Dr. Sayed JAVAID HUSSAIN SHAH VS SECETARY, REVENUE DIVISION; ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2980 (2002)

Customs act (IV of 1969)‑‑‑

‑‑‑‑S. 224‑‑‑Auction Rules, 1996 (S.R.O. 663(2)/96, dated 7‑8‑1996), Rr.21 & 22‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Extension of time limit‑‑‑Forfeiture of earnest money‑‑‑Balance payment was made after due date by pay order after adjustment of an amount being refundable, paid in an earlier bid‑‑ Non‑acceptance of‑‑‑Validity‑‑‑Customs Authorities were justified in forfeiting the earnest money when successful bidder failed to deposit the balance three‑fourth amount by due date‑‑‑Rules 21 & 22 of the Auction Rules, 1996 were very clear in this regard having no room for any relaxation or waiver or refund of any amount, once the earnest money was deposited in the case of successful bidder and balance amount was not paid by the due date‑‑‑Complainant was not entitled to any refund of the earnest money‑‑‑Federal Tax Ombudsman recommended that the Chairman Central Board of Revenue should order an inquiry into the circumstances leading to the sale of inferior quality 725 Kgs. of Black. Tea which were found to be unfit for human consumption by the PCSIR test report, when the complainant returned the tea to the Customs Authorities, the same tea was disposed of in small quantities to other persons without caging for the health of the innocent citizens and if the inquiry revealed that the contentions of the complainant were correct in this regard, suitable action should be taken against the officers responsible for playing with the health and life of the citizens.

Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan PLD 1998 SC 64 ref.

Dr. Sayed Javaid Husain Shah for the Complainant.

Dr. Sadiqullah Khan, D.C. Customs for Respondent.

DECISION/FINDINGS

The complainant Dr. Sayed Javaid Hussain Shah has complained that as the highest bidder in a customs auction he purchased 725 Kgs. of Black Tea on 28‑2‑2000 from Peshawar Customs Department of full payment of Rs.82,000. Samples were drawn and sent to PCSIR Peshawar for a Laboratory Test. According to its report No. 406/ 161/2000, dated 27‑7‑2000 Tea was riot found fit for human consumption. Subsequently the complainant participated in another auction of the Customs Department for disposal of vehicles on 28‑3‑2000 and offered the highest bid of Rs.145,000 for a Subaru Van (ABC‑493) and deposited a sum of Rs.40,000 as earnest money. Before the Van could be delivered to him and before the balance amount of Rs.105,000 could be deposited, a secret cavity in the Van was discovered containing 2 Kgs. of Charas. The Customs Authorities, therefore, did not pass on the possession of the vehicle to the highest bidder being the complainant in this case. The earnest money of Rs.40,000 was not returned and was refunded ultimately to the complainant on 31‑5‑2000. On the same date i.e. 28‑3‑2000 the complainant also offered highest bid of Rs.400,000 for Nissan Oil Tanker (PRN‑6290) and made advance payment of Rs.100,000 as earnest money. In order to pay the balance amount of Rs.300,000 for the Oil Tanker the applicant requested the Department for refund of Rs.122,000 (Rs.82,000 for Tea plus Rs.40,000 for Subaru Van not delivered). However, on 31‑5‑2000, Rs.40,000 in. respect of Subaru Van purchased on 28‑3‑2000 were refunded, whereas the money relating to Tea amounting to Rs.80,000 was returned on 30‑8‑2000.

2. After paying Rs.100,000 as advance in respect of the Oil Tanker the complainant was asked .to deposit the balance of Rs.300,000 by 6‑4‑2000. He did not make that payment by the due date. On 2‑6‑2000 the complainant deposited the pay order No.166424 amounting to Rs.218,000 and requested that the amount of Rs.82,000 lying with the Department in respect of payment made for inferior tea should be adjusted towards the total liability of Rs.300,000 arid the oil tanker be delivered to him. The Department returned the pay order to the applicant on 8‑7‑2000 and Rs.80,000 relating to Tea on .30‑8‑2000 after intervention of the Regional Accountability Bureau the earnest money of Rs.100,000 paid for the purchase of Oil Tanker was, however, forfeited.

3. The Department in its reply has conceded that the Tea was of inferior quality and amount of Rs.80,000 was refunded on 30‑8‑2000 after cancellation of the bid: As regards the Subaru Van payment was made on 31‑5‑2000. With regard to the Nissan Oil Tanker auctioned on. 28‑3‑2000 since the, prescribed time limit for deposit of the remaining 3/4 balance amount of Rs.300,000 against the highest bid of Rs.400,000 had to be paid by 6‑4‑2000 the earnest money of Rs.100,000 stood forfeited in terms of rules 21 and 22 of the Auction Rules, 1996 issued vide S.R.O. 663(I)/96, dated 7‑8‑1996, and conveyed later on to the bidder by the Assistant Collector Customs Anti‑Smuggling Division, Peshawar vide Order bearing C. No.C‑Cus(16)Auction/18/2000/454, dated 13-10-2001.

4. Dr. Sadiqullah Khan, D.C. Customs appeared for the Revenue Division while the complainant attended in person. The complainant produced copy of letter dated 16‑2‑2001 sent by the Collector Customs, Peshawar to the Board to consider the request of the applicant on the grounds contained in his petition dated 4‑12‑2000. Board vide letter dated 7‑5‑2001 asked the Collector that the decision should be taken by him and not by the Board. When the D.R. was asked as to what decision was taken by the Collector Customs on the letter sent to him by Board he submitted that in accordance with rule 22 of the Auction Rules, 1996 issued by the Collector vide S.R.O. 663(I)/96, dated 7‑8‑1996, "If the balance of the amount of the bid is not 'paid within the period as specified in Rule 21 (ibid) (7 days from the date of final acceptance), the earnest money shall be forfeited in favour of the Federal Government, and the goods may be sold by auction or otherwise". There is no such provision in the abovementioned S.R.O. to. allow the refund of earnest money by the Collectorate of Customs after it's forfeiting.

5. Rebutting the arguments of the D.R., the complainant referred to section 224 of the Customs Act, which authorised the Government not to retain the money, when it is not legally due. Continuing further he referred to decision of the Supreme Court of Pakistan in Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan PLD 1998 SC 64 where it has been observed that there may not be legal liability on the part of Government functionaries to. refund any amount received by it as a tax or other levy by virtue of certain special provisions under the special law but keeping in view that we are living in a democratic society governed by the rule of law and every Government, which claims to have ethical and moral values, must do what is fair and just to the citizens regardless of legal technicalities. The complainant prayed that the amount' of Rs.100,000 forfeited, may be refunded to him.

6. Having heard the arguments advanced by the parties, to the dispute it appears that Customs Authorities were justified in forfeiting the earnest money of Rs.100,000 for purchase of Nissan Oil Tanker when successful bidder failed to deposit the balance 3/4 amount i.e. Rs.300,000 by 6‑4‑2000. Rules 21 and 22 of the Auction Rules 1996 issued vide S.R.O. 663(I)/96, dated 7‑8‑1996 are very clear in this, regard. The D.R: has pointed out that these Rules provide‑no room for any relaxation or waiver or refund of any amount, once the earnest money in deposited in the case of a successful bidder and. balance amount is not paid by the due date. In this case the complainant produced the pay; Order of Rs.218,000 on 2‑6‑2000 as against 6‑4‑2000. The complainant; is, therefore, not entitled to any refund of the earnest money of Rs.100,000 as asked for by him.

7. It is recommended that:

(i) The Chairman C.B.R. should order an inquiry into the circumstances leading to the sale of inferior quality 725 Kgs. of Black Tea which were found to be unfit for human consumption by the PCSIR test report. When the complainant returned the tea to the Customs Authorities, the same tea was disposed of in small quantities to other persons without caring for the health of the innocent citizens.

(ii) If the inquiry reveals that the contentions of the complainant are correct in this regard, suitable action should be taken against the officers responsible for playing with the health and life of the citizens,

(iii) A copy of the inquiry report may be submitted within 60 days.

C.M.A./M.A.K./413/FTOOrder accordingly.