MUHAMMAD KHALID VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2007 (2001)

(a) Sales tax‑‑‑

‑‑‑‑ Show‑cause notice‑‑‑Order passed after a lapse of more than one year from the date of issue of show‑cause notice‑‑‑Validity‑‑‑Was imperative on the part of the Deputy Collector to have issued a fresh show‑cause notice before passing the said order and he was also required before passing the order to ascertain as to whether the notice for hearing was properly served on the complainant or not.

(b) Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑S.33(1)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Penalty for non‑filing of return‑‑ Allotment of new Sales Tax No.‑‑‑Various show‑cause notices on old Sales Tax No.‑‑‑Such show‑cause notices were duly replied‑‑‑Nobody bothered to look into such replies‑‑‑Federal Tax Ombudsman observed that; (1) assessee had been unduly harassed and punished for an offence which was not committed by them; (ii) Computer Section of the Collectorate is gradually becoming a white elephant where the honoured taxpayers are treated as subject, where the, routine services are performed as a matter of favour, and where such lapses are not only deliberate but contumacious‑‑‑Federal Tax Ombudsman recommended that (a) Central Board of Revenue to direct for an enquiry to fix the responsibility of the officials who have shown extreme negligence and carelessness in issuing show‑cause notices to the complainant with old sales tax registration number and ignored the replies furnished by the complainant‑‑‑Appropriate disciplinary action may be taken against the deliquent officials: (b) Deputy Collector (Adjudication. III) who passed the order, dated 25‑6‑2001 be called upon to explain as to why the said order was passed without issuing a fresh show‑cause notice and without ascertaining proper service to the notice of hearing of the case on 28‑8‑2000. Appropriate action may also be taken against him if he fails to explain the aforesaid irregularities satisfactorily.

Complainant in person.

Miss Shahnaz Maqbool D.C. (Adjudication) for Respondent.

DECISION/FINDINGS

1. The complainant is proprietor Messrs A.B International Agency, Karachi which carries on business as commercial importer. It is stated by the complainant, Mr. Muhammad Khalid that Messrs A.B. International Agency Karachi, got themselves registered voluntarily with the Collectorate of Sales Tax (West Zone), Karachi on 3‑8‑1995 and were issued Sales Tax Registration No.10‑90‑9999‑438‑28. Subsequently on 13‑9‑1997 the Collectorate of Sales Tax (West) changed the aforesaid registration number and issued New Registration No.11‑90‑9999‑818‑73. A copy of the certificate issued by the Assistant Collector Head quarters (Registration), Karachi dated 13‑9‑1997 has been furnished by the complainant in this behalf. It is stated therein that previously the concern was got voluntarily registered under section 18 of the Sales Tax Act, 1990 and with effect from 13‑6‑1997 Messrs A.B. International Agency being taxable persons are required to be registered under section 14 of the Sales Tax Act, 1990.

2. It is alleged by the complainant that he has been filing the sales tax returns regularly and the return for the month of March, 2000 was filed within the due date on 13‑4‑2000. It is further alleged that without issuing a show‑cause notice, the Deputy Collector (Adjudication III), Karachi passed an order on 25‑6‑2001 whereby a penalty of Rs.5,000 per month was imposed under section 33(1) of the Sales Tax Act, 1990 for alleged default of non‑filing of the Sales tax return for the month of March, 2000. The old Sales Tax Registration number of the complainant was recorded in this adjudication order. The order was passed on 25‑6‑2001 but was dispatched through postal authorities on 24‑8‑2001 and was received by the complainant on 25‑8‑2001.

3. The case was fixed for hearing on 20‑11‑2001y. The complainant, Mr. Muhammad Khalid, proprietor appeared. Miss Shahnaz Maqbool, D.C. (Adjudication), Karachi III appeared on behalf of the department.

4. It has been contended by the Departmental representative that in cases which were transferred to the D.C. (Adjudication III) the show- cause notices earlier from the Collectorate of Sales Tax (West), Karachi were considered to be valid and no fresh notices were issued by the D.C. (Adjudication). She has further stated that in the case of complainant also a show‑cause notice dated 13‑5‑2000 was issued by the Superintendent, Assessment Sales Tax (West), Karachi and the notice was properly served on the complainant.

5. The complainant has stated that the aforesaid show‑cause notice issued on 13‑5‑2000 was received by him on 23‑5‑2000 and he immediately informed the Superintendent Assessment Sales Tax (West), Karachi vide his letter dated 23‑5‑2000 that the return for the month of March, 2000 was duly submitted in the N.B.P. on 13‑4‑2000 and a copy thereof was also enclosed for ready reference. This reply was sent by the complainant through T.C.S. and a photocopy of the receipt has also been filed. The Departmental Representative has not been able to explain as to why the complainant's reply dated 23‑5‑2000 was not considered while passing the order by D.C. (Adjudication) on 25‑6‑2001 She has, however, stated that probably the reply of the complainant was not forwarded to the D.C. (Adjudication) alongwith the records of the case.

6. Miss Shahaz Maqbool, D.C. (Adjudication) has further stated that a notice of hearing was also issued to the complainant on 21‑&2000 for hearing on 28‑8‑2000 but the complainant did not appear on the stipulated dated i.e. 28‑8‑2000. The D.C. (Adjudication) has, however not produced any evidence to establish that the notice for hearing was properly served on the complainant. The complainant has also vehemently denied the receipt of the alleged call notice. He has further stated that he never failed to respond to the notice issued by the Sales Tax Department. To substantiate his contention the complainant has filed copies of the following show‑cause notices issued by the Sales Tax Department with old registration number and the replies submitted by him:

7. It is pertinent to note that the D.C. (Adjudication‑III) passed Order No.351 of 2001 on 25‑6‑2001 i.e. after a lapse of more than one year from the date of issue of show‑cause notice on 13‑5‑2000. It was, therefore, imperative on the part of the D.C. to issue a fresh show‑cause notice before passing the aforesaid order. He was also required before passing the order to ascertain as to whether the notice for hearing of the case on 28‑8‑2000 was properly served on the complainant or not.

8. The complainant has vehemently contended that all the five show‑cause notices referred to above were issued from 2‑8‑1999 to 13‑5‑2000 bearing old Sales Tax Registration No. for alleged default of non‑filing of Sales Tax returns. He has further stated that he responded promptly to each show‑cause notice. stating therein that his Sales Tax Registration No. was changed by the Department and he was allotted new Sales Tax Registration No. vide certificate issued by the Department, dated 13‑9‑1997 but unfortunately nobody bothered to look into his replies which resulted in harassment and imposition of undue and unjustified penalty vide order, dated 25‑6‑2001.

9. The grievances of the complainant seem to be quite well founded considering the copies of documents filed by him in support thereof.

10. The respondent, instead of filing parawise comments on the complaint forward on 29‑9‑2001 filed a copy of order under section 45A(4) of the Sales Tax Act, 1990, dated 13‑10‑2001 ‑passed by the Collector of Customs, ST & CE (Adjudication) Karachi‑III after the notice of the complainant was served. He redressed the grievance and after narrating the facts that fresh Sales Tax Registration Number was allotted to the complainant, it was observed as follows:‑‑‑

"The respondents complied but the Collectorate miserably failed to set the house in order. Their Computer Section which is the apple of the Collectorate's eyes failed to incorporate and integrate the change in their data, and the respondents were issued show‑cause notices for non‑filing of returns. The adjudication blindly followed the contents of the show‑cause notice and an order was passed which applied mutatis mutandis to them as well. Aggrieved with the impugned Order‑in -Original, the respondents have sought redressal from the Honourable Federal Tax Ombudsman.

3. I have gone through the record of the case and I have to make the following observations:‑‑‑

(a) Messrs A.B. International Agency, 24 Machiyara Square, Muljee Street, Kharadar, Karachi have been unduly harassed an punished for an offence which was not committed by them.

(b) Computer Section of the Collectorate is gradually becoming a white elephant where the honoured taxpayers are treated as subjects, where the routine services are performed as a matter of favour, and where such lapses are not, only deliberate but contumacious.

(4) I, therefore, shelve that portion of the Order‑in‑Original No.351 of 2001, dated 25‑6‑2001 which concerns the respondents i.e., Messrs. A.B. International Agency, 24, Machiyara Square, Muljee Street Kharadar, Karachi I also direct that a thorough enquiry be conducted into the lackadaisical nature of the working of the Computer Section of the Collectorate.

11. Although the grievances of the complainant as stated in his complaint; dated 22‑9‑2001 filed in this Secretariat have been redressed by the order of the Collector (Adjudication), Karachi‑III, dated 13‑10‑2001 this would trot absolve the officials who have shown utter negligence and highly irresponsible attitude while dealing with the case of the complainant.

12. It is, therefore, recommended that:

(a) C.B.R. to direct for an enquiry to fix the responsibility of the officials who have shown extreme negligence and carelessness in issuing show‑cause notices to the complainant with old Sales Tax Registration number and ignored the replies furnished by the complainant. Appropriate disciplinary action may be taken against the delinquent officials.

(b) D. C. (Adjudication‑III) who passed the order, dated 25‑8‑2001 be called upon to explain as to why the said order was passed without issuing a fresh show‑cause notice and without ascertaining proper service of the notice of hearing of the case on 28‑8‑2000. Appropriate action may also be taken against him if he fails to explain the aforesaid irregularities satisfactorily.

(c) The above recommendations be implemented within 45 days of the receipt of these findings and a compliance report may be sent to this office within one week thereafter.

C.M.A./M.A.K./290/FTO Order accordingly.