Messrs KHANIAN ORIENTAL CARPETS & RUGS, ISLAMABAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2591 (2002)

Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss.19 & 14(1)(ii)‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 10(4)‑‑‑Compulsory registration‑‑‑Requirement of‑‑‑Arbitrary registration by Spot Survey Team without determining the value of supplies during the last twelve months‑‑‑Validity‑‑‑Expression "value of supplies in any period during the last twelve months ending any tax period" connotes that the Collector in order to register a retailer under S.19 of the Sales Tax Act, 1990 shall have to satisfy himself that value of retailer's supplies exceeds five million rupees in any of the 12 tax periods ending during the month in which compulsory registration of the retailer was intended and its preceding eleven months‑‑‑Collector had to work back the value of supplies for periods of 12 months from each tax period ending during the last 12 months‑‑‑Before adopting such a view, an opportunity of being heard had to be provided to the complainant as well as the Department‑‑‑Liability of the complainant to be registered under S.19 of the Sales Tax Act, 1990 having not been determined as required under S.14(1)(ii) of the Sales Tax Act, 1990, Federal Tax Ombudsman recommended that the Collector or such other officer as may be authorized by him in this behalf, after such enquiry may satisfy himself if the complainant was required to be registered‑‑‑If the said functionary was satisfied that the complainant was not required to be registered, he may cancel the registration of the complainant by invoking his jurisdiction under proviso to S.19 of the Sales Tax Act, 1990.

Malik Ghulam Hussain for the Complainant

Sultan Haider, Assistant Collector, Headquarters for Respondent.

DECISION/FINDINGS

The precise allegation in the instant complaint is the in maladministration of Spot Survey Team for arbitrarily registering the complaint under section 14 of the Sales Tax Act, 1990.

2. Responding to the notice under section 10(4) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (Ordinance XXXV of 2000), the Assistant Collector, Registration and Information, Rawalpindi submitted that the complainant was not registered compulsorily. The basis of its registration is its gross annual turnover of Rs.7.5 millions duly assessed by the National Tax Survey Team on the basis of Survey of Business Form filed in on behalf of the proprietor by Mr. Arshad Mahmud, Salesman on 27‑6‑2000 declaring total sales at Rs.6,182,178 for the period 1‑7‑1999 to 30‑6‑2000. Income Tax Return for the assessment year 2000‑2001 shows sales to be Rs.6,34,854 and Income Tax Return for the assessment year 2001‑2002 shows sales to be Rs.4,345,474. Both these sales include retail sales, supplies and export.

3. Malik Ghulam Hussain, the complainant and Mr. Sultan Haider, Assistant Collector, Headquarters were heard.

4. The complainant submitted that he never made any application in such form and manner as the. Board might have by notification in the Official Gazette, specified in accordance with section 18 of the Sales Tax Act, 1990 (Act).

5. He has further submitted that the certificate of Registration issued under the signature of Assistant Collector (Sales Tax), Registration and Information Division, Rawalpindi mentioned that he had been registered vide Registration No. 07‑01‑9999‑227‑55 on 26‑4‑2001 as wholesaler and retailer. It was mentioned in the certificate that it meant that he must:

(i) Charges sales tax on all taxable supplies made during the course of taxable activity.

(ii) File a return in the designated bank relating to a month on or before the 15th of the following month.

(iii) File a Nil‑Return even if no taxable activity takes place during the current tax period.

(iv) Abide by provisions of Sales Tax Act, 1990 and rules made thereunder.

6. The complainant contended that it amounted to compulsory registration under section 19 of the Act. According to him, it had no valid basis. He submitted that he was basically a retailer; that he was required to be registered under clause (ii) of subsection (1) of section 14 of the Act ‑if his value of supplies in any period during the last twelve months ending any tax period exceeds five million rupees and that the period of 12 months for registering his unit was to be counted backward from 26th.April, 2001 i.e. the date on which he was compulsorily registered. The complainant submitted that counting in such manner, the value of his supplies amounted to Rs.4,345,193 only. He submitted that the correct value of his supplies could be established by verification from record of income‑tax proceedings as required under the Rules. The complainant therefore, contended that the Registration order was arbitrary and oppressive falling under the definition of maladministration. Recommendation, therefore, was sought for Collector to invoke the proviso to section 19 to cancel such registration.

7. However, the contention of the complainant that under clause (ii) of subsection (1) of section 14, the value of his supplies is to be calculated by adding up the value of supplies for the last 12 months counted backward from the date of his compulsory registration is not correct.

8. The expression "value of supplies in any period during the last twelve months ending any tax period" connotes that the Collector in order to register a retailer under section 19 shall have to satisfy himself that value of retailer's supplies exceeds five million rupees in any of the 12 tax periods ending during the months in which compulsory registration of the retailer is intended and its preceding eleven months. In other words, he has to work back the value of supplies for periods of 12 months from each tax period ending during the last 12 months.

9. However; before adopting the foregoing view, an opportunity of being heard has been provided to the complainant as well as the respondent. Complainant's counsel concedes to the following view.

10. Since it is established that the liability of the complainant to be registered under section 19 of the Sales Tax Act, 1990 has not been determined as required under clause (ii) of subsection (1) of section 14 of the Act, it is recommended that the Collector or such other officer as may be authorized by him in this behalf, after such enquiry as required in accordance with observations in para.8 supra, may satisfy himself if the complainant was required to be registered.

In case, he is satisfied that the complainant was not required to be registered, he may cancel the registration of the complainant by invoking his jurisdiction under proviso to section 19 of the Sales Tax Act, 1990.

11. Compliance may be reported within 30 days of the date of this order.

C.M.A./M.A.K./402/FTO

Order accordingly.