HAZIR ZAMAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1460 (2002)

(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----S. 2(3)---Maladministration---Defence arguments, non-consideration of---Effect---Deciding a case without taking into consideration the defence arguments. whether submitted in writing or made orally, was an act of maladministration as the same was against principles of natural justice.

(b) Sales Tax Act (VII of 1990)---

----Ss. 26 & 15---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---Monthly return---Application for registration---Despatch/delivery of registration documents to enable assessee to file return---Burden of proof --- Department had to prove whether the complainant/assessee was informed about Sales Tax Registration of his, unit and whether the relevant documents of registration were dispatched/delivered enabling him to file the returns.

(c) Sales Tax Act (VII of 1990)---

----S. 33---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---General penalties---Imposition of penalty for not filing returns despite Department's own failure to inform the complainant/assessee that he had been registered under the Sales Tax Act; 1990---Validity---Department need to appreciate the complainant,' assessee's case for absolving him from penalty and for deregistering his unit by closely examining two certificates both issued by Principal Company---One certificate verifies the cancellation of distributionship and the other confirms that no supplies were ever made to him up to the time of cancellation of his distributionship---Federal Tax Ombudsman recommended that Revenue Division may direct the concerned Collector Sales Tax and Central Excise, to cancel the order passed by the Assistant Collector, under S.45(A(4) of the Sales Tax Act, 1990 and advise the Competent Authority to pass a fresh, speaking adjudication order on merits taking into. consideration the submissions of the complainant, after providing him the opportunity of being heard.

Complainant in person.

M. Saleem, D.C. (Sales Tax) for Respondent.

FINDINGS/ORDERS

Mr. Hazir Zaman, the Proprietor of New Utman Traders, Topi, the complainant in the case, alleges maladministration on the part of the Tax Authorities. of the Sales Tax Collectorate, Peshawar for illegally imposing a penalty of Rs.5,000 on his business concern for not filing the Sales Tax Returns despite Department's own failure to inform them that they had been registered under the Sales Tax Act, 1990. The complainant has briefly explained his case as under:--

In the year 2001, while negotiating with Messrs Pepsi Cola Co. for a distributionship, he (the complainant) was asked by the aforesaid company to sign on some documents for registration with the Tax Authorities, but, for reasons best known to them, they did not offer him the distributionship. Had Messrs. Pepsi Cola informed him about Tax registration by the Sales Tax Department he could have got it cancelled owing to their own refusal to grant him the distributionship. Not only that, he also did not receive any document of registration from the Tax Department rendering him unable to file the tax returns.

2. However, after a lapse of one year; the Department issued to him a show-cause notice for failure to file the returns to which he replied that (i) as neither Messrs Pepsi Cola nor the respondent had ever informed him about the registration, he could not possibly have filed the monthly Sales Tax Returns (ii) under the circumstances the Department was not justified to impose penalty for non-filing of the returns.

3. In view of the above position, the complaint seeks remission of penalty and the cancellation of the so-called registration. which he contends was never received by him.

4. In the written reply the Department has made the following points.---

(i)???????? The complainant had applied for registration under section 14 of the Sales Tax Act, 1990 vide his application dated 9-2-2001 on the letter pad showing the name as "New-Utman Traders" Besides, he took oath on stamp paper before the Public Notary that he wanted to open a Godown of Pepsi Cola in the Ittehad Market Main Bazar Topi and that the established godown was his own property and he had concealed nothing.

(ii)??????? He was registered on 'his own request. So the question of ignorance about registration does not arise.

(iii)?????? Under section 26 of the Sales Tax Act, 1990 a registered person is required to file tax return whether or not any business activity is undertaken.

(iv)?????? Since the complainant had committed the offence of non-filing of returns a proper show-cause notice was issued to him allowing opportunity of hearing.

(v)??????? The applicant has the right to apply for deregistration under the law but no request for deregistration has been received from him. However, he is required to file monthly tax return under the Sales Tax Act, 1990 after payment of all outstanding Government dues.

5. At the hearing the complainant and the respondent reiterated the same arguments as contained in the complaint and respondent's reply. However, the complainant added that on a visit to the Assistant Collector Sales Tax's office he enquired from the dealing clerk in the presence of A.C. as to whom the registration documents had been dispatched and the clerk categorically confirmed that those had been sent to Messrs Pepsi Cola and not to him. He also stated that a hearing was fixed in the case on 18-3-2002 at which he had made various submissions including a request for cancellation of registration, if any, but the Order-in-Original No. (missing), dated 3-4-2002 imposing the penalty does not even so much as make a mention of such a hearing, leave along considering the submissions made by him. The complainant termed this as totally unfair.

6. The Department contended that as the complainant had voluntarily applied for registration he could not take the plea that he was not due for registration. nor, for that matter, he could deny the receipt of registration documents sent to him at his address on 17-2-2001 by the Department.

7. The arguments and record of the case have been examined. It is found that the Order-in-Original No. (missing), dated 3-4-2002 passed in the case is practically a two-line Order, cursory and superficial inasmuch as it does not even made a mention of the defence arguments, nor does it show that a hearing had taken place whereas the complainant contends that not only did he appear to defend his case on the date appointed for the hearing but was heard also. This by itself is an act of mal?administration because deciding a case without taking into consideration the defence arguments, whether submitted in writing or made orally, is against all principles of natural justice. Such slipshod orders are improper, to say the least, and legally infirm besides being non? speaking.

8. The main burden of the complainant's arguments is that he was kept totally ignorant of the fact of Sales Tax Registration and it was for the respondent to prove that the documents of registration had been delivered to him. The respondent was asked during the hearing about the manner in which the registration document were dispatched to `the complainant, whether by registered post or hand delivered to the complainant. As the representative of the Department had not brought the dispatch register he could not confirm how the documents were delivered to the complainant and whether those had been received by the complainant. Next day the respondent faxed an extract (on record) from the dispatch register showing dispatch of the documents to the complainant on a certain date but unfortunately the photocopy, being partly not legible, does not help to determine the mode of dispatch nor whether those had been delivered to and received by the complainant. It is for the Department to prove whether the complainant was informed about Sales Tax registration of their unit and whether the relevant documents of registration were dispatched/delivered enabling him to file the returns.

9. So far as the complainant's request for deregistration is concerned, it is found that the same is contained in his letter, dated 13-3-2002 (reply to the show-cause notice), addressed to the Assistant Collector Sales Tax and Central Excise. In the aforesaid letter the complainant, apart from explaining his position vis-a-vis the Tax registration, had also asked for deregistration. The Department needs to appreciate the complainant's case for absolving him from penalty and for deregistering his unit by closely examining two certificates both, dated nil issued by Messrs Pepsi Northern Bottling Company (Pvt.) Limited. While one certificate verifies the cancellation of distributionship or Messrs New Utman Traders w.e.f. 15th February, 2001, the other confirms that no supplies were ever made to him upto the time of cancellation of his distributionship.

10. Based on the above findings, it is recommended that:--

The Revenue Division direct the Collector Sales Tax and Central Excise, Peshawar to cancel the Order-in-Original No: (missing), dated 3-4-2001, passed by the Assistant Collector, under section 45A(4) of the Sales Tax Act, 1990 and advise the competent authority to pass a fresh, speaking adjudication Order on merits taking into consideration the submissions of the complainant, after providing him the opportunity of being heard.

Compliance report to be submitted within 30 days of receipt of this order.

C.M.A./638/FTO???????????????????? ??????????????????????????????????????????????????????????? Order accordingly.