Law: Federal Tax Ombudsman Ordinance, 2000

Section: 10(1),10(4)

Law: Income Tax Ordinance, 2001

Section: 100D(9),100D(9)(a),181

The complaint filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000, regarding the alleged unlawful transfer of jurisdiction from RTO Quetta to MTO/LTU Karachi by the Federal Board of Revenue (FBR). The complainant, a bona fide resident of Quetta and owner of M/s Arbab Brothers, contends that his business activities primarily involve government construction contracts, which do not classify him as a "Builder and Developer" under the Income Tax Ordinance.

Background

• Complainant's Claims: The complainant argues that the FBR's decision to transfer his case was based on an incorrect assumption about his business category. He asserts that he has applied for the jurisdiction to be reverted back to RTO Quetta but has faced no success. Consequently, he has received various orders from assessing officers in Karachi that have resulted in significant tax demands against him.
• FBR's Response: The FBR justified the transfer by stating that it falls within its legal powers to classify taxpayers based on their activities. They maintained that the complainant's activities align with those of builders and developers as defined by law.

Findings

1. Legality of Transfer: The Ombudsman found that while the FBR had the authority to transfer cases, the shift from Quetta to Karachi has caused undue hardship to the complainant. It is noted that taxpayers should ideally be taxed within their operational jurisdictions.
2. Classification Issues: There is a need for FBR to clarify whether contractors in public sector construction should be treated similarly to private sector builders and developers.
3. Similar Cases: The Ombudsman highlighted that other similar cases have been transferred back to RTO Quetta, suggesting potential inconsistencies in how jurisdictions are assigned.
4. Pending Cases: It was noted that several similar cases from KPK and Balochistan are currently under judicial review, emphasizing the necessity for uniform treatment across similar complaints.

Recommendations

The Ombudsman recommends that:

• The FBR should align its decisions regarding jurisdiction with those of similar cases and superior court orders.
• A thorough review of the individual circumstances surrounding this case should be conducted to reach a fair conclusion.
• Clarifications should be issued regarding the definitions and classifications related to builders and developers to mitigate existing ambiguities.
• A compliance report should be submitted within 60 days.

This summary encapsulates the central issues and recommendations stemming from the complaint against the FBR regarding jurisdictional transfers affecting taxpayers in Pakistan.

ORDER