MUHAMMAD ASGHAR VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 106 (2002)

Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑S.11‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 10(14)‑‑‑Maladministration‑‑‑Complainant was a registered manufacturer and was notified as suspected fake unit to various chambers and trade bodies in spite of removing objection of auditors regarding adjustment of input tax i.e. payment of tax‑‑ Department stated that the name of complainant's unit had been deleted from the list of suspects‑‑‑Validity‑‑‑Though the grievance had been redressed but maladministration was established‑‑‑Issues raised in the contravention report would be contested before the concerned authority and none of the issues identified in contravention report warranted inclusion of the name of complainant's registered unit in the list of units suspected to be fake‑‑‑Federal Tax Ombudsman recommended that Member (Sales Tax), Central Board of Revenue to issue advice to the concerned officers to be careful in future and to further scrutinize the list of already notified suspected units with a view to detect any other such units wrongly included in the list and to exclude any such unit forthwith.

Bashir Tahir, Mazhar Hussain Shah for Complainant.

Jamil Nasir Khan D.C. (Refunds) Sales Tax for Respondent.

FINDINGS/RECOMMENDATIONS

Maladministration is alleged in the instant complaint against the Sales Tax Collectorate, Faisalabad for notifying the name of Messrs Jillani Aslam Weaving Factory alongwith two hundred others among the units suspected to be registered on fake grounds.

2. Briefly, the facts were that the complainant, a member of an A.O.P. operating power looms to produce fabrics for exporters on job basis, was duly registered as a manufacturer under the Sales Tax Act, 1990 since November, 2000. Monthly Sales Tax Returns were being filed regularly. However, in November, 2001 a list of 200 registered units suspected to be fake was notified to various chambers and trade bodies that included the name of complainant's unit as well.

3. It was alleged that neither any prior notice was given nor any valid reason was offered subsequently for

suspicion. Complainant voluntarily offered on 8‑12‑2001 to be audited and audit was conducted and completed in January, 2002.

4. The auditors objected to adjustments of input tax amounting to Rs.10,760, Rs.17,109 and Rs.16,808 on account of Scrap Sale, lube oil and spare parts respectively and the complainant deposited aggregate amount of Rs.44,677 on 8‑3‑2002 and applied for a copy of the audit report with a paid challan of Rs.50 on the same date; but it was never issued.

5. Collector, Sales Tax, Faisalabad was formally moved through application dated 21‑3‑2002 to exclude the name of complainant's unit from the list of suspects. Complainant personally approached all officers from Auditors (Post Refund Audit) up to Collector but to no avail.

6. It was, therefore, alleged that the delay caused by all concerned officials of Sales Tax Collectorate, Faisalabad amounted to neglect, inattention, incompetence, inefficiency, and ineptitude in the discharge of duties and responsibilities. Consequently, the unit suffered heavy loss of business and members of A. O. P. suffered torture and harassment.

7. Mr. Saeed Akhtar, Collector, Sales Tax, Faisalabad forwarded parawise comments of the D.C.S.T. (Refund) on the complainant in response to notice 'under section 10(4) of the Establishment of Federal Tax Ombudsman Ordinance, 2000. According to the D.C.S.T., name of the unit was included on the basis of information received in the Collectorate that the unit was not declaring its supplies.‑ correctly and there was discrepancy of Rs.940,263 between the declared amount of supplies as per Sales Tax Returns and the amount of receipts declared as per Income Tax Return for the year 2000‑2001 which meant short payment of Sales Tax by Rs.155,143. According to complainant's counsel the difference is on account of the fact that the figure of supplies is the aggregate of 8 tax periods since registration in November, 2000 while receipts declared in Income‑tax return are for 12 months since July, 2000.

8. The D.C.I.T (Refunds) further submitted that the audit team on 28‑2‑2002 conducted the preliminary audit but details of machinery and copies of lease agreements were not provided till 21‑3‑2002.

9. According to Mr. Jamil Nasir Khan, the D.C.S.T. (Refund), another discrepancy noted by the Auditors was that electricity meter as per bills for tax periods 11/2001 and 12/2001 was showing consumption of 23,731 and 21.256 electricity units respectively while the complainant's unit was declaring nil supplies in each of the two periods.

10. He, therefore, submitted that contravention case had been made out and sent for adjudication to the Adjudicating Authority and the case was being considered for issuing N.O.C.

11. The D.C.S.T. (Refunds) has produced, at the time of hearing, a copy of the Letter C. No. Post refund/ 162/2001/5935, dated 18‑5‑2002 addressed to the Collectors of Sales Tax, Karachi (East), (West), Rawalpindi, Peshawar, Gujranwala, Lahore, Multan, Hyderabad, Quetta and Azad Kashmir intimating that the name of complainant's unit has been deleted from the list of suspects.

12. Though the grievance has been redressed but maladministration in the case is established. The learned counsel of the complainant while conceding that the issues raised in the contravention report will be contested before the concerned authority has submitted that none of the issues identified in contravention report warranted inclusion of the name of complainant's registered unit in the list of units suspected to be fake.

13. It is recommended that Member (Sales Tax), C.B.R. to issue advice to the concerned officers to be careful in future and to further scrutinize the list of already notified suspected units with a view to detect any other such units wrongly included in the list and to exclude any such, unit forthwith.

C.M.A./486/FTO Order accordingly.