Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss.15 & 17‑‑‑Voluntary Registration and De‑registration Rules, 1996‑‑‑S.R.O.550(I)/96, dated 1‑7‑1996‑‑‑Standing Order No. 1 of 2000, Part 1(d)(ii)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 9‑‑‑Application for registration‑‑ Non‑issuance of Sales Tax Registration Certificate on the ground that the complainant had submitted copy of agreement without specified date, and that he failed to submit duly attested copy of National Tax Number‑‑ Validity‑‑‑Non‑submission of NTN and absence of date on the tenancy agreement were too minor points to hold up the registration in the first instance and cause delay of approximately three months‑‑ ‑Department did not even follow Standing Order 1 of 2000 as survey and inspection was carried before the issuance of the certificate and not after the receipt of certificate by the complainant as required‑‑‑Non‑observance of the Standing Order had caused further delay which was a case of maladministration ‑‑‑Department had not acted in a business friendly manner‑‑‑ Voluntary Registration and De‑registration Rules provided an elaborate application form and the check list of the documents prescribed in Part 1 of the Standing Order No. 1 of 2000 should have been in conformity with the Rules besides the fact that this part should have been published in the form of the public notice‑‑‑Federal Tax. Ombudsman recommended that Central Board or Revenue should consider updating the Registration Rules, 1996 by adding acceptable elements of Part 1 of the Standing Order 1 of 2000 and deleting Part I of the Standing Order and to direct the Collectors of Sales Tax to ensure registration of the sales tax units expeditiously and avoid delay on minor deficiencies which could be quickly rectified.

Tariq Ahmad, Consultant.

Ms. Sayeeda Anjum, Assistant Collector (Registration).

FINDINGS/DECISION

The complaint has been filed against the Sales Tax Collectorate (East), Karachi, for not issuing the Sales Tax Registration Certificate the complainant had applied for on 5th December, 2001. The complainant's Consultant stated in the complaint that his client was unable to transact with the corporate sector and also could not apply for export registration without a valid Sales Tax Certificate.' Despite repeated telephonic requests and written submissions to the Assistant Collector and the Collector of Sales Tax, no positive response was received. This was a case of maladministration and the complainant requested to investigate the matter, order issue of the certificate. and identify the ,persons responsible for maladministration.

2. The Collector of Sales Tax and Central Excise (East), Karachi, stated in the reply to the complaint that Messrs Faisal Engineering applied for registration as a manufacturer on 5‑12‑2001. The processing of the application required receipt of attested copies of the documents as specified in the Standing Order No. 1 of 2000. The complainant had submitted a copy of the tenancy agreement without any specified date and failed to submit attested copy of NTN. After receipt of attested copy of NTN, the Sales Tax Registration Certificate was issued on 28‑2‑2002.

3. During the hearing of the complaint the Consultant submitted a rejoinder to the Collector's reply and stated that the Registration Certificate was issued after a delay of 86 days from the date of application. He referred to the Collector's remarks that Registration Applications were processed, in accordance with the Standing Order No.1 of 2000, after verifying premises and machinery, that the complainant had submitted copy of agreement without specified date, and that he failed to submit duly attested copy of NTN. The Consultant stated that the verification of premises was to be done after the issue of the certificate and not during the process of issuance of certificate. In the Standing Order there was no requirement for submission of list of machinery or physical inspection. Similarly there was no requirement in the Order to produce a tenancy agreement and if there was any shortcoming in the tenancy agreement it should have been ignored.

4. The learned Consultant objected to the use of the word FAIL in submission of NTN because it meant a wilful and deliberate act while this was not the case in the present situation. The reason of non submission of NTN was given in the application for sales tax registration and the delay in its submission was beyond the complainant's control as the application was pending with the Income Tax Authorities in Islamabad. The submission of NTN was not mandatory in the Standing Order. He raised a question that while the Standing Order, abase document to which the Department adhered strictly, provided for attestation of documents by an Assistant Collector, why did the Department accept copies of the documents attested by a Superintendent. Further, the Standing Order being a departmental document was required to be followed by the staff under the Collector, and other persons were not obliged to follow its instructions because matters pertaining to the general public should be notified through Public Notice for compliance. In the instant situation, the Collectorate did not issue a public notice.

5. The learned Consultant stated that section 15 of the Sales Tax Act required the submission of application for registration in the prescribed form and, under section 17, the authorized officer should issue the certificate if he was satisfied that the application was complete in all respects. Similarly rule 3 of the 'Registration, Voluntary Registration and De‑registration Rules', notified vide S.R.O. 550(I)/96 dated 1‑7‑1996, laid down that where the application for registration was complete in all respects, a certificate of registration would be issued. He asserted that the applicant had filed a correct application alongwith original documents in support of the application and the certificate should have been issued within a few days.

6. The Department's Representative admitted that prior verification of premises was not required under the Standing Order No.1 of 2000. The need of tenancy agreement was felt because it was necessary to get the specific particulars of the premises on record. She did not agree that the requirement of NTN was not mandatory and the words 'if any' used in Part I (d) (ii) of the Standing Order applied only to 'income‑tax assessment order for the last year' and not to 'National Tax Number Certificate'. She stated that the attestation by a Superintendent had been accepted because the Standing Order No. 1 of 2000 had been amended to provide for attestation by a Superintendent of the Department. She added that Standing Orders issued by the Department were applicable to the members of the public as well as to the officials of the Department. The Department could not issue a certificate of registration without checking that all documents had been received and all particulars were entered in the application.

7. The learned Consultant has raised some important points in the rejoinder to the Department's reply. Standing Orders are issued by the Departments to prescribe the procedure, the steps to be taken, and the duties of officials of various levels. These basically contain officials' job descriptions and check lists of their duties. If they contain some instructions for the taxpayer, those should be notified in Public Notices, and circulated through the trade bodies and associations. The Consultant has rightly pointed out that registration of his unit should have been done in accordance with the Registration Rules notified by the C.B.R. in 1996. Even in applying the Standing Order, the non‑submission of NTN as explained by the complainant and absence of date on the tenancy agreement were too minor points to hold up the registration in the first instance and cause delay of approximately three months. The Department did not even follow Standing Order 1 of 2000 as survey and inspection was carried out before the issuance of the certificate and not after the receipt of certificate by the Complainant as required. This non‑observance of the Standing Order caused further delay Clearly it is a case of maladministration. The Department has not acted, as unhappily noted by the Consultant, in a business friendly manner. The Registration Rules provide an elaborate application form and the check list of the documents prescribed in Part I of Standing Order No. 1 of 2000 should have been in conformity with the rules besides the fact that this Part should have been published in the form of a public

8.It is recommended that C.B.R.

(1)Consider updating the Registration Rules, 1996 by adding acceptable elements of Part I of the Standing Order‑ I of 2000 and deleting Part I of the Standing Order;

(2)direct the Collectors of Sales Tax to ensure registration of the sales tax units expeditiously and avoid delays on minor deficiencies which could be quickly rectified; and

(3)report compliance within thirty days.

C.M.A./M.A.K/316/FTOOrder accordingly.