISD/IT(04)/257/2013
Dated: 12-02-2013[*]
M/s Jhelum CNG StationJhelum / … Complainant
Versus
Secretary
Revenue Division
Islamabad / … Respondent
Dealing Officer / : / Sardar Irshad Shaheen, Advisor
Authorized Representative / : / Mr. Javed Rasool, ITP
Departmental Representative / : / Syed Roman Ali Shah, ACIR, RTO, Rawalpindi
FINDINGS/RECOMMENDATIONS
This complaint is against non issuance of refund for tax years 2010, 2011 and 2012.
2. According to the AR, refund applications were e-filed for all the three years on 16-11-2012. However, refund orders have not been passed within the time limit prescribed under Section 170 of the Income Tax Ordinance 2001 (the Ordinance). The refunds became due on account of excess deduction of tax on electricity bills.
3. The DR claimed that withholding tax deducted from electricity bills under Section 235 read with Section 234(A) was final charge of tax liabilities and no refund was payable in the instant case. He also claimed that Representations filed on 09-08-2012 against the Recommendations of Hon’ble FTO in identical cases were still pending.
4. The AR rebutted the claim of the DR and produced a copy of order of OIR, RTO, Islamabad, wherein refund was issued in an identical case for tax years 2010 and 2011 vide order No.148, dated 06-09-2012. He contended that RTO, Rawalpindi, was arbitrarily rejecting the refunds due and there was no uniform policy among the field formations of FBR, which was tantamount to maladministration.
5. Both the parties have been heard and record perused.
6. Hon’ble Lahore High Court in judgment reported as 211 PTD 01 held: “in spite of discharge of final tax under the Ordinance (Section 234A) the petitioners are being subjected to deduction of transitional advance tax under Section 235, which is not chargeable and therefore will invariably be refunded”.
7. During the hearing of complaints No.375/2012 and No.447/2012 dated 09-07-2012, the RTO Rawalpindi informed, vide letters dated 17-05-2012 and 26-06-2012, that RTO Faisalabad and RTO Lahore had issued refunds and exemption certificates in the light of Lahore High Court’s decision supra, and that he himself had directed his Commissioners to take necessary action accordingly.
8. FBR also clarified the issue of withholding tax on CNG stations under Section 234(A) read with Section 235 of the Ordinance vide C.No.1(14)/WHT/2009-PT, dated 18-05-2012. On the basis of this clarification, RTO, Islamabad, started issuing refund of excess deduction of tax. Treating the amount of electricity bills up to Rs30,000/- per month as minimum tax under Section 235 the balance amount would be refundable being excess deduction in the case of CNG stations in which deduction of tax @ 4% was final tax, provided electricity was consumed on CNG business only and not on petrol pump business or any other business.
Findings:
9. Its appears that no uniform policy is being followed by the field formations even after the clarification issued by FBR through Circular dated 08-05-2012, which displays negligence and inefficiency on the part of FBR. Non passing of order, as per law, within time limit prescribed under Section 170 of the Ordinance is also maladministration in terms of Section 2(3) of the FTO Ordinance 2000.
Recommendations:
10 FBR to-
(i) ensure that a uniform policy of issuance of refund is followed by the field formations in the case of CNG stations;
(ii) direct the Chief Commissioner Rawalpindi to issue refund / compensation due, as per law; and
(iii) report compliance within 21 days.
(Dr. Muhammad Shoaib Suddle)
Federal Tax Ombudsman
Dated: 06-05-2013
AH
[*] Date of registration in FTO Sectt: