The Federal Tax Ombudsman (FTO) has taken a significant step by instructing the Federal Board of Revenue (FBR) to expedite the processing of a substantial sales tax refund. The refund, amounting to Rs. 408.782 million, is pending for M/s GlaxoSmithKline Pakistan Limited, highlighting a crucial move towards addressing corporate grievances.
GlaxoSmithKline Pakistan Limited brought forward claims for sales tax refunds for the period from February to June 2022, utilizing the FASTER PHARMA module. According to the rules, such claims should be processed within 72 hours, facilitating prompt advice to banks for crediting the amount to the claimant’s account as per the Sales Tax Rules 2006.
The FTO’s findings revealed that the delay in processing the refund for the specified period deviated from the stipulated 72-hour timeframe as per Rule 39L of the Sales Tax Rules 2006, amounting to administrative negligence.
To rectify this, the FBR has been directed to ensure the missing refund amount of Rs 408.782 million is linked to the relevant claims as per Circular No.03 of 2020. Moreover, the Commissioner of Zone-Ill, LTO Karachi, is tasked with processing the deferred sales tax refund claims amounting to Rs. 756.736 million in line with the Sales Tax Rule 2006 and relevant circulars.
GlaxoSmithKline Pakistan Limited’s initial claim through the FASTER Pharma module was for Rs. 2,281.254 million. Of this, Rs. 1,115.736 million was processed, leaving a deferred refund of Rs. 756.736 million. However, a balance of Rs 408.782 million was overlooked and not included in the February to June 2022 returns.
The dispute revolves around the method of processing the missing refund amount, with a decision pending on whether to apply Circular No. 1 of 2020, which would involve a rollback of claims, or Circular No. 3 of 2020, which simply requires the insertion of the missing amount.
The FTO emphasized the unfairness and injustice of requiring GlaxoSmithKline Pakistan Limited to revert the already sanctioned Rs. 1.116 billion to process the claim for the missing amount, especially when there’s mutual agreement on the shortfall.
This directive from the FTO to the FBR marks a pivotal moment in ensuring that large corporations like GlaxoSmithKline Pakistan Limited are treated fairly in the refund process. It underscores the importance of adherence to established rules and the need for efficient administrative processes to support businesses effectively.