The President has upheld the Federal Tax Ombudsman (FTO) decision with regard to charging excessive (17 percent sales tax) on the purchase of Suzuki Cultus vehicle 998cc in August 2021 as against 12.5 percent, which was the actual rate at that time. The FTO Asif Mahmood Jah informed the media that the President of Pakistan while upholding the FTO decision with regard to charging excessive sales tax, directed Suzuki Motor Company to return the amount to the affectees.
He said that twenty-four complaints have been filed against FBR and Pak Suzuki Motor Company Limited, in terms of Section 10(1) of the FTO Ordinance, 2000 (FTO Ordinance) for charging Sales Tax at the rate of 17 percent on the purchase of Suzuki Cultus vehicle 998cc in August 2021 as against 12.5 percent, which was the actual rate at that time.
The complainants had booked Suzuki Cultus cars 998cc, prior to June 2021 at 100 percent advance payment of Rs2.145 million, with a tentative date of delivery after July 2021. Meanwhile, the rate of sales tax on such cars was revised downwards, from erstwhile 17 percent to 12.5 percent and the FED chargeable at the rate of 2.5 percent was waived off altogether through the Finance Act, 2021.
The vehicles were delivered to the complainants, along with an invoice of Rs2.069 million the new rate applicable after July 2021, and not the one, at the time of booking of the car in June 2021. However Pak Suzuki Company Limited charged sales tax on old rates rather than invoice date “the time of sale” and refused to refund the difference, hence depriving middle-income complainants of the due effect of the reduced tax burden.
The complainant contacted FBR as well, on its helpline through email requesting for refund of the differential amount of sales tax. In response thereof, the FBR communicated through email dated that sales tax had been reduced to 12.5 percent on cars up to 1000cc. However, the FBR restricted its response to this email and did not resolve the issue by arranging for a refund of the differential amount of sales tax. Afterwards, the complainants made a complaint to the FTO seeking that the department may be directed to refund the overcharged sales tax and FED.
FBR admitted, “there was lack of clarity with regard to the definition of “time of supply” at the time of booking of the vehicle in June 2021 and that at the time of its delivery in August 2021. Instead of resolving the issue and allowing refunds to middle-income buyers FBR took refuge under non-clarity of law and filed representations to the President of Pakistan. While concluding the subject proceedings, the President of Pakistan confirmed the grant of refund by the Federal Tax Ombudsman.
