Direct Tax Case 29-09-2018

Email No: 212 - 2018

FEDERAL TAX OMBUDSMAN

Complaint No. FTO-ONL/0000051 of 2017, decision dated: 31-07-2017

PRESENT:
ABDUL RAUF CHAUDHRY, FEDERAL TAX
OMBUDSMAN
M/S. SEVEN ELEVEN CNG STATION,
BAHAWALNAGAR
VS
SECRETARY, REVENUE DIVISION, ISLAMABAD
Abdur Rehman Dogar, Advisor, Dealing Officer.
Riaz Ahmad Raja, ITP, Authorized
Representative.
Muhammad Sultan, Addl. CIR, RTO, Bahawalpur,
Departmental Representative.

ORDER

FINDINGS/RECOMMENDATIONS BY: ABDUR RAUF

CHAUDHARY, FEDERAL TAX OMBUDSMAN:---.---This
complaint has been filed under section 10(1) of the Federal Tax

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Direct Tax Case 29-09-2018
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Ombudsman Ordinance, 2000 (the FTO Ordinance) against non

issuance of refund amounting to Rs.0.227 million with
compensation for tax year 2016.

2. Brief facts of the case are that the Complainant an AOP

deriving income from running “Seven Eleven CNG Station” e-filed
return on 06.09.2016 declaring income at Rs.10.288 million, tax
payable at Rs.0.411 million and refund amounting to Rs.0.227
million of the tax deducted under Section 235 of the Ordinance on
electricity. Application for refund along with original bills and
statement of tax deduction under section 234A was submitted on
IRIS as well as sent through Leopard Courier on 07.09.2016, but
the same was not disposed of as per Circular No. 5 of 2003 dated
30.06.2003. According to the complainant, the Deptt’s neglect and
inattention was tantamount to maladministration under section
2(3)(i)(a) & (ii) of the FTO Ordinance.

3. The complaint was sent for comments to Secretary Revenue

Division, in terms of section 10(4) of the FTO Ordinance. In
response, the Deptt vide letter No. RTO-BWP/SO-III/FTO-
304/6771 dated 12.04.2017 raised preliminary objection of
jurisdiction under section 9(2)(b) of the FTO Ordinance on the
ground that the matter pertained to the assessment and
determination of tax in respect of which remedy was available by
way of appeal to the appellate fora. In support, decisions of the
Hon’ble President of Pakistan in C.No. 564/LHR/ ST(157)/999/13
(M/s. Khalid Modern Industries (Pvt.) Ltd. and No. 154/KHI/ST-
(66)/527/2015 (M/s. Libra International, Karachi) were quoted. On

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Direct Tax Case 29-09-2018
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merits, it was stated that the Complainant was not entitled to

refund of tax deducted under section 235 as per provisions of
sub-section (4) of Section 234A of the Ordinance and FBR’s
clarification vide letter No. 4(19)IT-Budget/2017-23670-R dated
23.02.2017.

4. The DR reiterated the stance taken in the written comments.

Whereas, the AR contended that the Complainant was entitled to
claim refund of tax deduction under section 235 of the Ordinance.
According to him, under section 120(1)(b) of the Ordinance, return
filed had attained status of deemed assessment and so claimed
refund became due unless any amendment in the assessment
was made. It was obligatory for the Deptt to pass appropriate
order. This has not been done. By not issuing refund, the Deptt
committed maladministration which was cognizable under the
FTO Ordinance.

5. Both the parties heard and record perused. The Deptt keeps
raising preliminary objection unnecessarily just for the sake of
objection which displays mediocrity and lack of understanding of
legal provisions of FTO Ordinance, 2000 read with the tax laws.
As refund claim is not an issue pertaining to assessment of
income or determination of tax liability, the Deptt’l objection is
misconceived. However, on the issue of refund in CNG cases,
FBR has issued clarification vide letter No. 4(19)T-Budget/2017-
23670-R dated 23.02.2017. It has been clarified that in the light of
provisions of subsection (4) of section 234A of the Ordinance, a
CNG station is not entitled to claim adjustment of withholding tax

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Direct Tax Case 29-09-2018
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collected or deducted under any other head/provision of the

Ordinance even in instances where tax collected/deducted under
any other head is in excess of final tax liability discharged by the
taxpayer under section 234A of the Ordinance.

6. In view thereof, the Deptt. should dispose of refund application

in accordance with the said clarification after providing opportunity
of hearing to the Complainant expeditiously

7. The complaint stands disposed of in the above terms.

_____________________

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