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Sales tax department told to decide refund case in 30 days

ISLAMABAD (June 10 2003) : The Sales Tax Department, East, Karachi, has been asked to decide within 30 days the refund claim of an exporter of Karachi who had purchased invoices from a Lahore firm which subsequently was placed on the negative list because of issuing suspicious invoices.

The Federal Tax Ombudsman noted that the firm was not on the negative list when the goods were purchased from it.

Hence the delay of more than 18 months was a clear case of maladministration.

The complainant, Excellent Enterprises, Karachi, exported fabrics purchased from Falcon International, Lahore, for Rs 7.5 million on June 4, 2001 and shipped the goods to UAE on June 8, 2001.

The exporter filed sales tax Challan on July 7, 2001 for refund of sales tax of Rs 0.9 million.

The date on the sales tax invoices, however was erroneously put 14.6.2001, instead of 4.6.2001.

This caused problem of verification from the firm, which was subsequently put on the negative list by the department for it was found to have been involved in several irregularities.

During hearing of the case, the Department expressed its inability to make the refund because of the fake nature of the invoices issued by the blacklisted firm.

The complainant, however, argued that when he exported the consignment of Rs 7.5 million, including sales tax payment of 0.9 million, the firm was not on the negative list.

The complainant stated that the office of the Assistant Collector, Verification Cell, Sales Tax and Central Excise, Lahore vide letter dated November 6, 2002 “refused to verify the documents on the ground of items being on negative list”.

The complainant's counsel visited the collector's office and explained that the items purchased from Falcon International and exported to UAE were never placed on the negative list.

To process the claim unless date on the invoices was corrected, the matter had been pending for the last 18 months and the requests made have borne no fruit on the technical ground that the two invoices did not carry the correct date.

Nafis Siddiqi, advocate for the complainant, pleaded that the complainant's case was very clear.

The complainant was not responsible for what happened later on, much later, with regard to the activity and the status of the supplier.

Since it had purchased goods against genuine invoices and exported them as evidenced from the documents, the department's refusal to refund sales tax was not justified.

In his order, the Federal Tax Ombudsman, Justice Saleem Akhtar, observed that the application of refund of sales tax was filed on January 27, 2001 which has not been decided by the Department.

The difference in date of the invoices might have occurred due to an error.

The supplier firm was not a “suspect' unit when it was supposed to have supplied the goods.

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