DRAP STRN deregistration case: FTO orders swift conclusion
ISLAMABAD: Federal Tax Ombudsman (FTO) has instructed the Large Taxpayers Office (LTO), Islamabad to promptly conclude proceedings in the matter of de-registration of Sales Tax Registration Number (STRN) application of Drug Regulatory Authority of Pakistan (DRAP).
The complaint was filed under Section 10(1) of the FTO Ordinance, 2000, citing prolonged inaction by the tax authorities despite clear directions from the Appellate Tribunal Inland Revenue (ATIR) to reconsider the case afresh.
The Complainant pointed out that no decision had been made on their statutory application for de-registration, while notices continued to be issued for tax compliance, resulting in procedural confusion and administrative hardship.
FTO observed that the delay in implementing the Tribunal's order and inaction on the de-registration request fell within the definition of maladministration as per Section 2(3) of the FTO Ordinance. The matter is further complicated by a legislative amendment that potentially exempts regulatory and licensing bodies like DRAP from certain taxes under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001.
The LTO in its response claimed that remand proceedings were underway, and a hearing notice had already been issued. However, no final order had been passed. The complainant's authorized representative confirmed receipt of the notice but emphasized that the application for de-registration had still not been adjudicated.
Taking serious note of the administrative delays, the FTO has directed the Chief Commissioner,
LTO Islamabad to expedite the conclusion of de novo proceedings in line with the Tribunal's remand order and decide the complainant's pending application for de-registration in accordance with applicable laws.
The LTO has been asked to submit a compliance report within 45 days. This direction by the FTO reflects a continued push for institutional responsibility and fair treatment of taxpayers by ensuring due process is not sacrificed at the altar of bureaucratic inertia.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
18 hours ago
- Express Tribune
FTO prevents taxmen from sealing retail shops
Listen to article In a major relief for tier-I retailers, the Federal Tax Ombudsman (FTO) has issued a comprehensive ruling in favour of the formal retail sector, directing the Federal Board of Revenue (FBR) to stop sealing shops and address critical technical issues in the Point-of-Sale (POS) system. A complaint, filed by the Chainstore Association of Pakistan (CAP), highlighted serious concerns including POS system failures, excessive integration costs, profile disconnections, missing invoice uploads and the lack of coordination between the FBR and its automation wing – Pakistan Revenue Automation Limited (PRAL). The FTO has directed that no sealing of tier-I retail outlets should be carried out until all technical issues were fully addressed. It recommended the FBR to consult CAP on future POS-related glitches and enforcement strategies to ensure mutual resolution of issues and smoother compliance. The FTO ruling strongly criticised the lack of technical training among FBR's field officers, noting their inability to resolve system-specific issues, and advised enhanced coordination with PRAL. "The FBR is instructed to develop a forewarning system for tier-I retailers to inform them about POS disconnections, token expiry or auto shutdowns in order to avoid abrupt disruptions," it said. The FTO recommended that POS security tokens should not expire before five years, with prior intimation to the retailer. The lack of a bulk download feature in the POS system – a longstanding concern among retailers – was acknowledged by the FBR, which submitted the Change Request Form. The FTO emphasised its urgent application. The ruling confirmed that invoices frequently failed to sync with FBR servers and retailers faced "fake disconnect" errors, though the system was running. The FBR attributed that to substandard software, but the FTO stressed the need to resolve such issues technically and administratively.
Business Recorder
18 hours ago
- Business Recorder
FBR directed to immediately stop sealing Tier-1 retail outlets
LAHORE: In a landmark decision, the Federal Tax Ombudsman (FTO) has ruled in favour of Pakistan's formal retail sector, directing the Federal Board of Revenue (FBR) to immediately stop sealing Tier-1retail outlets and address critical technical flaws in the Point of Sale (POS) system. The verdict comes as a major relief for retailers who have long struggled with systemic inefficiencies, excessive costs, and abrupt enforcement actions. The ruling was issued in response to a complaint filed by the Chainstore Association of Pakistan (CAP), which highlighted persistent issues such as POS system failures, exorbitant integration costs, unjustified profile disconnections, missing invoice uploads, and poor coordination between the FBR and its automation wing, the Pakistan Revenue Automation Limited (PRAL). According to the details the FTO has ordered the FBR to suspend the sealing of Tier-I retail stores until all technical issues in the POS system are fully resolved. The FBR has been instructed to consult CAP on future POS-related glitches and enforcement strategies to ensure smoother compliance and dispute resolution. The FTO criticized the lack of technical expertise among FBR officers, urging enhanced training and coordination with PRAL to address system-level failures. FTO directed that FBR must develop a forewarning mechanism to alert retailers about POS disconnections, token expirations, or system shutdowns to prevent sudden disruptions. Security tokens for POS systems should now remain valid for at least five years, with prior notice to retailers before expiration. Acknowledging a long-standing demand, the FBR has submitted a Change Request Form (CRF) to introduce a bulk download feature for POS data, which the FTO has stressed that it must be implemented urgently. The ruling confirmed frequent synchronization failures between retailer invoices and FBR servers, as well as 'fake disconnection' errors. The FTO has directed the FBR to resolve these issues technically and administratively. Responding to complaints about third-party integrators charging up to Rs10 per invoice or Rs1 million annually, the FBR stated that PRAL's integration services would now be free under SRO 69(I)/2025. The FTO has recommended quarterly meetings between the FBR, CAP, and other stakeholders to monitor POS performance and address grievances in real time. The decision is expected to alleviate significant operational and financial burdens on thousands of Tier-I retailers who had voluntarily integrated with the FBR's POS system but faced undue harassment due to technical and administrative shortcomings. The FTO emphasized that resolving these issues is crucial for improving tax compliance and advancing Pakistan's retail documentation efforts. Retail industry leaders have welcomed the ruling, calling it a step toward fairer enforcement and a more business-friendly tax regime. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
SHC rejects pharma firm's pleas seeking hike in drug prices
KARACHI: The Sindh High Court dismissed two constitutional petitions filed by a leading pharmaceutical company, which requested for the increase of the Maximum Retail Prices (MRP) of certain drugs up to 10 percent instead of 7 percent annually, approved by the DRAP. The verdict, delivered by a division bench comprising Acting Chief Justice Muhammad Junaid Ghaffar and Justice Mohammad Abdur Rahman, had the core of the legal dispute originated from a pricing of three commonly used medicines including Brufen (tablet) 200mg, Brufen Suspension 120ml, and Thyronorm (Tablet) 125 mcg. Abbott sought an annual MPR increase of up to 10 percent for the fiscal year 2023-24. The company's argument hinged on the historical categorization of these medicines as 'lower priced drugs' under Rule 10 of the Drug Pricing Policy, which traditionally entitled them to a CPI-linked increase of up to 10 percent. Abbott asserted that it had submitted the required calculations to DRAP on July 1, 2024, and that the authority's failure to issue a decision within the stipulated 30 days should, under Rule 7(2)(ii) of the policy, result in their self-determined revised prices being deemed approved and officially notified. DRAP, represented by the Assistant Attorney General for the Federation of Pakistan, contested this position. The regulatory body asserted that the MRPs of these specific medicines had, over successive years of CPI-linked adjustments, gradually escalated and now surpassed the maximum thresholds prescribed for 'lower priced drugs' under Rule 10(1) of the policy. Consequently, DRAP had reclassified them as 'other drugs,' thereby capping their permissible annual increase at 7 percent instead of the 10 percent sought by Abbott. This reclassification and DRAP's subsequent decision were upheld by its Appellate Board, compelling Abbott Laboratories to seek judicial intervention through the constitutional petitions, specifically challenging DRAP's order dated March 12, 2025, and previous orders from November 7, 2024, as 'illegal, unlawful, unconstitutional, without jurisdiction, malafide, and of no legal effect.' The High Court, in its detailed judgment, rejected Abbott's argument for 'deemed notification' or 'deemed approval.' The court clarified that rules allow for the deemed issuance of revised MRPs only if the submitted calculations are 'in conformity with' and represent 'correct calculations' under the policy. Since Abbott's claim was predicated on categorizing the medicines as 'lower priced drugs' despite their MRPs having already crossed the officially notified thresholds, the court held that Abbott's calculations were not policy-compliant. Addressing Abbott's contention that the same medicines were recognized as 'lower priced drugs' in the preceding year despite exceeding the threshold, the court stated that even if such a regulatory oversight occurred previously, it could not justify repeating the error. The court underlined the legal maxim that 'two wrongs do not make a right,' rejecting the notion that a past administrative lapse could serve as a binding precedent or justification for current policy violations. The court also drew attention to a crucial procedural lapse by the Ministry of National Health Services, Regulations and Coordination. The judgment noted that under Rule 10(2) of the Drug Pricing Policy, the Ministry is legally obligated to revise the thresholds for lower-priced drugs annually in accordance with CPI changes. This statutory requirement, the court observed, had not been fulfilled, thereby indirectly contributing to pricing, however, because Abbott Laboratories had not directly challenged this specific omission in its petitions, the court refrained from issuing a definitive order on this matter due to jurisdictional limitations. Nonetheless, the court acknowledged that the issue 'warrants attention' and granted Abbott Laboratories the liberty to pursue this concern independently before the Ministry or any other competent legal forum. The court directed that any such representation filed by Abbott in this regard must be decided upon by the respondent within 60 days. The Sindh High Court found no merit in Abbott Laboratories' plea for a 10 percent price increase. It upheld the decisions of DRAP and its Appellate Board as 'legally correct,' given the undisputed fact that as of July 1, 2024, the MRPs of the disputed medicines had indeed exceeded the thresholds specified for lower-priced drugs, thereby disqualifying them from such categorization. Copyright Business Recorder, 2025
