2025 PTD 194 FEDERAL-TAX-OMBUDSMAN-PAKISTAN

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VS Ss. 2(3) & 9(1)---Recognized agricultural Tractor Manufacturers Rules, 2006, [issued vide SRO.363(I)/2012, dated 13.04.2012], Rr. 2 & 4---Delay in sanctioning of long pending refund claims of Tractor Manufacturing Industry (Industry)---Maladministration---Scope---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.

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