FTO Asks FBR to Review Transfer of Jurisdiction Cases

Federal Tax Ombudsman (FTO) has categorically conveyed to the Federal Board of Revenue (FBR) that the transfer of jurisdiction of public sector contractors from Quetta to Karachi has caused severe hardship to taxpayers.

The complaints were filed against the alleged unlawful transfer of the complainant’s jurisdiction from RTO Quetta to MTO/LTU, Karachi by the FBR. The principal activity of the complainant’s business is the construction of the buildings and roads on a contract basis being awarded by various government authorities of the Government of Balochistan.

The case of the complainant was also transferred on the assumption that his business category is builder and developer. The complainant is neither the builder nor the developer as defined under the Income Tax Ordinance 2001, but the jurisdiction of the case was transferred to Karachi just on the assumption that the taxpayer’s activity seems similar to the builders and developers.

According to an order issued by the FTO on changes in the tax jurisdiction, it is established that cases of builders/developers have been transferred to specialized zones as a special class of persons. This is evident from analysis of the jurisdiction orders of the Board and the powers of the Board under Section 209 of the Income Tax Ordinance, 2001 to transfer jurisdiction of any person or class of persons.

The act of the Board to transfer cases as a class of persons is not illegal and within the ambit of the powers conferred by the Income Tax Ordinance, 2001. However, it is also evident that the transfer of the case from Quetta to Karachi has caused severe hardship to the taxpayer and it is his genuine right to be taxed in the jurisdiction by facilitating him at the doorstep where the business is being done. Secondly, whether the contractors involved in public sector construction can be clubbed with private sector builders and developers is yet another area that needs FBR’s deliberations. In any case, no discriminatory treatment with any individual or a class of persons is desirable, the FTO order said.

The allegation that some of the similar cases have reportedly been transferred back to RTO Quetta also needs probe by concerned authorities. Some identical cases relating to Khyber Pakhtunkhwa and Balochistan are currently pending at superior judicial fora. Uniform treatment of all identical cases is the only solution to this issue.

Recommendations

FTO has recommended the FBR to take a pragmatic view in this matter. As per the FTO order, the IR Policy wing of FBR has to decide the issue of jurisdiction in line with other identical cases and in the light of orders by the superior judiciary. Further, the FBR should review individual facts of the instant case so as to reach a legal and equitable decision.

The FBR should also issue a clarification about the scope of builders and developers so as to clear the existing ambiguities on the subject and report compliance within 60 days, the FTO order added.

Source: Pro Pakistan