ISLAMABAD: The Federal Tax Ombudsman (FTO) has taken note of the Export-Oriented Sector Registration Cell (ESRC), FBR, non-compliance with a significant decision of the Economic Coordination Committee (ECC) of the Cabinet in the processing of the cases of export companies for availing of concessionary tariff regime.
The FTO issued a directive in this respect on Friday.
In accordance with the FTO order, the ECC had instructed the FBR, the Ministry of Commerce and other stakeholders to develop a standard operating procedure (SOP) for the enrollment of registered individuals under the export-oriented sectors (previously zero-rated sectors) in order to qualify for the concessionary regime of electricity, RLNG, and gas tariff.
A designated cell, the Export-Oriented Sectors Registration Cell (ESRC), was created as part of the scheme and given the authority to examine the information and recommendations provided by the relevant Associations as well as to double-check taxpayer information, including declarations made in the registration profile, among other things.
Although the aforementioned circular 4 of 2020 states that any discrepancies between the registration profile maintained by FBR and the data forwarded by concerned trade associations will be forwarded to field formation for a ground check, report, and recommendation, the complainant claims that instead of expeditiously processing the claims of export concerns, ESRC has engaged in an unauthorized exercise that is equivalent to an audit.
It has been noted that when the ESRC’s objections were resolved in a number of instances, concessionary tariff recommendations were made, but the delays in these cases severely hurt exporters since they were forced to pay ordinary tariffs while the cases were pending at the ESRC.
It is understandable that this system is threatened by misstatements, misdeclarations, and even tax fraud, but these concerns must not overwhelm the ECC’s top goal, which is the quick handling of valid cases. The FTO decision said that cases with procedural errors and other return profile inconsistencies must be discussed with appropriate field formations with legal jurisdiction and the authority to handle the abovementioned dangers by legal methods and procedures.
The export industry deserves the utmost consideration, sympathy, and care since it is the backbone of Pakistan’s economy. It said that by no means should it be subject to a delay brought on by standard administrative red tape.
The complainants passionately reaffirmed their claims throughout the hearings and supplied information about the delays the ESRC imposed in sending their cases to the Ministry of Commerce, Government of Pakistan. Additionally, they complained that paying normal tariffs throughout the ESRC’s processing period increased exporters’ costs and decreased their ability to compete on the market.
According to the FTO’s conclusions, when processing the complainant’s complaint, ESRC did not conduct the procedures in the manner intended by ECC. This is made abundantly obvious by the circumstances of the current instance.
On April 19, 2022, the ESRC transferred the complainant’s case to LTO Karachi rather than the Ministry of Commerce, and there was an ongoing delay until June 8, 2022. Only after this office’s assistance was the matter finally moved forward on June 22, 2022. According to clause 2(3) (ii) of the FTO Ordinance, 2000, such a delay, inattention, and incompetence constitute maladministration.
The FTO has instructed the FBR to make sure that cases that the ESRC receives from trade organisations or associations are handled quickly and those proceedings are carried out on a daily basis. The FTO instructed the FBR that cases of obvious tax fraud should be shared with the relevant trade bodies and IR field formations in a transparent and equitable manner. The ESRC strictly adheres to the requirements of Circular No. 4 of 2020 and processes the cases without delay, preventing any irreparable loss to the exporters.
The FTO ruling also said that the ESRC must regularly communicate with and meet with the relevant trade groups in order to expedite processing rather than engaging in time-consuming communication. It must also report compliance on a monthly basis.