Messrs NEW AMJAD FAROOQ COTTON INDUSTRIES, DERA GHAZI KHAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2650 (2002)

Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑S.34‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 2(3)‑‑‑S.R.O. 1349(I)/99, dated 7‑12‑1999‑‑‑Additional tax‑‑‑Levy of additional tax without any order except a "computer print out" which had no calculations, details or specific order‑‑‑Validity‑‑‑Such course of action exposed "mal administration" inasmuch as a substantial demand was shown to be payable by the complainant when he had already cleared all the tax demand at the relevant time‑‑‑Revenue was at a loss to establish the validity or even the origin and the basis of the demand shown to be outstanding against the complainant in a "computer print out"‑‑ Posting in the accounts, as shown in the computer print out, were expected to be a consequence of some decision or order‑‑‑Principle of audi alteram partem was so deeply enshrined in the modern legal system that it was to be read in every statute‑‑‑Pocket of a subject should not be touched without first confronting him with the action envisaging a financial burden‑‑‑Federal Tax Ombudsman recommended that the Collector Sales Tax may in exercise of powers vested in him under S.45‑A(4) of the Sales Tax Act, 1990 examine the issue as to how an amount was demanded when there was neither any order on record as conceded by the Departmental Reformation nor was there any reason to raise such a demand; that Officer found guilty for neglect and harassment may be proceeded against under the E & D Rules, 1973; that if an amount was deposited in the Bank but did not find mention in the Monthly Returns filed under S.26 of the Sales Tax Act, 1990 may be given credit for and that sales tax refund paid on electricity bills may be examined if found legally due after adjustment as input tax which may be refunded.

Sh. Ghulam Asghar for the Complainant.

Aftab Ahmad Bhatti, Deputy Collector Customs/Sales Tax, Multan for Respondent.

DECISION/FINDINGS

The complainant protests against imposition of additional tax in contravention of the immunity granted by the C.B.R. to those who deposited their dues on 31‑5‑1998 to 30‑6‑1998.

2. Briefly the facts are that the complainant runs a cotton factory at D. G. Khan and is a "registered person" with the Sales Tax Department. Tax on supply of Cotton Seed was levied for the first time w.e.f. 1‑7‑1996. Since the levy was disputed by the Cotton Ginners the complainant also did not collect tax on the supplies made by it to Kohinoor Edible Oil (Pvt.) Limited. However, the C. B. R. granted a waiver vide S.R.O. 75(I)/98 of 12‑6‑1998 from additional tax/penalty to those who paid the principal amount on 31‑5‑1998 to 30‑6‑1998 of sales tax due on Cotton Seed supplied between 1‑7‑1996 to 31‑5‑1998. The complainant availed this amnesty by depositing a sum of Rs.525,831. At a later stage, the Additional Collector, Sales Tax, Multan passed an Order‑in‑Original No.20/99 on 3‑12‑1999 imposing additional tax at Rs.1,266 which also was deposited availing the concession allowed by the C.B.R. vide S.R.O. 1349(I)/99, dated 7‑12‑1999 as the exemption waived 75% of the amount of additional tax and penalty on depositing 25 % of the outstanding arrears. When the complainant applied for refund of excess sales tax paid through electricity bills, he was confronted with outstanding demand of Rs.3,259,129 on account of additional tax levied by the Assistant Collector in pursuance to the direction by the Additional Collector vide his order, dated 3‑12‑1999 wherein it was alleged that an amount of Rs.425,556 though deposited through a challan on 20‑3‑1998 did not get support from the return filed in to the Bank on 31‑8‑1999.

3. The learned counsel for the complainant submitted that for this alleged outstanding demand of Rs.3,259,123 only a computer print out has been handed over with no calculation, details or any specific order still the Department demands that the same be paid and is withholding issuance of refund due on account of excess payment paid through electricity bills.

4. Dr. Aftab Bhatti, Deputy Collector, Customs/Sales Tax, Multan appearing as a representative of Revenue contended that the complaint is not competent for admission as it is barred by time. He further contended that as admitted by the complainant there is no order levying additional tax except a `computer print out' which is not meant to be issued to taxpayers and is an internal document of the Department. He emphasized that no specific demand has been conveyed nor any exist on record and, therefore, the complaint is wholly misconceived.

5. The matter is not simple as it is made out by the Representative of Revenue. First: it exposes "maladministration" inasmuch as a substantial demand is shown to be payable by the complainant when he had already cleared all the tax demand at the relevant time. Moreover, the Revenue is at a loss to establish the validity or even the origin and the basis of the demand shown to be outstanding against the complainant at Rs:3,259,123 in a "computer print out". It is expected that posting in the accounts, as shown in the computer print out, are a consequence of some decision or order. The principles of audi alteram partem are so deeply enshrined in the modern legal system that these are to be read in every statute. These require that the pocket of a subject should not be touched without first confronting him with the action envisaging a financial burden. It is recommended that:

(i) Collector Sales Tax may in exercise of powers vested in him under section 45‑A(4) of the Act examine the issue as to how an amount of Rs.3,259,123 was demanded when there was neither any order on record as conceded by the D.R. nor was there any reason to raise such a demand.

(ii) Officer found guilty for neglect and harassment may be proceeded against under the E&D Rules, 1973.

(iii) If an amount of Rs.425,556 was deposited in the Bank but did not find mention in the Monthly Returns filed under section 26 of the Act may be given credit for.

(iv) Sales Tax refund paid on electricity bills may be examined. If found legally due after adjustment as input tax may be

6. Compliance may be reported within 30 days.

C.M.A./M.A.K./395/FTO

Order accordingly