The Federal Tax Ombudsman (FTO) has explicitly informed the Federal Board of Revenue (FBR) that the relocation of public sector contractors’ jurisdiction from Quetta to Karachi has resulted in significant hardship for taxpayers.
The complaints were made in response to the FBR‘s claimed illegal transfer of the complainant’s jurisdiction from RTO Quetta to MTO/LTU, Karachi. The complainant’s primary economic activity is the construction of buildings and roads under contracts given by different government agencies of the Government of Balochistan.
The complainant’s case was likewise moved on the idea that he is a builder and developer. The complainant is not a builder or developer as defined by the Income Tax Ordinance 2001. Yet, the case was moved to Karachi only on the basis that the taxpayer’s conduct seems to be similar to that of builders and developers.
According to the FTO’s ruling on changes in tax jurisdiction, cases of builders/developers have been assigned to specialized zones as a special class of individuals. This is obvious from an examination of the Board’s jurisdiction orders and the Board’s authority to transfer jurisdiction of any person or class of people under Section 209 of the Income Tax Ordinance, 2001.
The Board’s decision to transfer cases as a group is not unlawful and is within the authority granted by the Income Tax Ordinance, 2001. However, it is clear that the relocation of the case from Quetta to Karachi has resulted in significant difficulty for the taxpayer, and it is his real right to be taxed in the jurisdiction by helping him at the point where the business is conducted. Second, whether contractors working in public sector buildings may collaborate with private sector builders and developers is another issue that requires FBR consideration. In any event, the FTO ruling said that no discriminatory treatment of any individual or group of people is desired.
The accusation that several comparable cases have apparently been moved back to RTO Quetta requires further investigation by competent authorities. Several cases involving Khyber Pakhtunkhwa and Balochistan are now pending before higher courts. The only way to solve this problem is to treat all identical situations uniformly.
The FTO has advised the FBR to adopt a realistic approach to this subject. According to the FTO ruling, the FBR’s IR Policy branch must resolve the question of jurisdiction in accordance with previous similar instances and in light of orders from the higher court. Furthermore, the FBR shall examine the specific circumstances of the current case in order to make a legal and fair conclusion.
The FBR should also clarify the scope of builders and developers to clear up any uncertainties and declare compliance within 60 days, according to the FTO directive.
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