Maladministration

Petitioner / insurance company was aggrieved of orders passed by Federal Insurance Ombudsman and Appellate Authority to pay insurance claim to respondents / insured persons

Plea raised by petitioner / insurance company was that respondents were suffering from ailments prior to their insurance which were covered under "pre-existing conditions"

Validity

Merely incorporating "pre-existing conditions are not covered" in the exclusion term of the Policy did not allow petitioner / insurance company to repudiate the claim

Where a stipulation was not merely unreasonable but impossible, in the sense that from the outset it never could be performed, it was a nullity, and was simply disregarded

Respondents / insured persons alleged mala fide conduct, delay in claim settlement, arbitrary repudiation, misrepresentation of policy terms and repudiation contrary to law

Federal Insurance Ombudsman rightly found maladministration and directed payment of reasonable compensation for the medical expenses incurred by respondents

Federal Insurance Ombudsman rightly assumed its jurisdiction while deciding complaints filed by respondents as their grievances fell squarely within the Ombudsman's jurisdiction under S.127 of the Insurance Ordinance, 2000

High Court declined to interfere in the orders passed by two fora below

Constitutional petition was dismissed in circumstances.

After conducting the investigation and examining the record, it had been established that the Commissioner Inland Revenue (Appeals-), passed Order-in-Appeal, however, the Respondent / Department discharged its official obligation by issuing the appeal effect order after a lapse of more than six years, without allowing credit for the amount forcibly recovered through bank attachment

The anxiety and hardship suffered by the taxpayer were natural, as despite the lapse of a considerable period, their request for issuance of the appeal effect order was not diligently attended to by the Department

Such prolonged inaction on the part of the Department and the concerned officers in the discharge of official duties constituted "maladministration"

Federal Tax Ombudsman recommended that the FBR shall direct the Chief Commissioner to (i)(a) fix the responsibility, after looking into the unjustified delay in allowing appeal effect, after 6 years, violating the relevant provisions of law and only after the intervention of this forum, ; (b) take cognizance of non-compliance of notices issued by this forum previously asking the Department to present its stance ; (ii) the Commissioner Inland Revenue shall rectify appeal effect order, allowing the credit of tax forcibly recovered through bank attachment; (iii) the Commissioner Inland Revenue shall immediately dispose of refund claim for the Tax Year 2014, in accordance with the law and after giving proper hearing

Complaint was allowed accordingly.

Alleged irregularities in registration process of Federal Board of Revenue (FBR) entailed the implications that the new manually issued NTNs might be misused to avail tax relief at reduced rate especially in case of property registration , and that the number of non-filers kept swelling because such newly registered persons might not be bona fide filers

It was found that out of 65 manually registered new cases in RTO, Multan 38 taxpayers did have one or more SIMs in their name as verified from online available website

Further, in said 65 newly issued NTNs, 51 registered persons belonged to jurisdiction of RTO, Multan and had been registered by using user ID of officer / official working in RTO, Multan and the remaining 14 had been registered by using ID of officers of other RTOs

Most of said newly registered persons were filers and there was every likelihood that they were registered to avail the benefit of reduced regime of withholding taxes especially for registration of immovable property

Findings of Federal Tax Ombudsman were that, in view of likely leakage of state revenue, the issue required further probe by the Field Formations because such registrations had been made in violation of Standard Operation Procedure (SOP) laid down by the FBR for registration of taxpayers linking it with mandatory incorporation of SIM numbers; maladministration in terms of section 2(3)(i) of the Federal Tax Ombudsman Ordinance, 2000 was clearly visible

Federal Tax Ombudsman recommended FBR to (i) direct the DG (DT & IT), FBR and PRAL authorities at Islamabad to carry out a thorough investigation of the data of recent manually registered persons by the Field Formations in order to forestall any Revenue leakages; (ii) Departmental officers involved in by passing FBR's SOP needed to be identified and taken to the task

Complaint was allowed accordingly.

Grievance of the taxpayer emanated from the refusal of the Department to abide by the stay order issued by the Commissioner Appeals and despite the passage of same (stay) the bank accounts of the petitioner were not detached

Taxpayer filed complainant before the Federal Tax Ombudsman who declared the non-compliance of stay order as maladministration

Petitioner /taxpayer impugned an order passed by the President of Pakistan, whereby findings and recommendations of the Federal Tax Ombudsman (FTO) were set-aside on a representation filed by respondent/Federal Board of Revenue (FBR)

Validity

Considerations that prevailed with the President of Pakistan were that the Federal Tax Ombudsman ('FTO') had exceeded his authority by interfering with the matter of assessment of tax and interpretation of law; which obviously was not the case

Question of legality of the assessment order passed against the taxpayer had been settled by the Appellate Tribunal Inland Revenue

Question before the FTO was with regard to the maladministration on part of Assessing Officers as defined under S. 2(3)(1) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 ('the FTO Ordinance, 2000')

Finding of the FTO was that the failure or refusal of the relevant tax officials to honor and implement the stay order issued by the Commissioner Appeals was perverse, arbitrary, unjust and oppressive, and that conduct falls within the definition of maladministration under S. 2(3)(1)(b) of the FTO Ordinance, 2000

After reaching such conclusion, the FTO issued recommendations to the Chief Commissioner Inland Revenue to take suitable action against the officials responsible for failure to comply with the order of the Commissioner Appeals

Such recommendations fall within the powers vested in the FTO under S. 14(6) of the FTO Ordinance, 2000

High Court set-aside the decision of the President of Pakistan for not being in accordance with law, and upheld the decision of the FTO, directing the FBR to ensure the re-commendation passed by the FTO was given effect in accordance with provisions of law

Constitutional petition, filed by the taxpayer, was allowed, in circumstances.

Grievance of the taxpayer emanated from the refusal of the Department to abide by the stay order issued by the Commissioner Appeals and despite the passage of same (stay) the bank accounts of the petitioner were not detached

Taxpayer filed complainant before the Federal Tax Ombudsman who declared the non-compliance of stay order as maladministration

Plea taken by the FBR was that the Commissioner Inland Revenue was never made aware of a stay order issued by the Commissioner Appeals

Validity

As a matter of practice, the Commissioner Appeals also endorses a copy of any order passed under S. 128(1A) of the Income Tax Ordinance, 2001, to the relevant Commissioner Inland Revenue

For FBR to take such plea/ position (that the Commissioner Inland Revenue was not aware of a stay order) would amount to FBR denying the taxpayers the right to a fair and just tax system

It is the duty of FBR to ensure that the taxpayers are treated justly and fairly during the adjudication process

And it is not for FBR to deny knowledge or dodge service of any orders issued by the Commissioner Appeals and thereby deny any benefit of a stay order issued by the Commissioner Appeals in favor of the taxpayer

Consequently, the denial of knowledge was without merit and would constitute an independent ground for FBR, under the relevant provisions of the Federal Board of Revenue Act, 2007, to take disciplinary action against officials who claimed that they were unaware of the stay order passed by the Commissioner Appeals

High Court set-aside the decision of the President of Pakistan for not being in accordance with law ,and upheld the decision of the FTO, directing the FBR to ensure the re-commendation passed by the FTO to be given effect in accordance with provisions of law

Constitutional petition, filed by the taxpayer, was allowed, in circumstances.

Complaint was filed by the taxpayer against a Commissioner Inland Revenue (CIR) serving with FBR requesting for initiation of defiance / contemptuous proceedings on account of malfunctioning, misuse of powers, duplicate proceedings and duplication of notices for deliberately blocking the lawful refund for relevant Tax Year

Federal Tax Ombudsman found that i.) The department lacked the clarity to dispose of the pending issues as per law and norms

Prolonged proceedings adversely impact both the department as well as the taxpayer; ii.) The complainant did not come clean either: on one hand he had agitated that the core reason for rejection of refund claim at the time of first rejection of refund claim under S. 170(4) (that tax deducted under S. 148 of the Income Tax Ordinance, 2001, was final discharge of tax liability) was neither raised in the Show Cause Notice nor opportunity of hearing was given, but in the (present) complaint he was contesting the issuance of notice communicating the same reason and opportunity of being heard ; iii.) Departmental view that it was a case of Final Tax Regime, therefore, nothing was overpaid to be refunded was a legal issue, subject to different interpretation of law and Federal Tax Ombudsman Office was not a proper forum to decide such issues rather Superior Courts were

Facts of each individual case determine the application of law and legal precedents; iv.) Mere issuance of a notice or a show cause itself doesn't constitute any maladministration unless some illegal order was passed as courts have held in a number of cases that mere issuance of show cause cannot be taken as infringement upon someone rights; v.) Notices under S.122(9) read with S. 122(5A) of the Ordinance, 2001 being related to assessment issues need not be discussed at this forum (Federal Tax Ombudsman) as any lapse on any account was the prerogative of appellate fora

Thus, the allegations levelled by the complainant on the Respondent /CIR i.e. "malfunctioning and misuse of powers, double proceedings and duplication of notices just to gulp down the lawful refund, deliberate withholding and non-payment of refund, defiance and contemptuous proceedings" appeared to be premature; however, prolonged proceedings under S.170(4) of the Ordinance 2001 despite issuance of multiple notices constituted maladministration in terms of Ss.2(3) (i) & 2(3) (ii) of FTO Ordinance, 2000

However, noticeably, the conduct of departmental representative, during the course of proceedings, remained far from being exemplary

Being tax collector the FBR functionaries were expected to be polite, composed and compassionate while listening to the grievances of tax payers

The conduct of a civil servant ought not to be prejudicial to good order, service discipline or unbecoming of an officer and a gentleman

The FBR functionaries must at all times cognizant of the fact that "courtesy" was one of the core values being pursued by FBR

Federal Tax Ombudsman recommended that the FBR was required to i) direct the CIR to dispose of the refund claim in accordance with law and after giving proper opportunity of being heard to the complainant and compliance to be reported in 30 days; (ii) take practical measures to inculcate the true essence of "courtesy" in its functionaries and this should also be one of the cardinal yardsticks in performance evaluation of the officers/officials

Complaint was disposed of accordingly.

Grievance of the complainant (lecturer of Government College Bannu, hired by the Directorate of Higher Education Government of KPK Peshawar) was that his salary was not liable to tax

Plea of the respondents/FBR was that college authority had hired the complainant /taxpayer who was providing services in private capacity upon which tax was withheld under S.153(1)(b) of the Income Tax Ordinance, 2001

Validity

Record revealed that in view of prolonged recruitment proceedings at Provincial Public Service Commission , the Directorate of Higher Education Government of KPK Peshawar, had evolved a separate and streamlined mechanism for hiring appointment of lecturers on semester to semester basis ; thus, plea of the respondents / FBR was not justified in alleging that college authority had hired the complainant / taxpayer who was providing services in private capacity

Federal Board of Revenue's treatment of the instant cases under S. 153(1)(b) of the Income Tax Ordinance, 2001, was against the dictates of law and excessive tax deductions from the pay/wages of a hired employee of educational institution, which tantamounts to maladministration in terms of Federal Tax Ombudsman Ordinance, 2000

Said discriminatory, unjust and extra legal treatment of salary cases tantamounts to maladministration in terms of S. 2(3)(i) and (ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman recommended / directed FBR to ensure that hired lecturers of government educational institutions were not burdened with excess deductions at withholding stage while issuing necessary clarification for all withholding agents to safeguard employees like complainant against excessive deductions

Complaint was allowed accordingly.

Refund application of the complainant / Government servant for Tax Year 2018 was rejected on the basis that evidence of tax deduction was not attached with the application, complainant was informed by the Chief Commissioner that his application for refund had already been rejected almost two years ago ;and that since there was no refund application pending, his case could not proceed

Validity

Order having been passed under S.170(4) of the Income Tax Ordinance, 2001 was a classical example of departmental inattention and incompetence as on one hand, (one page )order stated that, "necessary evidence of tax payments is placed on record."

However, in the concluding para of same order the officer opined "that the taxpayer neither furnished any evidence regarding tax deduction manually not attached any evidence in support of refund claimed....... In view of above facts of the case, the refund application is rejected"

Thus, the contradiction and carelessness were more than evident

Said order, under S. 170(4) of the Income Tax Ordinance, 2001 was silent about any opportunity of being heard given to the taxpayer prior to passing rejection order; which act itself contravened the said section which obligated the Department to afford proper opportunity of being heard

In the present case, tax deduction mainly related to S. 236-K of the Income Tax Ordinance, 2002, which was CNIC based and internally verifiable from FBR's portal

Thus, the present case reflected serious incidence of maladministration in terms of S. 2(3)(1)(b)(c) and (ii) of FTO Ordinance, 2000

Federal Tax Ombudsman recommended that FBR be directed to ensure that the concerned Commissioner was to revisit the impugned order and the claim of refund be disposed of as per law after affording proper opportunity of being heard to the complainant

Complaint filed by the taxpayer was disposed of accordingly.

Plea of the complainant was that the online portal for filing tax return (IRIS) allowed the declaration of credit notes issued to unregistered customers in the sales tax return, however, in subsequent month, the IRIS portal had reversed the said credit notes, which reflected incidence of maladministration

Explanation made by the FBR was that such blocking, being a bona fide action, was temporary and aimed at abnormal flow of credit notes as unbridled acceptance of credit notes could trigger a wave of tax fraud as in some cases of Registered Persons an abnormality of huge credit notes against supplies made to unregistered persons, drastically reducing their tax liability, had been observed by FBR

In order to address the hardships caused to the Registered Persons, the FBR had, at first, allowed adjustment of Credit Notes against unregistered buyers in case of the automobile sector; and then at second stage, adjustment through Credit Notes for manufacturer-cum retailers, up to certain limits had been allowed

Federal Board Revenue's detailed reply and actions initiated after the intervention of FTO Secretariat in order to alleviate the grievances of genuine registered persons was fair, cautious and reasonable

Thus, no maladministration was visible

Complaint warranted no further action, which was disposed of.

Case of the claimant (Tractor Manufacturer Unit) was that industry pays 17% sales tax to its vendors from whom it purchases parts ; that it is allowed to pass on only 5% Sales Tax to the buyers and FBR has to refund rest 12% to the Tractor Manufacturer; that said differential, in case of the claimant has touched Rs.6 billion, that said scenario left no choice for the Tractor Manufacturer but to suspend operations to save itself from future losses; that Department had not processed/ sanctioned due refund within three days as prescribed under Recognized Agricultural Tractor Manufacturers Rules, 2006, issued vide SRO.363(I)/2012 dated 13.04.2012 ('the Rules/SRO')

Validity

Subject to filing of refund application, pursuant to R. 2 of the Rules / SRO, refund of admissible excess input tax is to be allowed within three days

Subject to Rule 4, Tractor Manufacturer (claimant) is required to file complete refund claim along with requisite supportive documents within fifteen days of sanctioning of refund

In case, any amount already sanctioned and paid is found inadmissible, the same is recoverable within seven days by encashing the bank guarantee to the extent of adjudged liabilities

It appears that timelines, given in prescribed procedure, are not being followed in letter and spirit while processing/sanctioning refund claims of the Tractor Industry

Delay in processing/sanctioning due refund claims and consequently, delay in transfer of sanctioned amount to Tractor Manufacturers' (claimants') bank accounts, as per timelines, prescribed vide the Rules / SRO, is tantamount to maladministration in terms of S. 2(3) of the Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman recommended that the FBR shall direct :-(i) all CCIRs, holding jurisdiction over sales tax affairs of Tractor Industry, to strictly comply with timelines, as prescribed vide SRO.363(I)/2012 dated 13.04.2012, while processing due refund claims, as per law; and (ii) report compliance within 45 days

Complaint was disposed of accordingly.

Plea of the complainant (Pakistan Overseas Employment Promoters Association) was that it was to be attributed as maladministration that the charge of Sales Tax only on service charges (Rs.6000/- per person), instead of the entire turnover (which included actual expenses incurred on air ticketing, medical, work permit, levy, visa and documentation of the emigrant)

Validity

Service charges have been elaborated at Sr. No.15 of the Emigration Rules, 1979 (updated 2021), which reads as "(1) person selected for employment abroad by an Overseas Employment Promoter or the Corporation shall deposit a sum of rupees six thousand in case of monthly salary up to twelve hundred US dollars or equivalent to it in any other currency and rupees ten thousand in case of monthly salary equal to twelve hundred and one or more US dollars or equivalent to it in any other currency with a branch of a bank which shall issue a certificate in the form as set out in Form 7"

Punjab Finance Act, 2020 had clarified that a 5% rate of tax was chargeable on the value of service as fixed by the Bureau of Emigration and Overseas Employment, whereas, the ICT (Tax on Services) Ordinance, 2001 vide S. 3(1) determined the scope of tax on the value of the taxable services rendered or provided in ICT and applied 15% rate of tax

This was a major dichotomy of Provincial and Federal Sales Tax Law where the Provinces were charging sales tax on service charges equal to Rs.6,000/- or Rs.10,000/- as the case might be, while the FBR in ICT was charging sales tax on the overall value of taxable services

Findings of the Federal Tax Ombudsman were that, evidently, no maladministration could be attributed to FBR, however, due to the glaring dichotomy and disparity in the applicability of Sales Tax chargeability rate on service charges or value of services respectively was found to be discriminatory, which adversely impacted the ease of doing business and tantamount to non-provision of a level playing field to the complainant (Pakistan Overseas Employment Promoters Association) in ICT

Recommendations of the Federal Tax Ombudsman were that FBR be advised to remove said disparity as well as discrimination by proposing necessary amendments in the ICT (Tax on Services) Ordinance, 2001, in the next budget proposals for the Finance Bill, 2023-24

Complaint was disposed of accordingly.

Plea of the Complainant (Pakistan Overseas Employment Promoters Association) was that the higher tax in ICT be attributed as maladministration

Validity

There was no denial of the fact that the rate of sales tax on complainant (overseas employment promotors), applicable in Islamabad Capital Territory (ICT), was discriminatory vis-a-vis the rates, applicable in the provinces of Sindh and Punjab while no tax had been notified by the province of KPK and Balochistan, however, on said account, no act of maladministration could be attributed to FBR or its field formations as they were applying the law i.e. the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, promulgated by the President and amended by Finance Act, 2021

Said discrimination could only be removed by Legislation

Subject plea of the petitioner was earlier received at FTO Secretariat as "Budget Proposal" for Finance Year 2022-23, which was accordingly sent to FBR with recommendations for consideration

Findings of the Federal Tax Ombudsman was that, evidently, no maladministration could be attributed to FBR, however, due to the glaring dichotomy and disparity in the Sales Tax, chargeability rate between the Provinces and ICT was found to be discriminatory, which adversely impacted the ease of doing business and was tantamount to non-provision of a level playing field to the complainant (Pakistan Overseas Employment Promoters Association) in ICT

Recommendations of the Federal Tax Ombudsman were that FBR be advised to remove said disparity as well as discrimination by proposing necessary amendment in the ICT (Tax on Services) Ordinance, 2001, in the next budget proposals for the Finance Bill, 2023-24

Complaint was disposed of accordingly.

Disposal of cases of all individuals/AOP who had adjusted refund claims against admitted tax liability of Tax Years 2016-2021, matter of

Federal Tax Ombudsman, jurisdiction of

Maladministration

Scope

Respondent /Department raised objection regarding bar on jurisdiction of the Office of Federal Tax Ombudsman

Validity

Issue in hand was not of assessment of determination of tax

The taxpayer had outstanding refund claim of previous years far in excess of admitted tax liability clearly visible in respective tax years in IRIS

Determination of refund under S.170 of the Income Tax Ordinance, 2001, for those previous tax years against prescribed period of six months, was pending with the department

Now the Department intended to penalize the taxpayer for not being able to produce refund order which was in fact to be processed by the Department itself

This was a fit case of maladministration to be treated by Federal Tax Ombudsman.

No penalty was imposed by authorities under Pakistan Environmental Protection Act, 1997, against officials of Capital Development Authority who commenced the project prior to approval of Environment Impact Assessment

Effect

Abdication of powers by Pakistan Environmental Protection Agency by not submitting any complaint against delinquent officials of CDA and/or the contractor to Environment Tribunal could not operate as a fetter on the Constitutional jurisdiction of High Court in taking notice of such contravention

Maladministration, under Art. 2(2) of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, included a decision, process, recommendation, act of omission or commission which was contrary to law, rules or regulations or was a departure from established practice or procedure, unless it was bona fide

Continuation of construction activity by CDA and/or the contractor without having obtained an approval of the EIA was a clear violation of S. 12 of Pakistan Environmental Protection Act, 1997

Construction activity continued despite issuance of show cause notice by Pakistan Environmental Protection Agency (PEPA); the continuation of such activity could not be termed as bona fide

PEPA had adequately put CDA to notice that the continuation of construction activity was a contravention of S. 12 of Pakistan Environmental Protection Act, 1997

Wafaqi Mohtasib was empowered under Art. 9 of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, to undertake any investigation into any allegation of maladministration on the part of any Agency or any of its officers or employees on a motion of High Court made during the course of any proceedings before it

"Agency" was defined in Art. 2(1) of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, which included a statutory body like CDA

High Court instead of shutting it's eyes to such brazen violation by CDA of the mandatory requirements of S. 12 of Pakistan Environmental Protection Act, 1997, referred such maladministration committed by the officials of CDA to Wafaqi Mohtasib for investigation and proceeding in accordance with the law.

No penalty was imposed by authorities under Pakistan Environmental Protection Act, 1997, against officials of Capital Development Authority who commenced the project prior to approval of Environment Impact Assessment

Effect

Abdication of powers by Pakistan Environmental Protection Agency by not submitting any complaint against delinquent officials of CDA and/or the contractor to Environment Tribunal could not operate as a fetter on the Constitutional jurisdiction of High Court in taking notice of such contravention

Maladministration, under S. 2(2) of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, included a decision, process, recommendation, act of omission or commission which was contrary to law, rules or regulations or was a departure from established practice or procedure, unless it was bona fide

Continuation of construction activity by CDA and/or the contractor without having obtained an approval of the EIA was a clear violation of S. 12 of Pakistan Environmental Protection Act, 1997

Construction activity continued despite issuance of show cause notice by Pakistan Environmental Protection Agency (PEPA); the continuation of such activity could not be termed as bona fide

PEPA had adequately put CDA to notice that the continuation of construction activity was a contravention of S. 12 of Pakistan Environmental Protection Act,1997

Wafaqi Mohtasib was empowered under S. 9 of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, to undertake any investigation into any allegation of maladministration on the part of any Agency or any of its officers or employees on a motion of High Court made during the course of any proceedings before it

"Agency" was defined in S. 2(1) of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, which included a statutory body like CDA

High Court instead of shutting it's eyes to such brazen violation by CDA of the mandatory requirements of S. 12 of Pakistan Environmental Protection Act, 1997, referred such maladministration committed by the officials of CDA to Wafaqi Mohtasib for investigation and proceeding in accordance with the law.

Plea of the complainant was that he was a bona fide resident of Quetta City having been registered with the FBR at RTO Quetta since long, while the principal activity of the his business was the construction of the buildings and roads for Provincial Government on contract basis, however, FBR vide its Notification No.07(407) Jurisdiction / 2019/280620-R dated 03-12-2019 ('the Notification dated 03 December 2019') transferred the cases falling under the business category of Builders and Developers from RTO Quetta to MTO/LTU Karachi while he was neither a Builder nor the Developer as defined under S.100D(9) of the Income Tax Ordinance, 2001

Validity

Pertinently, S. 100D of the Income Tax Ordinance, 2001 was inserted vide Finance Act, 2020 dated 30th June, 2020, however in the present case, the jurisdiction of the taxpayer was transferred from RTO Quetta to MTO Karachi vide the Notification of 03 December, 2019; as such, the jurisdiction of the taxpayer had been transferred about six months before the insertion of S. 100D of the Income Tax Ordinance, 2001

This made the case of the transfer of the jurisdiction unlawful and void in the eyes of the law

From analysis of the jurisdiction orders of the Board and the powers of the Board under Section 209 of the Income Tax Ordinance, 2001 to transfer jurisdiction of any person or class of persons, it was established that cases of builders/developers had been transferred to specialized zones as a special class of persons

Though the act of the Board to transfer cases as class of persons was not illegal and within the ambit of the powers conferred by the Income Tax Ordinance, 2001, however, evidently the transfer of case from Quetta to Karachi had caused severe hardship to the taxpayer and it was his genuine right to be taxed in the jurisdiction by facilitating him at the doorstep where the business was being done ; secondly, whether contractors involved in public sector construction could be clubbed with private sectors builders and developers was yet another area which needed FBR's deliberations without discriminatory treatment and with uniform treatment of all identical cases

Federal Tax Ombudsman recommended that the FBR was required to take a pragmatic view in the matter to (i) decide the issue of jurisdiction in line with other identical cases and in the light of orders by the superior judiciary ; (ii) review individual facts of the instant case so as to reach at a legal and equitable decision/conclusion

Complaint was disposed of accordingly.

Imports by diplomats, diplomatic missions and other privileged persons were rendered taxable through Finance (Supplementary) Act, 2022, by omitting relevant Serial No.46 to the 6th Schedule of the Sales Tax, 1990, but FBR unilaterally rendered the said omission inapplicable vide U.O No. 4/I-STB/2022, dated 4th February, 2022 ('UO')

Reservations of the Ministry of Foreign Affairs ('MOFA') were that the said omission could trigger an adverse reaction from other foreign states and international organizations

Validity

Plain reading of UO in question revealed that FBR, on its own, had assumed the review jurisdiction of an Act of Parliament and unilaterally undid the omission and once again granted exemption from the tax levied by the Legislature

While doing so, the FBR had trespassed its legal domain, and issuance of UO, containing an oblique clue to FBR's volta-face, tantamounted to maladministration in terms of Ss. 2(3)(i)(a), 2(3)(i)(b),2(3)(i)(c) & 2(3)(ii)Federal Tax Ombudsman Ordinance, 2000, as the omission-in-question having hurriedly been enacted through Finance(Supplementary) Act, 2022 was perverse, arbitrary or unreasonable, unjust, discriminatory and was based on irrelevant grounds

Subsequent unilateral withdrawal through UO was contrary to law ;and even delay and ineptitude was shown by the FBR because summary for Federal Cabinet was moved after about 24 days of raising of alarm by the MOFA and that too at the intervention of Federal Tax Ombudsman ('Ombudsman')

Ombudsman directed the FBR to identify the officer responsible for said faux pas , resulting in an embarrassing position for MOFA and that proper legal cover be arranged in place of FBR's U.O No. 4/I-STB / 2022, dated 4th February, 2022

Own Motion was disposed of accordingly.

Federal Tax Ombudsman took Own Motion against FBR Authorities to provide relief to the taxpayers because more than 65000 cases were unassigned, lying in CTO portal, in wake of split of one RTO into three RTOs

Validity

Though a large number of cases were revealed to be dead ones, however, as many as 18591 cases belonged to live / active tax-payers whose jurisdiction was yet to be ascertained

Unusually large number of cases were lying without assigning proper jurisdiction, causing not only grievance to taxpayers but also suffered from enforcement inaction, if any, by the Department

Apathy, inattention, ineptitude in discharge of duties tantamount to maladministration under S.2(3)(i)(a)(b) & (ii) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman passed directions to the FBR to ensure developing an effective IT process so as to ensure timely assignment of newly registered cases to their proper jurisdiction; and also to the 18591 cases awaiting proper jurisdiction

Own Motion was disposed of accordingly.

Authorities proceeded against the importer alleging him of using fake/flying invoices while taxpayer/ importer trying to satisfy the authorities

Complaint was filed by the importer against the Authorities for issuing show-cause notice to him (claimant / importer) in present matter which remained unresolved for about two decades with series/rounds of litigations, even in presence of order in his favour having been duly passed by the Commissioner (Appeal) and the Department neither filed second appeal nor sanctioned him the refund amount

Held, that matter-in-hand was a classic example of neglect, inattention, delay incompetence, inefficiency and ineptitude that constituted maladministration in terms of S. 2(3)(ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000

Case of the complainant, prima facie, had been mishandled badly by the department due to, inter alia, rapid changes in the jurisdiction and transfer/posting of the officers from one place to another

Situation of the present matter had reached a stage where the Department would have no choice other than to give effect to the order of the Commissioner Appeals as the same (order) had attained finality and their (Department's) representation before the President against the previous order passed by this Forum(Federal Tax Ombudsman )had also been rejected

Issuing Show-Cause Notice again to the claimant / importer relating to 19 years old matter and rejecting the claim on allegation of fake / flying invoices without having incriminating evidence / documents would be a blatant violation of the law and the orders having been passed

During 19 years, no serious and professional effort was made on record to show that the matter-in-hand was paid any prudent heed by the Department

Federal Tax Ombudsman passed certain recommendations directing FBR to give effect to the order passed by the Commissioner Appeals in favour of the complainant; and also to treat matter-in-hand as "case study" for academic, research and training purposes at the FBR

Complaint was disposed of accordingly.

Respondent (widow) claimed an amount of Rs. 240,000/- admissible and payable to her on account of Group insurance of her late husband

Petitioner (Insurance Corporation) admittedly had paid an amount of Rs.50,000/- as Group Insurance and declined the remaining claim of respondent, which constrained respondent to file a complaint before the Wafaqi Mohtasib which was decided against respondent

Respondent agitated the matter before Provincial Mohtasib which was also decided against the respondent

Respondent, filed a representation before the Governor of Punjab which was accepted

Validity

Insurance was a regulated business and governed under the Insurance Ordinance, 2000

Aggrieved person was provided remedies to invoke the jurisdiction of Insurance Tribunal constituted under S. 121 of the Insurance Ordinance, 2000 (the Ordinance) or the Insurance Ombudsman appointed under S. 125 of the Ordinance

Section 127 of (the Ordinance) provided that the Insurance Ombudsman may on a complaint by an aggrieved person undertake an investigation into any allegation of mal administration on the part of any insurance company if the matter did not fall within the jurisdiction of the Wafaqi Mohtasib or was not sub-judice before any Court of competent jurisdiction

Issue raised in the present petition was covered under the definition of "Maladministration" stipulated in Ss. 127(2) & 128 of (the Ordinance) empowered a Court to refer any matter to the Insurance Ombudsman for inquiring therein and passing of an appropriate order

Petitioner Company did not raise the issue of jurisdiction before Wafaqi Mohtasib, Provincial Mohtasib or Governor of Punjab although the forums did not have the jurisdiction to decide the matter

Petition was disposed of by the High Court with direction that the same was converted into a representation in the form of complaint along with its annexure and transmitted to the Insurance Tribunal to decide the same in accordance with law.

Facts of the case were that during pendency of refund application, statutory proceedings under S.122(5A) of Income Tax Ordinance, 2000, were initiated and an ex parte order was passed by Additional Commissioner

Order was challenged in appeal before Commissioner (Appeals)

Commissioner (Appeals) upheld the Additional Commissioner's order

Department, without consent of the taxpayer, adjusted refund without passing any order under S.170(3) of the Income Tax Ordinance, 2001, and also recovered certain amount under S.140 of the Income Tax Ordinance, 2001

Taxpayer preferred appeal before the Appellate Tribunal, wherein addition under S.111, Income Tax Ordinance, 2001 was deleted and the department was directed to allow credit of sum recovered as well as vacated the orders of two authorities below and remanded the matter to Additional Commissioner for decision afresh

Department filed reference before the High Court, which was dismissed

Taxpayer, in terms of S. 124, approached the department to give effect to the order passed by Appellate Tribunal but failed to get any response

Held; neglect, inattention and delay in giving effect to the order of Appellate Tribunal consequent to High Court's order was tantamount to maladministration

Commissioner was directed to give effect to the order passed by Appellate Tribunal within 30 days and the CCIR (Chief Commissioner Inland Revenue) was directed to hold a fact finding inquiry as to who was responsible for the neglect and take appropriate action.

Complaint against Departmental harassment, violation of protocols, SOPs and fiscal laws and misuse of authority by Large Taxpayer Office ("LTO")

Contention of complainant, inter alia, was that taxpayer was facing undue harassment by Department with the design to block taxpayer's legal and admissible refunds

Federal Tax Ombudsman observed that record revealed that maladministration was embedded in routine neglect, inattention, delay and incompetence of Departmental functionaries, and in the administration and discharge of duties and responsibilities at the LTO

Federal Tax Ombudsman recommended Department to withdraw notice under S.120(3) of Income Tax Ordinance, 2001 issued to taxpayer and furthermore, to direct IT Wing of Department to review IRIS application to ensure that system should not allow completion of audit / assessment in cases where returns were incomplete and that indiscreet notices under S.120(3) of Income Tax Ordinance, 2001 were not issued by the enforcement officers for tax years wherein audit / assessment proceedings were completed and to further ensure immediate implementation of system based scrutiny of returns

Complaint was disposed of, accordingly.

Complaint against misuse of statutory powers to compulsorily registered taxpayer under Sales Tax Act, 1990 and for imposition of penalty for non-filing of sales tax returns

Validity

Federal Tax Ombudsman observed that Department in the present case, based its actions on declared turnover of complainant as being above threshold for compulsory registration, but failed to notice that complainant's tax profile mention that his principal activity as service provider / lawyer / advocate and no transaction was declared under column of opening stock, net purchases etc., which established that no activity with respect to sale or supply of goods was involved and therefore action of compulsory registration was not justified

Compulsory registration of a professional lawyer under Sales Tax Act, 1990 was based on wrong application of law and actions of the Department tantamount to "maladministration"

Federal Tax Ombudsman recommended Department to call for record of proceedings under S.45A of Sales Tax Act, 1990 and examine legality and propriety of order for compulsory registration and pass speaking order in terms of proviso to R.6(4) of Sales Tax Rules, 2006 with opportunity of hearing to complainant

Complaint was disposed of, accordingly.

Own Motion complaint against systemic maladministration by Department due to problems in service of notice(s) to residents / non-residents and in appointment of Authorized Representative(s) for non-residents

Federal Tax Ombudsman observed that comprehensive legal mechanism was in place for service of notice or orders under S.218 of Income Tax Ordinance, 2001 and for appointment of Authorized Representative of a non-resident in terms S.172(3) of said Ordinance, however when it came to ground reality, situation was quite different

Failure of Department to properly serve notices and orders in terms of S.218 and problems in appointments of Authorized Representatives tantamount to maladministration

Federal Tax Ombudsman recommended Department to devise system / mechanism to ensure that notices were served well within time in accordance with spirit of S.218 of the Ordinance and that timely declaration of appointment of Authorized Representatives be made and furthermore Department was to dispose of all pending cases of non-residents in terms of S.170(3)(f) of income Tax Ordinance, 2001

Complaint was disposed of , accordingly.

Contention of complainant, inter alia, was that Department had failed to pass orders for refund under S.170(4) of Income Tax Ordinance, 2001 within 60 days of filing of return, therefore maladministration stood established

Validity

Admitted position that before filing of present compliant, Department had already disposed of complainant's application for refund under S.170(4) of Income Tax Ordinance, 2001, therefore, grievance of complainant had been redressed already

Complaint being bereft of any merit, was dismissed, accordingly.

Complaint against failure of Department in giving effect to order of Appellate Tribunal whereby complainant / taxpayer was held entitled to tax refund

Validity

Department stated that after order of Appellate Tribunal, complainant had not yet filed e-application for refund, and assured that after filing of such application, Department would issue refund as per law within 30 days

Federal Tax Ombudsman observed that upon such assurance of Department, complaint could be disposed of, and recommended that Department issue refund as per law and report compliance of same to Federal Tax Ombudsman

Complaint was disposed of, accordingly.

Complaint against failure to provide taxpayer opportunity of hearing and unilateral reduction of refund amount with no compensation for delayed refund

Contention of Department was that said complaint was that not maintainable under S.9(2)(b) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000

Validity

Objection against maintainability of complaint was not valid as complainant was aggrieved at passing of order without providing opportunity of hearing, which was a clear violation of S.170(4) of Income Tax Ordinance, 2001

Federal Tax Ombudsman observed that failure to provide complainant / taxpayer opportunity of hearing before passing of order under S.170(4) of Income Tax Ordinance, 2001 was tantamount to maladministration, and recommended Department to direct concerned commissioner to pass fresh order after providing opportunity of hearing to complainant

Complaint was disposed of, accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed that registration of persons and issuance of refunds was not a simple task but required teamwork involving not only main beneficiaries but also connivers in the Department

Failure of Departmental officials in retrieving huge loss of revenue due to bogus sales tax refund and not initiating action against culprits was a case of gross maladministration

Federal Tax Ombudsman recommended to the Department to direct Chief Commissioner to identity and take actions against officials who failed to take action against tax evaded and who delayed suspension of registered persons and initiate criminal proceedings to recover evaded tax

Complaint was disposed of, accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refund

Contention of Department, inter alia, was that after issuance of red alert, proceedings under S.21(2) of Sales Tax Act, 1990 were initiated and registration of taxpayer was suspended, and said taxpayer was backlisted

Validity

Matter was promptly attended to by Department upon receipt of red alert, therefore no case of maladministration could be attributed to Department

Complaint was closed, in circumstances.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed that Department after detecting fraudulent activities and issuing letters of Red Alerts to field formations did not pursue the matter to fruition

Country-wide investigation against issuance of bogus refunds was carried out by Department, fake registered persons with connivance of staff of Department claimed in basis of fake and flying invoices refund ,causing loss to exchequer

Such failure of Department tantamount to maladministration

Federal Tax Ombudsman recommended Department to identify officials involved in registration of fake registered persons and initiate criminal/disciplinary action against the same, and furthermore initiate the proceedings to recover the swindled amounts

Complaint was disposed of, accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed that failure to initiate actions against persons and officials involved in fake registration of registered persons and issuance of bogus refund via misuse of SROs was tantamount to maladministration

Federal Tax Ombudsman recommended to Department to investigate and identify such officials and take action against the same, as well as to recover tax evaded by misuse of SROs

Complaint was disposed of, accordingly.

Federal Tax Ombudsman disposed of complaint upon undertaking of Department to decide matter of application of complainant for filing of sales tax return, within a period of 30 days, under R. 14(3) of Sales Tax Rules, 2006.

Complainant sought findings against Department for inordinate delay in issuance of refund on account of excessive deduction of tax

Validity

Federal Tax Ombudsman, upon assurance of Department to dispose of refund application within a period of 30 days, disposed of the complaint without adjudicating on legal and factual merits of complaint.

Record showed that application of complainant for revision in sales tax return was pending for three months and no action was taken by Department despite follow-up reminders

Delay in disposal of complainant's application was evident, which was tantamount to maladministration

Federal Tax Ombudsman recommended Department to direct concerned Commissioner to dispose of the application of Complainant after providing opportunity of hearing and report compliance of same within 45 days

Complaint was disposed of accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds and fake registered persons

Federal Tax Ombudsman observed that entity in question was registered on basis of active collusion of the Department officials and said entity was one of 42 units registered through one email address and all said units were dubious and engaged in fraud

Federal Tax Ombudsman further observed that such matter was a case of criminal negligence and gross maladministration and recommended to Department to investigate officials involved in fake registration and initiate investigative audit against the entity on basis of income tax return filed

Complaint was disposed of, accordingly.

Own motion complaint against maladministration committed by Department and its officials in issuing bogus sales tax refund

Federal Tax Ombudsman observed that except backlisting the registered person, Department failed to initiate any proceedings to verify genuineness of input tax or locate the registered person, which was tantamount to maladministration

Federal Tax Ombudsman recommended to the Department to direct concerned commissioner to conduct timely investigative audit to identify the officials involved in registration of fake registered person and initiate criminal and disciplinary action against the same

Complaint was disposed of, accordingly.

Complainant sought findings against Department for inordinate delay in issuance of refund on account of excessive deduction of tax

Validity

Federal Tax Ombudsman, upon assurance of Department to dispose of refund application within a period of 30 days, disposed of the complaint without adjudicating on legal and factual merits of complaint.

Record showed that application of complainant for revision in sales tax return was pending for three months and no action was taken by Department despite follow-up reminders

Delay in disposal of complainant's application was evident, which was tantamount to maladministration

Federal Tax Ombudsman recommended Department to direct concerned Commissioner to dispose of the application of Complainant after providing opportunity of hearing and report compliance of same within 45 days

Complaint was disposed of accordingly.

Own Motion complaint against misuse of import-cum-export facility and special incentive schemes in respect of gold, jewelry and other precious metals at various Customs Stations

Scope

As per audit reports, repeated exports were made whereby foreign exchange was not repatriated against prescribed forms, which subsequently turned out to be fake, and no explanation was provided by Department as to how such exports were allowed when no foreign exchange was repatriated within the specified period

Certain weaknesses existed in the scheme notified under SRO No.760(I)/ 2013 dated 02.09.2013 which needed to be revisited to provide for a performance based quota scheme for import of gold, for meeting timelines, and authentication of passbook entries

Federal Tax Ombudsman observed that failure of Departmental officers to take timely actions under S. 156 of the Customs Act, 1969 and failure to exercise due precaution resulted in massive loss of revenue which fell within definition of maladministration under S.2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman recommended the Department to ensure that inquiry is initiated against officials involved in illegal and inadmissible exports/imports in violation of SRO No.266(I)/2001 dated 18.06.2001 and SRO No.760(I)/ 2013 dated 02.09.2013, and to request Ministry of Commerce to constitute a committee compromising of representatives from the State Bank, FBR, TDAP to review the SRO No.760(I)/2013 dated 02.09.2013, SRO No.266(I)/2001 dated 18-6-2001 and propose amendments

Federal Tax Ombudsman further recommended to the Ministry of Commerce to conduct study to measure impact analysis of incentive schemes for import and export of gold and gemstones and to examine a proposal to prescribe Bank guarantee against import value of pervious metals instead of one-percent case margin

Complaint was disposed of, accordingly.

Suo motu investigation against systemic maladministration by Department as non-residents were being required to file return of income by Banks before opening a foreign currency account

Scope

Federal Tax Ombudsman observed that such treatment to non-residents was prima facie in violation of the express provisions of S. 114 of the Income Tax Ordinance, 2001 whereby non-residents were not under an obligation to file returns on their foreign income

Complaint was resolved upon clarification issued by the State Bank of Pakistan vide EPD Circular No.7 dated 19.04.2019 whereby it was clarified that non-residents were not required to be filers of income under the Income Tax Ordinance, 2001 to be able to open foreign currency accounts.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed that despite receipt of Red Alert, Department failed to process sales tax refunds or initiate action to determine tax liability and it failed to start proceedings to recover short-levied sales tax / value added tax on imports through misuse of concessionary SROs

Such conduct was criminal negligence and a case of gross maladministration

Federal Tax Ombudsman recommended to the Department to direct Chief Commissioner to identity and take actions against officials who failed to take action against tax evaded through misuse of SROs and initiate criminal proceedings to recover evaded tax

Complaint was disposed of, accordingly.

Federal Tax Ombudsman observed that failure to exercise statutory powers against smuggling of non-duty-paid (NPD) vehicles and providing protection to offenders reflected inefficiency and ineptitude in discharge of duties by Department's officers, which tantamount to maladministration in terms of S.2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance

Federal Tax Ombudsman recommended Chief Customs Collector to form a task force for action against NPD vehicles, to regularly conduct raids on car showrooms, to examine past seizure reports, and to initiate disciplinary action against officials engaged in violation of law and ensure that all future seizures of vehicles are made complying with all legal requirements as provided for, inter alia, in Customs Act, 1969 and Smuggling Act, 1977

Complaint was disposed of, accordingly.

Suo Motu complaint against systemic maladministration by Department upon newspaper item regarding ghost entities registered as manufacturers under the Sales Tax Act, 1990, with fictitious addresses, and having been setup for tax evasion by claiming benefit of SRO No. 1125(I)/2011 dated 31.12.2011

Review of rules regarding sales tax registration and risk score weightage assigned to risk parameters employed in the registration process revealed that IRIS based registration module failed to timely incorporate revised registration rules which lead to misuse of "manufacturer" status by registered persons for purpose of tax evasion

Federal Tax Ombudsman observed that the Department had failed to take timely action in integrating the registration module in IRIS system thereby providing opportunity to unscrupulous elements to take advantage of weaknesses in registration procedure

Modification in registration module was carried out after nine months after the revision of the Sales Tax Rules, 2006 and no exercise was carried out by field formations to verify that existing manufacturers were registered in conformity with provisions of the revised rules

Federal Tax Ombudsman, inter alia, recommended to the Department to seek initiation of criminal proceedings against owners entities which were registered as ghost manufacturers along with delinquent tax functionaries; and recommended development of a comprehensive risk management framework, audit of all manufacturers who availed benefit of SRO No.1125(I)/2011 dated 31.12.2011, development and implementation of a software for live data synchronization with regard to sales tax registration and further recommended that direction be given to all Commissioners to conduct half-yearly physical verifications of all units registered in respective jurisdictions as "manufacturers"

Complaint was resolved, accordingly.

Complainant sought findings against Department for inordinate delay in issuance of refund on account of excessive deduction of tax

Validity

Federal Tax Ombudsman, upon assurance of Department to dispose of refund application within a period of 30 days, disposed of the complaint without adjudicating on legal and factual merits of complaint.

Complainant/taxpayer sought review of order of Federal Tax Ombudsman whereby complaint against, inter alia, non-payment of additional payment for delayed refund, was rejected on ground that Federal Tax Ombudsman lacked jurisdiction

Validity

Reappraisal of record revealed that no formal rejection order was passed by Department on request of complainant for additional payment under S.171 of the Income Tax Ordinance, 2001

No remedy of appeal against an order under S. 171 of the Income Tax Ordinance, 2001 was available to complainant therefore jurisdiction of the Federal Tax Ombudsman was not barred under S.9(2)(b) Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman observed that failure to settle additional payment for delayed refund in terms of S. 171(2)(a) of the Income Tax Ordinance, 2001 was tantamount to maladministration under S. 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman recommended the Department to direct concerned Commissioner to issue additional payment for delayed refund after providing opportunity of hearing to complainant / taxpayer

Impugned findings in original order were recalled, and Review Petition was allowed, accordingly.

Complainant was income tax assessee who was aggrieved of action taken under S. 122(1) of Income Tax Ordinance, 2001 by income tax authorities and same had been set aside by Commissioner Inland Revenue in exercise of powers under S.122-A of Income Tax Ordinance, 2001

Plea raised by authorities was that complaint was not maintainable

Validity

Order passed by tax authorities under S.122(1) of Income Tax Ordinance, 2001 was appealable under S.127 of Income Tax Ordinance, 2001 and provisions of S.122-A of Income Tax Ordinance, 2001 were attracted

Action taken by Commissioner Inland Revenue in setting aside assessment by taking action under S.122-A of Income Tax Ordinance, 2001 was contrary to law

Amendment in assessment was made on 29-09-2018 and demand notice was served on complainant on 02-10-2018 when he had sufficient time of filing appeal before Commissioner Inland Revenue (Appeals) till 11-02-2018 and during such period no activity under S. 122 of Income Tax Ordinance, 2001 could be made

Complaint had become infructuous but action of Commissioner Inland Revenue setting aside order passed under S. 122(1) of Income Tax Ordinance, 2001 by invoking provisions of S. 122-A of Income Tax Ordinance, 2001 was contrary to law, procedure, established departmental practice and involving exercise of powers for corrupt motives was established and same tantamount to maladministration as defined in S.2(3)(i)(a) & (d) of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman directed Federal Board of Revenue to direct concerned Zonal Commissioner Inland Revenue to rectify order passed under S.122-A of Income Tax Ordinance, 2001 while exercising powers conferred under S.221 of Income Tax Ordinance, 2001

Federal Tax Ombudsman further directed Federal Board of Revenue to initiate disciplinary proceedings in terms of S.14(6) of Federal Tax Ombudsman Ordinance, 2000 against Zonal Commissioner Inland Revenue for passing order under S. 122-A of Income Tax Ordinance, 2001 as same was contrary to law, procedure, established departmental practice and involving exercise of powers for corrupt motives to extend illegal benefit to complainant and causing substantial loss of revenue to the State

Complaint was dismissed accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed that despite issuance of red alert, Department's sleeping over such an important tax evasion exercise, had led to serious instances of maladministration, which jeopardized transparency in tax administration

Failure of Department to initiate action against persons and officials involved in registration of fake Registered Persons and retrieval of refunds already issued prior to issuance of Red Alert was tantamount to maladministration

Federal Tax Ombudsman recommended that Department identify officials who failed to complete backlisting proceedings and those involved in processing of refunds on basis of fake and flying invoices and take appropriate legal action against them

Federal Tax Ombudsman further recommended that Department initiate appropriate action, including criminal proceedings leading to prosecution of Registered Persons involved in such activities and recover amount of loss caused to national exchequer

Complaint was disposed of, accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed that a country-wide investigation against issuance of bogus refunds was carried out by a Directorate of Department, however except mere blacklisting of Registered Person, no effort had been made for retrieving loss of revenue or to unearth culprits involved in such activity

Such failure of Department tantamount to maladministration and Federal Tax Ombudsman directed that Department make investigations against officials and Registered Persons involved in bogus sales tax refunds and recover amount swindled from public exchequer

Complaint was disposed of, accordingly.

Own Motion complaint against failure of Department to initiate action against claimants of bogus sales tax refunds and their connivers in the Department, bank officials and PRAL management

Federal Tax Ombudsman observed that registration and issuance of refund was not a simple task but required teamwork involving not only beneficiaries of such fraud but also officials in departments and banks who facilitated in opening of bank accounts from which refund cheques were drawn

Failure of Department to initiate action against such persons tantamount to maladministration

Federal Tax Ombudsman recommended that Department direct concerned Commissioner to investigate and identify officials involved in registration of fake Registered Persons, and take disciplinary and criminal action and recover amount swindled from public exchequer

Complaint was disposed of, accordingly.

Own motion complaint against maladministration committed by Department and its officials in field formations, in processing and sanctioning of bogus sales tax refunds

Federal Tax Ombudsman observed after issuance of Red Alert letters, failure to retrieve loss and not initiating action against culprits involved in bogus sales tax refunds was gross maladministration and except suspension of Registered Persons, two years after receipt of Red Alert, no effort to initiate proceedings to retrieve loss caused by such bogus refunds had been made by the Department

Federal Tax Ombudsman directed that Department make investigations against officials and Registered Persons involved in bogus sales tax refunds and recover amount swindled from public exchequer

Complaint was disposed of, accordingly.