2012 PLP 309 (PTD)

DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN),

The complainant through this complaint has sought indulgence of the Hon'ble FTO against delay in issuance of refund of Rs.45,939 for the tax year 2007 and Rs.73,997 for tax year 2008. (Total: Rs.119,936).

2. The complaint was sent to Secretary, Revenue Division, on 13-10-2011 for comments. The Chief Commissioner, RTO, Islamabad, submitted comments vide Letter No.CC/D/RTO/2011/419CC, dated 14-11-2011.

3. According to the complainant, he was posted as Deputy Director General (Science), National Institute of Science and Technical Education (NISTE), Islamabad. Working as Teacher Trainer, he received instructional allowance @ 20% of basic pay on which he was entitled to 75% rebate in tax as admissible to whole time teachers and researchers. However, the Department had refused to refund excess deduction of tax which was maladministration as defined under the FTO Ordinance.

4. In the departmental reply it has been contended that the complainant was posted as Deputy Director General (Science) which was an administrative post. As he was not working as a full time teacher or researcher, he was not entitled to 75% rebate of tax as claimed by him. Also, the taxpayer was required to file refund application for tax year 2007 latest by 30-9-2007 and for tax year 2008 latest by 30-9-2008, whereas he filed the applications for refund on 17-8-2011. As his claim was hit by limitation, the refund could not be allowed to him.

5. During the hearing, the complainant stated that he worked in NISTE as Incharge of Science Wing in the capacity of Teacher Trainer and also supervised Science Teacher Training Programme. His salary included instructional allowance @ 20% of basic pay. He continued to receive this allowance from the date of posting till retirement, which shows that he was all along a full time teacher. He was therefore entitled to 75% tax rebate admissible to full time teachers and researchers. He stated that he submitted his income tax returns and claimed refund of Rs.45,939 for tax year 2007 and Rs.73,997 for tax year 2008. He filed applications for issuance of refund on 17-8-2011 but the refund had not been issued so far.

6. During the hearing the complainant filed a rejoinder mostly relating to departments other than income tax. He stated that he suffered from severe 'ischemic stroke' which ultimately led to his complete mental and physical paralysis. He has been subjected to discrimination not only by the NISTE administration but also by the tax department. He stated that photo copies of his salary slips for the relevant period have been provided to the Department which is sufficient evidence of deduction of tax from his salary.

7. The DR stated that the taxpayer was holding supervisory job and was not entitled to 75% tax rebate under clause (2) of Part-III of the Second Schedule to the Income Tax Ordinance, 2001. The complainant also did not provide any evidence of tax deduction. His claim was otherwise barred by time as the refund application was not filed within prescribed time limit.

8. The averments of both sides have been examined. The complainant filed returns of income which constituted deemed assessment orders for both the years. These deemed assessments have not been modified or amended by the Department. His claim of being a full time teacher has not been rejected through any written order. Therefore, his claim of refund validly exists on record even today. He has filed sufficient evidence of tax deduction in the shape of salary slips for the relevant period. Departmental contention about time limitation is misplaced because the Hon'ble Supreme Court of Pakistan in the case of Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others (sic) held that a refund claim could not be declined on the ground of limitation. "No person shall be deprived of his property save in accordance with law" is the Fundamental Right enshrined in Article 24(1) of the Constitution. The Departmental refusal to entertain the complainant's claim of refund is not found plausible. Findings:--

9. The action of the Department in refusing the complainant's claim of refund based on 75% tax rebate admissible under clause (2) of Part-III of Second Schedule to the Income Tax Ordinance, 2001 is unfair, unjust and arbitrary. It is tantamount to maladministration under section 2(3)(i)(b) of the FTO Ordinance, 2000. Recommendations:--

10. F.B.R. to

(i) direct the Chief Commissioner, RTO, Islamabad to issue refund, as per law, within 15 days; and (ii) report compliance within 7 days thereafter. C.M.A./266/FTO Order accordingly.