Messrs BUSINESS SECURITY TECHNOLOGY (PVT.) LTD., ISLAMABAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1974 (2001)

(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)‑‑‑

‑‑‑‑S. 9‑‑‑Federal Tax Ombudsman declined interference with the assessment orders as the matter was sub judice before the Tribunal and the same questions had been raised in the complaint.

(b) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)‑‑‑

‑‑‑‑ S. 2(3)‑‑‑Maladministration‑‑‑Directions and recommendations were made by the Ombudsman to the Central Board of Revenue that letters written by the assessee or any person should at least be acknowledged within two weeks and replied within three Weeks‑‑‑Such directions which were of general application, were found to have been violated and not complied with by the Central Board of Revenue itself which reflected upon the conduct of business and the treatment meted out to the tax payers and which amounted to maladministration.

(c) Income Tax Ordinance (XXXI of 1979)‑‑

‑‑‑‑Ss. 80C, 61 & 66A‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of. 2000), S.9‑‑‑Security service business‑‑‑Assessment‑‑‑Proceeding under S.66A of the Income Tax Ordinance, 1979 holding that nature of business of company/assessee was such which could not be classified under the head

"service rendered", and therefore, assessment was to be made under S.80C of the Income Tax Ordinance, 1979‑‑‑Representations were made to Central Board of 'Revenue, Commissioner of Income Tax and Finance Minister that non‑inclusion of security services amongst the professions of providing service was due to lack of proper understanding about the concept, scope and operation of such services‑‑‑Non‑response by Central Board of Revenue and keeping quiet over the matter and failure to reply the complainant's letter was a deliberate omission in performance of its duties and responsibilities‑‑‑Such representations deal with policy matters which had collective effect and must be discussed with the party and if necessary with other relevant persons and should not be discarded or rejected unilaterally‑‑‑ Federal Tax Ombudsman recommended Chairman, Central Board of Revenue or Member of Central Board of Revenue to hear the complainant's representation, give him full opportunity to explain the case and then make order on the representations made by the complainant and Chairman, Central Board of Revenue to explain the reasons, for not replying the afore-stated letter addressed to him.

Brig. (R) Aftab Ahmed.

Qasim Samad Khan D.C.IT. for Respondent.

DECISION/FINDINGS

The complainant is a private limited company providing Private Security Services. For the assessment years 1993‑94 to 1996‑97 the company was assessed under section 61 of the Income Tax Ordinance. However, proceeding under section 66A was drawn and order was passed on 30‑9‑1998 holding that nature of business of the company is such which cannot be classified under the head `service rendered', and therefore, assessment is to be made under section 80C of the Income‑tax Ordinance. The complainant has filed an appeal against this order before the Tribunal, which is pending: As a consequence of order under section 66A assessment for the years 1993‑94 to 1996‑97 were framed afresh against which the complainant has filed appeal before the Commissioner of Income‑tax Appeal.

2. The other part of the complaint is that a letter, dated 29‑5‑2001 was written to the Chairman, C.B.R. pointing out to the problems faced by the Private Security Services Organizations. It was stated in this letter that non‑inclusion of security services amongst the professions providing service happened due to lack of proper understanding about the concept, scope, and operation of such service. Due to this reason authorities formulating the rules on the subject have casually treated who probably pictured a security service as a Chowkidar in olden days. The complainant traced the history of security service in modern time which started after World War II based on the experience gained from the activities of saboteurs and agents causing damage and destruction. Brinks of USA were pioneers of this business but the profession as such took root in the developed countries after World War II. In Pakistan the security business on professional lines is less than two decades on. It was pleaded that concept of socuroy service as provided these days cannot be equated with stevedoring on the work of an electrician or motor mechanic. The main object of the representation was that the status of security companies may be re‑examined and be classified amongst the professionals such as accountants, lawyers, advisers and consultants. This representation was initiated as security service business has been treated differently and is being subjected to presumptive tax regime. As no reply was received from the Chairman, C.B.R. the complainant wrote a letter on 13‑7‑2001 to the Special Officer endorsing a copy to the Chairman, C.B.R. but no reply was received. The complainant constantly pursued by writing letters, dated 16‑7‑2001, 15‑8‑2001 and 10‑9‑2001 but no response was received from the Chairman, C.B.R: Similar letter was addressed to the Finance Minister and three letters on the same subject were written on 27‑9‑20,01, 2‑10‑2001 and 16‑10‑2001 to the Commissioner of Income‑tax, copy of which was endorsed to the Chairman, C.B.R. None of the letters were replied or even acknowledge by any one of the officials.

3. The main object of point Brig. (Retd.) Aftab Ahmed was to bring home to the relevant officials the concept of service rendered by security companies which should be clearly understood. It after understanding the viewpoint the C.B.R. may justify or consider for amendment in the relevant Rules and laws. The complainant presented a security assessment of a particular company, prepared for its clients which is exhaustive and knowledgeable. This assessment deals with problems of security relating to law and order the environment of the plant and machinery, the apprehended dangers, accidents, proposals and advice in respect of security and emergency plan. From this brochure, which also contains the recommendations, the concept of security service rendered by the company is very clear. It does not seem to be restricted to posting of guard but it appears that the complainant Company is rendering advisory service, preparation of assessment and report in respect of security of installation and companies which is besides the guard service provided in respect of houses, shops and business centres.

4. Now coming to the assessments,' as the matter is sub judice before the Tribunal and the same questions have been raised in this complaint it is not possible to interfere with the assessment orders.

5. Reverting to the second part it is clear that the complainant has been writing letter to the Chairman, C.B.R. from 29‑5‑2001 and has one way or the other sent communications up to 16‑10‑2001 but no letter has been acknowledged much less replied. The object of complainant's representation was to present its case for getting the same treatment which service oriented assessees are enjoying. However, the attitude of the Tax Administrator is distressing and confirms the general complaint of this nature. In the past in complaints of the same nature directions and recommendations were made that, the letters written by the assessee or any person should at least be acknowledged within two weeks and replied within three weeks. This direction which was of general application, is found to be violated and not complained by C.B.R. itself. This reflects upon the conduct of business and the treatment meted to the taxpayers and amounts to maladminsitration.

6. Mr. Qasim Samad Khan has pointed out that the Government has initiated some proceedings and has presented copy of a letter of the Commissioner Income Tax, dated 13‑10‑2001 addressed to the Regional Commissioner on the subject of inclusion of private security service in the Presumptive Tax Regime. It has been stated in this letter that security agencies are providing services of security guards generally under the contract to different concerns. This concept of security services rendered, according to the complainant, is narrow in the present scenario. The Commissioner without discussing or hearing the complainant concluded that the representation has no merit and should be rejected. It seems that this letter is in response to the representation made by the complainant to the Commissioner of Income Tax. It is not clear whether the C.B.R. has initiated any action to probe and study this problem. It has not been communicated to the complainant. The non‑response by C.B.R. and keeping tight over the matter and failure to reply the complainant's letter is deliberate omission in performance of its duties and responsibilities. Such representations deals with policy matters which have collective effect and must be discussed with the party and if necessary with other relevant persons. Such representations should not be discarded or rejected unilaterally.‑

7. It is therefore recommended that:‑‑‑

(i) Chairman, C.B.R. or Member of C.B.R. to hear the complainant's representation and give him full opportunity to explain the case and then make order on the representations made by the complainant, dated 29‑5‑2001, 16‑7‑2001, 15‑8‑2001 and.10‑9‑2001.

(ii) Chairman, C.B.R. to explain the reasons, for not replying the aforestated letters addressed to him.

(iii) Compliance be made within 30 days.

C.M.A./M.A.K./298/FTOOrder accordingly.