| Islamabad: The Lahore High Court (LHC) has instructed the Federal Board of Revenue (FBR) to amend the Sales Tax Act of 1990 to prevent delays in sales tax refund payments under the guise of pre-refund audit procedures, as revealed in a news article on January 29.
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According to the details, the directive aims to ensure timely refund payments for taxpayers during pre-refund audit proceedings, as stated in the LHC’s order against the FBR. The court’s ruling came in response to a petition filed by a Public Limited Company engaged in fertilizer manufacturing, challenging the legality of pre-refund audit proceedings and subsequent show-cause notices issued by the FBR. The petitioner sought a declaration of these actions as unlawful and in violation of Section 10 of the Sales Tax Act, 1990. Additionally, the company requested the refund of excess input tax paid, which remained pending despite timely submission of refund claims and supporting documents.
LHC emphasised that Section 10 of the Sales Tax Act requires a determination of the admissibility of refund claims when doubts arise regarding their eligibility. The court also clarified that the petition was premature since no adverse order had been issued against the petitioner based on the pre-refund audit proceedings.
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Furthermore, LHC directed the FBR to adhere strictly to the provisions of Section 10(3) of the Act, which mandates obtaining approval from the Board for concluding pre-audit proceedings within nine months. Failure to comply with this timeframe was deemed a violation of taxpayers’ fundamental rights under Articles 23 and 24 of the Constitution |
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