ISLAMABAD, April 25: The Federal Tax Ombudsman (FTO) has asked the director general (DG) of the Large Taxpayers Unit (LTU), Karachi, to immediately adjust the income tax refunds of a complainant against the sales tax liability.

According to official announcement issued on Thursday, the decision was taken on the complaint of Shell Gas LPG, Karachi, who complained against the tax officials of LTU for not allowing the adjustment of income tax refunds against sales tax liability.

They further said that the tax officials, instead of adjustment, initiated quasi judicial proceedings against them for recovery of additional tax for not paying the sales tax on time.

Justice (Retd) Saleem Akhtar in his decision asked the CBR to remit the additional tax and penalty of the complainant and also quash the adjudication proceedings initiated against them.

He also recommended to the CBR to formulate a procedure in accordance with the provisions of section 170 (3) (b) of the income tax ordinance with a view to providing facilities to the large taxpayers and compliance report should be produced to this office within 30 days of this order.

According to the FTO’s judgment, the deputy commissioner of income tax circle-I, companies zone-V, finalized the income tax assessment for the assessment years 1990-2000, 2001-02 and assessed refunds of Rs6.464 million and Rs6.687 million, respectively.

The complainant filed their sales tax returns for the months of June, July, August and September 2002 and they adjusted their sales tax liability against these refunds

The complainant made a repeated request to the tax officials of the LTU for adjustment but their request was declined.