President Asif Ali Zardari Upholds FTO Decisions Against FBR in Key Cases

In a strong endorsement of institutional accountability, the President of Pakistan has upheld multiple decisions of the Federal Tax Ombudsman (FTO), dismissing representations filed by the Federal Board of Revenue (FBR). The rulings highlight the government’s commitment to fair tax administration and reinforce the FTO’s pivotal role in addressing taxpayer grievances. The first case involved M/s Solergy Zone (Pvt.) Limited, Lahore, which filed a complaint against the Commissioner-IR, Zone-III, CTO Lahore, for disallowance of 100% input tax adjustment in its sales tax return for May 2024. The company, dealing in third schedule items, had integrated its Point of Sale (POS) system with FBR but was facing a 60% disallowance of input tax due to technical issues and administrative delays. Despite multiple representations and requests made to the relevant authorities, including the Commissioner and the Chief Commissioner-IR, no relief was granted. The FTO found that the Commissioner-IR failed to decide the taxpayer’s application for removal of the bar and condonation of the time limit under Section 74 of the Sales Tax Act, 1990, thereby constituting maladministration. The President, concurring with the FTO, dismissed the FBR’s representation and directed the tax authorities to: FBR was also directed to report compliance within 45 days. In another matter, Sprint Oil and Gas Services FZC, Islamabad, operating as a branch office of a non-resident entity, approached the FTO for non-implementation of orders passed by the Appellate Tribunal Inland Revenue (ATIR) for tax years 2008 to 2017. The ATIR had annulled tax demands raised by the FBR and directed the issuance of refunds with compensation. Despite the tribunal’s clear instructions, the tax department failed to act and did not attend scheduled FTO proceedings. The FTO noted this failure as maladministration under Section 2(3)(ii) of the FTO Ordinance, 2000. Accordingly, the President upheld the FTO’s decision and instructed FBR to: A compliance report is due within 60 days. In a third case, M/s Prism Estate & Builders, Islamabad, challenged the recovery of Rs. 25.9 million through bank account attachment and the prolonged withholding of a refund. The taxpayer contended that the recovery followed an illegal order and that despite multiple submissions of relevant documents, the tax office continued to harass the business by re-opening settled matters and issuing show-cause notices. The FTO had earlier dismissed the complaint based on legal technicalities. However, during review proceedings, the complainant presented evidence of mala fide intent by the tax department and ongoing harassment. The President endorsed the FTO’s revised stance, highlighting that prolonged proceedings and delay in refund without justification amounted to maladministration. These cases highlight persistent issues in tax administration, including delayed adjudication, failure to follow judicial orders, and administrative overreach. The President’s endorsement of the FTO’s findings sends a clear message that due process and taxpayers’ rights must be upheld. The decisions are expected to bolster public confidence in the FTO and provide critical relief to aggrieved taxpayers while holding tax authorities accountable for procedural fairness.