Tractor maker proves ‘application’ of SRO as mala fide of FBR

LAHORE: A tractor manufacturer has proved that the entire exercise of issuance of SRO No. 563 (I)/2022 dated 29-04-2022 and its retrospective application was a mala fide act on the part of Federal Board of Revenue (FBR) to deprive taxpayer of its due refund claim.

The taxpayer had filed its refund claim worth billions of rupees under SRO No. 363(1)/2012 dated 13-04-2012, but a Deputy Commissioner Inland Revenue had held him disentitled to refund claim in respect of period from July 2021 to February 2022 on the pretext that provisions of SRO No. 563(1)/2022 dated 29-04-2022 did not apply retrospectively and had also struck down word ‘existing’ in its Rule 39-0 of the controversial SRO.

Being aggrieved of order passed by Deputy Commissioner Inland Revenue holding it disentitled to refund claim in respect of period from July 2021 to February 2022, the taxpayer approached to the relevant forums, including Federal Tax Ombudsman (FTO) with a plea that both the show-cause notice as well as order-in-original by Deputy Commissioner Inland Revenue were passed without lawful authority and were of no legal effect.

The taxpayer stressed that he had filed its refund claims prior to the enactment of SRO 563 and in terms of SRO 363 and rule 3 in particular the refund of admissible input tax would be deemed to have been allowed within three days of receipt. Since the Commissioner Inland Revenue sat on the refund claims of the appellant and did not sanction them, this was used as a lever by FBR to delay the sanction of refund claims and thereafter proceeded to issue an SRO to stunt the claim.

Secondly, he said, the FBR neither has the power to take away vested rights and to upset past transactions nor to apply a notification retrospectively.

The higher appellate forum did not permit the department to let taxpayer go through the rigours of long drawn litigation process for refund claim, declaring that provisions of the controversial SRO did not apply to refund claims of taxpayer and it must be processed and disbursed expeditiously under the SRO of 2012.