Syed REHMAT ALI SHAH vs The SECRETARY, REVENUE DIVISION, ISLAMABAD Ss

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Syed REHMAT ALI SHAH VS The SECRETARY, REVENUE DIVISION, ISLAMABAD Ss.2(3), 9 & 10---Islamabad Capital Territory (Tax on Services) Ordinance (XLII of 2001), S. 3---Higher rate of sales tax applicable in Islamabad Capital Territory (ICT)---Maladministration---Scope---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. Citation Name: 2025 PTD 116 FEDERAL-TAX-OMBUDSMAN-PAKISTANBookmark this Case Syed REHMAT ALI SHAH VS The SECRETARY, REVENUE DIVISION, ISLAMABAD Ss.2(3), 9 & 10---Islamabad Capital Territory (Tax on Services) Ordinance (XLII of 2001), S. 3---Emigration Rules, 1979, Sr. No.15---Person selected for employment abroad by Overseas Employment Promoter---Sales tax on service charges (Rs.6000/- per person) in Islamabad Capital Territory (ICT), charging of---Maladministration---Scope---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.

Syed REHMAT ALI SHAH vs The SECRETARY, REVENUE DIVISION, ISLAMABAD Ss — 2025 PTD 116 FEDERAL-TAX-OMBUDSMAN-PAKISTAN

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