The Federal Tax Ombudsman (FTO) has directed the Large Taxpayer Office (LTO) Karachi to refund extra paid sales tax on vehicles to the Bank of Punjab (BOP) for giving tax relief to the end customers.
In this regard, the FTO issued an order (Informal Resolution of Disputes) against Pak Suzuki Motor Company Limited on Thursday.
According to an order issued by the FTO, the complaints were filed under section 33 of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), by the BOP along with a copy of NOC from the complainant/buyers of the cars through a lease from the bank.
The bank filed complaints on behalf of the buyers seeking relief against the charging of higher rate of sales tax in respect of these cars purchased by the complainant from the said car manufacturing company.
Briefly, the bank booked these cars when the rate of sales tax was 17 percent. Meanwhile, the rate of sales tax on cars up to 1000CC was reduced to 12.5 percent, while federal excise duty (FED) was waived off through the Finance Act 2021, effective from July 1, 2021.
Though the company waived off FED yet it charged sales tax at the rate of 17 percent applicable at the time of booking, rather than invoice/delivery date depriving the complainant benefit of the reduced tax burden. The bank has now filed an application to refund the differential amount of sales tax, as per the rate applicable on the date of delivery of the vehicle on behalf of the buyers.
FTO observed that all such cases are currently under implementation in Karachi. The FTO’s regional office in Karachi, in close liaison with LTO Karachi and the car company, has worked out an efficient implementation strategy. Being a 100 percent parallel case, no further investigation is warranted as the petitioner is entitled to the relief sought by him, and granted by the competent authority in other similar cases.
In view of the above, the LTO Karachi is directed to extend relief, in line with the referred cases, to the bank on submission of an undertaking to LTO Karachi that the benefit of refund of extra paid sales tax will be duly shared with the end customers/clients, FTO order added.