Utility Stores Corporation Files Complaint of Harassment Against FBR

[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]The Utility Stores Corporation (USC) has officially submitted a grievance regarding perceived mistreatment by the Federal Board of Revenue (FBR) to the Federal Tax Ombudsman.

This complaint specifically targets Muhammad Fiaz Hussain, DCIR, LTO, Islamabad, citing allegations of maladministration and misrepresentation during an ongoing appeal initiated by the Utility Stores Corporation pertaining to the tax period from 2012 to 2016, as detailed in report No. 129 dated 28.08.2023.

The complaint is founded on the following grounds:

1. USC operates as a Non-Profit Organization (NPO) and is reliant on a government grant to assist underprivileged individuals in Pakistan by providing essential household goods and grocery items such as flour, sugar, pulses, tea, rice, and more.
2. USC had reported and accounted for the input tax paid on purchases totaling Rs. 5,049,948,999 in their Sales Tax Returns. This assertion is verifiable through the FBR’s computerized system, as corroborated by the pertinent parties’ details, which were provided to the authorities at various stages. Nevertheless, this tax amount was once again challenged without validation through O.N.O No. 05/51 dated 28.02.2019.
3. USC’s ongoing appeal is currently under review by the Honorable ATIR Bench. Muhammad Fiaz Hussain DCIR was directed through letter No.2092 dated 20.12.2022 to authenticate the aforementioned input tax amount using the FBR system, but he failed to perform this task diligently, issuing verification requests to USC’s vendors in violation of Section 24 of the Sales Tax Act 1990.
4. Notably, various suppliers/vendors, including Unilever and Dalda, had already submitted their Sales Tax Returns electronically to the FBR, disclosing purchases made by USC. Surprisingly, the officer in question did not conduct a proper review and failed to authenticate USC’s input tax payment of Rs. 5,049,948,999, resulting in a misrepresentation to the ATIR Bench, contravening Section 24 of the Sales Tax Act 1990.

Also Read: IMF Asks Pakistan To Privatize Utility Stores

The following inquiries are raised for investigation due to this unlawful conduct by the relevant officer:

1. How can the confirmed input tax amount of Rs. 5,049,948,999, verifiable through the FBR electronic system, be invalidated?
2. Is it permissible to issue manual verification letters to vendors/suppliers under Section 24 of the Sales Tax Act, beyond the six-year statutory period?
3. Is there any legal provision for the recovery of Sales Tax already paid to the tune of Rs. 5,049,948,999, when the FBR has already accepted the Sales Tax Returns without objection?

The said officer’s actions have not only misrepresented the case before the Honorable ATIR Bench but have also caused administrative mishandling and harassment to the taxpayer, who pays substantial taxes in both income and sales tax and serves as a withholding agent nationwide. These actions have disrupted the USC’s smooth operation and hindered the provision of essential household goods and grocery items to the less fortunate.

Additionally, the officer has issued a show cause notice to the Manager Operations of MCB Islamic Bank for the recovery of Sales Tax, which was already paid for the period in question. This action has led to undue stress for the bank officers and USC’s officer.

Moreover, it’s important to note that the company has already filed refund claims amounting to Rs. 4,250,202,302. These claims remain unresolved, despite standing FBR directives, thereby violating the law.[/vc_column_text][/vc_column][/vc_row]