ISLAMABAD: The Federal Tax Ombudsman (FTO) has advised 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.
In this regard, the FTO issued an order here on Saturday.
The complaints were filed against the alleged illegal transfer of jurisdiction of the plaintiff from RTO Quetta to MTO/LTU, Karachi by the FBR. The main activity of the Complainant’s company is the construction of buildings and roads on the basis of contracts awarded by various government authorities of the Government of Balochistan.
The complainant’s file was also transferred on the assumption that his category of activity is builder-developer. The plaintiff is neither a builder nor a developer within the meaning of the Income Tax Ordinance 2001, but jurisdiction over the case was transferred to Karachi only on the assumption that the business of the taxpayer looks similar to builders and developers.
According to an order issued by the FTO on changes in tax jurisdiction, it is established that the records of builders/developers have been transferred to specialized areas as a special class of persons. This is clear from an analysis of the Board’s jurisdiction orders and the powers of the Board under section 209 of the Income Tax Order 2001 to transfer jurisdiction to any person or class of persons.
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The Council’s act of transferring business as a class of persons is not unlawful and falls within the powers conferred by the Income Tax Order 2001. However, it is also evident that the transfer of the business from Quetta to Karachi has caused serious difficulties. to the taxpayer and it is his true right to be taxed in the jurisdiction facilitating it at the gate where the business is carried on.
Second, whether contractors involved in public sector construction can be partnered with private sector builders and developers is another area that requires RBF deliberations. In any case, no discriminatory treatment of any individual or class of people is desirable, the FTO order said.
The allegation that some of the similar cases were referred to RTO Quetta also needs to be investigated by the relevant authorities at FBR headquarters. Some identical cases concerning the KPK and Balochistan are currently pending before higher courts. Uniform treatment of all identical cases is the only solution to this problem.
The FTO recommended that the FBR adopt a pragmatic vision in this matter. IR Policy wing FBR to decide the question of jurisdiction in accordance with other identical cases and in light of the orders of the superior judiciary. The FBR must review the individual facts of this case in order to reach a legal and fair decision/finding. The FBR should issue a clarification on the scope of builders and developers to resolve existing ambiguities on the subject and report compliance within 60 days, the FTO order added.
Copyright Business Recorder, 2022