Malik MASOOD UL HASSAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2163 (2001)

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

‑‑‑‑‑Ss.2(3) & 9‑‑‑Maladministration‑‑‑Auction was held by the Customs Authorities one day before the date intimated to the complainant‑‑‑Authorities had informed the complainant fixing the. date of auction as 2nd June, 1999, but they auctioned the car on 1st June, 1999‑‑‑Such date was intimated to the complainant under the order of Wafaqi Mohtasib‑‑‑Department tried to justify its action on the ground that notice had been published in two daily newspaper for auction on 1‑6‑1999 and 2‑6‑1999‑‑‑Validity‑‑‑Mere issuing of public notice was not sufficient to justify the change of date as the complainant had specifically been informed that the auction will be held on 2nd June, 1999‑‑‑Public notice issued in the normal course changing the date of auction different from the one intimated to a party, could not exonerate the customs Authorities from committing such irregularity‑‑‑Complainant protested and pointed out that the date of auction intimated to him was 2nd June, 1999 and he had to arrange money for the auction bid‑‑‑Fact that the complainant visited the office on the 1st June and time was allowed up to 12‑30 p.m. but he did not turn up by itself was not sufficient to justify the irregularity‑‑Auction. according to the Department was fixed for two days i.e. 1st June, 1999 and 2nd June, 1999, as the complainant had been advised the date of auction as 2nd June, 1999‑‑‑Proper course for the department was to hold the auction on 2nd June, 1999‑‑ Rushing with the auction on 1‑6‑1999 was not necessary because it was possible that the complainant might not have been able to collect bid money in such a short period ‑‑‑Maladministration on the part of the Department by their acts of omission and commission was completely established in circumstances.

(b) Customs Act (IV of 1969)‑‑‑

‑‑‑‑S.169‑‑‑Confiscation of vehicle‑‑‑100% redemption fine‑in lieu of confiscated vehicle in addition to the Customs duty and other taxes payable thereon was levied‑‑‑Fine was reduced to 30% besides payment of the duty and taxes by the Appellate Tribunal‑‑‑Vehicle was ‑sold out by the Department in an auction without implementing the order of the Tribunal‑‑‑Validity‑‑‑Department was bound to obey and implement the order of Wafaqi Mohtasib‑‑‑Vehicle was to be released on payment of 30% fine as determined by the Customs Appellate Tribunal and the Customs Duty and Sales Tax on the depreciated value of the vehicle‑‑‑Department, instead of releasing the car in the terms of the order of the Tribunal agreed to auction the vehicle‑‑‑Order of Wafaqi Mohtasib and the Appellate Tribunal had to be implemented to its logical conclusion‑‑ Federal Tax Ombudsman directed that out of the auction proceeds after deducting 30 percent. fine as decided by the Tribunal and the Customs Duty and Sales Tax, the balance amount to be refunded‑‑‑Central Board of Revenue was directed to submit a list of all such vehicles which had been detained for being illegally imported giving their full details including the chassis number, the date of detention, the location where they were stocked and the name of officers or offices to whom the vehicles had been given on "Superdari" and Central Board of Revenue to supply all notifications, rules, circulars and orders relevant and applicable to such vehicles, which had been detained or confiscated.

FINDINGS/DECISION

Malik Masoodul Hassan son of Muhammad Sharif, resident of House No.59‑A, Street No.36, Sector F‑10/1, Islamabad has filed a complaint that a Toyota Corolla Model 1988‑89 vehicle bearing No.1304180 and Chassis No.CE90‑0042256, was purchased on 16‑12‑1996 by the company manager of M/s. Contractors International (Pvt.) Ltd. Islamabad from Mr. Fayyaz Hussain son of Muhammad Hussain resident of Village Basia, District Attock, with all the relevant documents available in original file with Excise and Taxation Office, Islamabad. All the concerned documents required by the E.T.O. Motor Registration Authority were provided and after complete verification by him an amount of Rs.25,000 and Rs.450 was deposited as capital value tax and Registration Fee for the registration of the vehicle, and Registration No. IDH 709 was allotted on 28‑12‑1996 to the said vehicle. The Excise and Taxation Department, Islamabad issued a letter for verification of documents to the Collector Customs AFU, Islamabad on 28‑12‑1996. It was discovered that the vehicle was non‑duty paid and was, therefore, confiscated by the Deputy Superintendent, Customs Preventive, Rawalpindi on 30‑1‑1997 and a detention memo. was issued. The Deputy Collector of Customs Preventive, Rawalpindi after a hearing gave the decision on 23‑5‑1997 in the following words‑‑‑

"I redeem the same to its lawful owner on imposition of 100 percent. redemption fine in lieu of confiscated vehicle in addition to the Customs duty and other taxes payable thereon."

An appeal filed before, the Collector of Customs (Appeals), Rawalpindi was also rejected by him on 15‑7‑1997. Against .the decision of the Collector of Customs (Appeals), Rawalpindi, an appeal was referred before the Customs Appellate Tribunal, Lahore. The said Tribunal vide its verdict given on 18‑12‑1997 decided "We allow the appeals to the extent that the pitch of fine in all these appeals is reduced to 30 percent. Besides payment of the duty and taxes leviable on the vehicle". The Collector Custom, Rawalpindi obtained a stay order from Lahore High Court Rawalpindi Bench on 22‑12‑1997 against the decision of the Tribunal. The Central Board of Revenue launched an amnesty scheme for seized vehicles in April, 1998 allowing their release on payment of Customs duty and Taxes without payment of any fine.

3. The complainant had further alleged that this vehicle was issued to the Collector of Sales Tax since 24‑11‑1997. The complainant filed a complaint before the Honourable Wafaqi Mohtasib against the use of confiscated vehicle. Two options were given to the complainant in the findings dated 27‑5‑1999, namely the Agency should calculate the depreciation of the vehicle misused or put the vehicle in open auction. The complainant chose the second option and the department vide its letter dated 26‑5‑1999 informed the complainant that the auction of vehicle would take place on 2‑6‑1999 whereas it actually took place on 1‑6‑1999. It is the contention of the complainant that this was done wilfully in order to deprive him of a chance to participate in the auction.

3. The complainant again submitted a petition before the Honourable Wafaqi Mohtasib on 2‑6‑199‑9 pointing out that the vehicle had been auctioned on 1‑6‑1999, whereas he was intimated the date of auction as 2‑6‑1999. Simultaneously the complainant also addressed a petition on 2‑6‑1999 before the Collector Customs, Rawalpindi, requesting that the market price of his vehicle may be provided to him. In response the Collectorate admitted that their letter regarding auction of the vehicle No. IDH 709 had mentioned the date 2‑6‑1999 but Press release was issued in the daily Nawa‑i -Waqt and the Nation Rawalpindi and Lahore for auction indicated the date as 1st and 2nd of June, 1999. Besides the complainant had also contacted the Assistant Collector Customs, incharge of the auction on 1‑6‑1999 and attended the proceedings, but did not offer his bid. When the Wafaqi Mohtasib Secretariat asked for the comments of the Collectorate, it was replied vide a letter dated 11‑6‑1999 that the vehicle was auctioned on 1‑6‑1999 as against 2‑6‑1999 intimated, but the auction was also advertised through the press i.e. daily Nawa‑i- Waqt and Nation on 24‑5‑1999 where the date of auction was announced as 1st and 2nd June, 1999. The complainant had visited on 1‑6‑1999 prior to start of auction and met the Assistant Collector of Customs incharge of the auction. Assistant Collector postponed auction of the vehicle for three hours to enable the complainant to arrange for amount to offer his bid, but he did not turn up. And the vehicle was auctioned to the highest bidder at Rs.560,000 which was purchased by Mr. Shiraz Khan son of Mr. Nazir Ahmad. On the request of the department and to resolve the issue Mr. Shiraz was asked to hand over the vehicle No.1DH 709 to the complainant in consideration of Rs.588,000 as Rs.28,000 had been paid duty taxes over, and above Rs.560,000 the complainant was allowed this facility up to 15‑6‑1999, but he did not avail the same. The complainant filed a third complaint on 20‑6‑1999 'before the Wafaqi Mohtasib alleging in maladministration. In response to the third complaint the complainant was advised to approach this office.

5. In response to the notice issued by this Office Mr. Asif Saeed Khan, Assistant Collector Customs who was holding the charge of AC (Auction.) on 1‑6‑1999 and Mr. Hassan Saqib, presently holding charge of (Auction) were summoned to produce the auction record. Mr. Athar Bukhari, Superintendent Customs dealing with the auction at the material time was also summoned. The complainant appeared and two car dealers namely Haji Saqlain and purchaser of the vehicle No. IDH 709 Mr. Shiraz Khan also appeared. Their statements were recorded about the event of the day when the auction took place and are placed on file.

6. The main grievance of the complainant is that he was deliberately denied the chance to participate in the auction on 1‑6‑1999 by indicating him a wrong date as 2‑6‑1999 and this was done with mala fide intention. Mr. Asif Saeed Khan the then Assistant Collector (Auction) in. his statement submitted that the complainant had met him at 9‑30 a.m. on 1‑6‑1999 and told that he had been misinformed about the date of auction and he had to arrange money for participation in the auction. Mr. Asif Saeed Khan further stated that on his verbal request he was allowed to arrange money till 12‑00 noon. As the complainant did not show up, up to 12‑30 p.m. the car was auctioned to the highest bidder Mr. Shiraz Khan at Rs.560,000 as against the reserve price of Rs.500,000. When the complainant approached on 2‑6‑1999 the department prevailed upon the highest bidder to sell the car to the complainant at Rs.588,000 (Rs.560,000 + Rs.28,000 the income‑tax). The complainant was given time up to 15‑6‑1999, but he did not avail this opportunity as well. The advertisement about the public auction of confiscated goods by the Customs auctioneer appeared in the daily Nawa‑i‑Waqt and daily The Nation on 24‑5‑1999 for 1‑6‑1999 and 2‑6‑1999. The department could not have disposed of the car at a price below the bid received in public auction.

7. Parties have been heard and it is apparent that the Customs Authorities had writt6n letter to the complainant fixing the date of auction on 2nd June, 1999, but auctioned the car on 1st June, 1999. Such date was intimated to the complainant under the order of Wafaqi Mohtasib. The Department is justifying its action on the ground that notice had been published in two daily newspapers for auction on 1‑6‑1999 and 2‑6‑1999. Mere issuing of public notice is not sufficient to justify the change as the complainant had specifically been informed that the auction will be held on 2nd June, 1999. In the face of such specific advice given through a letter, a public notice issued in the normal course changing the date of auction different from the one intimated to a party, cannot exonerate the Customs Authorities from committing such irregularity. The second plea is that the complainant did visit on 1‑6‑1999. However, he had protested and pointed out that the date of auction intimated to him was 2nd June, 1999 and he had to arrange money for the auction bid. According to Mr. Asif, the complainant had orally requested and he was allowed time up to 12‑30 p.m. but he did not turn up. This fact by itself is not sufficient to justify the irregularity. According to the Department, the auction was fixed for two days i.e. 1st June, 1999 and 2nd June. 1999. In the circumstances the complainant had been advised the date of auction as 2nd June, 1999 and he had personally protested on 1st June, 1999. The proper course for the Department was to hold the auction on 2nd June, 1999. In the prevailing situation, there was no need to rush with the auction on 1‑6‑1999 because it is possible that the complainant may not have been able to collect bid money in such a short period. Maladministration on the part of the Department by their acts of omission and commission is completely established.

8. In the present case, on 23‑5‑1997 the Deputy Collector (Preventive) had ordered to redeem the car to its lawful owner on imposition of 100 percent. redemption fine in lieu of confiscation in addition to Customs Duty and other taxes payable thereon. This order was maintained by the Collector (Appeals). However, the Customs Excise and Sales Tax Appellate Tribunal, Lahore by its order dated 18‑12‑1997 allowed the appeal to the extent that the pitch of fine was reduced to 30 percent. besides payment of the duty and taxes leviable on the vehicle. The appellant filed complaint before the Wafaqi Mohtasib, where the matter proceeded and the following decision was made:‑‑

After "hearing the parties and examining whatever record they produced it appeared that although there was no maladministration on the part of the Agency with regard to the one time legitimization and C.B.R.'s not sending a reply, the Agency committed maladministration in respect of other matters. It does not behave a Government Office to use a vehicle by placing a fictitious number plate. However, to settle the matter, Malik Masood‑ul‑Hassan offered in writing that either the vehicle may be released on his paying 30% fine as determined by the Customs Appellate Tribunal and the Customs Duty and sales tax on the depreciated value of the vehicle (depreciation to be worked out also for the period the vehicle was `misused' by the Agency) or the vehicle may immediately be auctioned in open market and the auction date may be indicated to him. The representatives of the Agency accepted the second alternative and stated in writing that the department is agreed to put the vehicle in open auction under intimation to the petitioner (under registered cover at his given address i.e. House No.159‑A, Street No.36, F‑10/1, Islamabad), as well as in print media within one month. Malik Masood‑ul‑Hassan expressed his satisfaction over' the acceptance by the representatives of the Agency of his second option and submitted that the complaint in this Secretariat may now be filed. Hence, the case is closed as settled. It is expected that (i) the Agency would honour its commitment and (ii) it would see that in future no maladministration occurs in any case."

9. The department was bound to obey and implement the order of Wafaqi Mohtasib. The vehicle was to be released on payment of 30 percent. fine as determined by the Customs Appellate Tribunal and the Customs Duty and Sales Tax on the depreciated value of the vehicle (depreciation to be worked out also for the period the vehicle was misused by the Agency). However, the department instead of releasing the car in the above terms agreed to auction the vehicle. After vehicle was auctioned, the order of Wafaqi Mohtasib and the Appellate Tribunal had to be implemented to its logical conclusion. It is, therefore, directed that:‑‑

(i) Out of the auction proceeds after deducting 30 percent. fine as decided by the Tribunal and the Customs Duty and Sales Tax, the balance be refunded.

(ii) C. B. R. to submit a list of all such vehicles which have been detained for being illegally imported giving their full details including the chassis number, the date of detention, the location where they are stocked and the name of officers or offices to whom the vehicles have been given on "Superdari". The C.B.R. should also supply all notifications, rules, circulars and orders relevant and applicable to such vehicles, which have been detained or confiscated.

11. Complainant to be reported within 30 days.

C.M.A./M.A.K./321/FTOOrder accordingly.