ISLAMABAD, Nov 29: Federal Tax Ombudsman Justice Saleem Akhtar has asked the Central Board of Revenue to formulate standards of wastage of various types of industries aimed at keeping the quality of products intact.

The Ombudsman observed that in the absence of any clear cut procedures to determine the quantum of waste, the CBR field formations dealt with the issue according to their own convenience, said an official announcement issued on Friday.

Justice Saleem recommended to the CBR to come up with standard rules for the determination of waste to ensure that a uniform policy was applied by the field formations.

The CBR had undertaken an exercise to determine the industrial standards of wastage which was yet to be notified.

Textile processing units claimed that wastage ranging from 8 to 10 per cent, which was considered genuine and wastage above 10 per cent was abnormal. A processing unit having wastage of 28 per cent could not survive as the cost of wastage would render the business uncompetitive.

The decision was taken at the complaint of Ihsan Yousaf Textile (Pvt) Ltd, which alleged that the sales tax department had made deduction from the refund claim on account of wastage in the production process of their factory allegedly without any basis and cogent reasons. The complainant pleaded that the collectorate of sales tax, Faisalabad, has withheld an amount Rs0.642m from refund of sales tax without any show-cause notice.

The Ombudsman in his order observed that the action of the department to make deduction without issuing notice to the complainants and providing them the opportunity of submitting their arguments was arbitrary, unreasonable and unjust. The decision not to follow the procedure prescribed under rule 8 of the sales tax refund rules was unreasonably and contrary to the rules.

He recommended to the CBR to direct the collector of sales tax, Faisalabad, to issue notice to the complainants for the amounts arbitrarily withheld and not refunded against the claims of Oct, Nov and Dec 2001 and Feb, March and April 2002, in accordance with the prescribed procedure.

The Ombudsman further said to decide the matter afresh within 45 days and compliance report should be produced to his office within 60 days.