President endorses FTOs ruling The President has confirmed the ruling of the Federal Tax Ombudsman (FTO) that there was no question of deliberate or wilful default liable to penalty for non-filing or late-filing of sales tax returns, if no taxable sales were made during the tax period. Sources told Business Recorder, here on Sunday that the President has rejected a representation of Federal Board of Revenue (FBR) under section 32 of the FTO Ordinance, 2000. In the said representation FBR had requested the President for setting aside the FTOs recommendations but the President has endorsed the viewpoint of the FTO. When contacted a Lahore-based tax lawyer Waheed Shahzad Butt told this correspondent that present case is a rare instance of rule of law. Former FTO Dr Muhammad Shoaib Suddle had issued recommendations to the FBR to direct the Commissioner to revisit penalty order by invoking the provisions of section 45-A of the Sales Tax Act, 1990 because no taxable sales were made by complainant during the relevant period and as such there was no question of deliberate or wilful default liable to penalty for late filing or non-filing of sales tax returns. Expert further said that earlier complainant approached FTO feeling aggrieved of Order-in-Original imposing a penalty for non filing/late filing of sales tax returns, contending that no taxable activity had been done during the relevant period. FTO conducted hearing and found that no taxable sales were made by complainant during the relevant period and as such there was no question of deliberate or wilful default liable to penalty. The following recommendations were made by FTO: FBR to direct the Commissioner to revisit penalty order by invoking the provisions of section 45-A of the Sales Tax Act, 1990. Tax lawyer further said that if we look at the nature of penalty which seems to be only in the nature of mark-up for the late payment or utilising the public money for taxpayers own business or personal use. As the quantum of penalty is not multi-fold of the amount involved it is not by way of punishment rather it is a message to the defaulting person to be cautious in future. Section 33 of the Sales Tax Act, 1990 provides that whoever commits any offence meaning thereby who fails to deposit the amount of sales tax due or any part of thereof in time or in the manner laid down under the Sales Tax Act shall be liable to penalty. The word offence as used in the Section 33 of the Act is not defined in the Sales Tax Act, therefore, it has to be assigned the same meaning as in ordinary parlance or in the dictionary. The Blacks Law Dictionary defines offence as a violation of the law. Oxford Advanced Learners Dictionary defines offence as an illegal act. The New Webster Dictionary College Edition defines offence as something that is offending or displeasing; any wrong doing, as violation of divine or human law; a crime or sin etc. All above meanings clearly highlight only one thing that violation of law is an offence. Once committing of offence is established then the offending person is liable to penalty besides other liabilities under the law. In case of non-filing or late filing of sales tax returns where no taxable sales were made by a taxpayer during the relevant tax period then obviously there was no question of deliberate or wilful default liable to penalty for late filing or non filing of sales tax returns because said taxpayer is not utilising the public money for his own business or personal use. When the pivotal issue of committing offence is missing then question of imposing penalty under the law does not arise at all, Waheed said. This representation has been filed by agency which completely fails to answer the said reasoning of FTO and does not even contain denial of the factual observations regarding no taxable activity during the relevant period. No ground stand made out for interference with findings and recommendations of FTO. Accordingly the President has rejected the above referred representation, President order added.
Posted on: Thu, 09 Oct 2014 05:43:42 +0000
Trending Topics
Recently Viewed Topics
© 2015