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

----S. 19---Survey for Documentation of National Economy Ordinance (XV of 2000), Preamble---Establishment of Office of Federal Tax Ombudsman - Ordinance (XXXV of 2000), S.9---Compulsory registration---Non-service of enrolment certificate---Show-cause for payment of sales tax and penalty---Validity---Since. the Department had failed to establish that the enrolment certificate was served on the complainant/assessee. the show-cause notice for the period involved recovery of an amount of sales tax and penalty alongwith additional tax, based on enrolment of the complainant/assessee was ab initio void and unsustainable.

(b) Survey for Documentation of National Economy Ordinance (XV of 2000)---

----S. 3---Sales, Tax Act (VII of 1990), S.19---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9---Compulsory registration on the basis of .sales assessed by the Survey Team---Demand of sales tax---Complainant denied signature on survey form ---Validity-- Was necessary to investigate whether the complainant/assessee had signed the entries of the survey form---If investigation proved that complainant had not signed the relevant entry them the turnover shown on .the survey form could not be made the basis of assessment---If it was found that complainant or his representative had indeed signed the relevant entry and was aware of it, the Department could then argue that complainant failed. to file objection against the assessment made by the Survey Team within a reasonable time and proceed further in the matter---Complainant even then had right to file objection against the veracity or correctness of the entries made in the survey form and his objection regarding estimate of sales/turnover by the Survey Team will have to be considered by the Competent Authority on its merits---Federal Tax Ombudsman recommended that Central Board of Revenue had to cancel the show-cause .notice, dated 17-7-2002 as the complainant could. not be saddled with the liability of which he was not made aware and to investigate, through an independent :officer, the claim of the complainant that he neither himself nor his representative signed the survey form entry regarding annual sales/turnover determined by the Survey Team and proceed in the matter as indicated.

Iftikhar Ahmad and Tariq Mehmood for the Complainant.

Mrs. Mona Aslam, A.C. Sales Tax, Gujranwala for Respondent.

FINDINGS/ORDERS

The facts of the complaint are that during the Survey for Documentation of National Economy 2000, the complainant had declared an annual turnover of Rs.4,00,000 but the Survey Team during its third visit assessed the sales at Rs.15,00,000. The department allegedly enrolled the complainant with effect from 14-7-2001 requiring him to file sales tax returns. Due to their failure to do so the complainant has been issued a show-cause notice for recovery of Rs.28,800 for the period from July 2001 to July 2002 together with additional tax and penalty. Hearing in the case were fixed on different dates but according to the respondents these were adjourned on the request of the complainant. The case is still pending adjudication. The complainant contends that he owns small hotel, which caters to the poor people. He had declared his annual sales as Rs.4,00,000 but was not aware by how much the Survey Team and enhanced them. He received a notice in July 2002 informing him that an amount of Rs.48,800 was recoverable from him. Prior to this he was not informed that he was enrolled/registered for sales tax. The respondents for making recovery of the subject amount are harassing him. The respondents may be restrained from taking the recovery action because the complainants had not received any intimation about their liability before the issue of the recovery notice.

2. In their written reply the respondents have stated that during the survey the complainant had filed the business survey form, returned it to the team, declaring a turnover of 4,00,000, which was determined at Rs.15,00,000 by the Survey Team. The complainant was enrolled with effect from 14-7-2001 vide enrollment certificate (on record). As they failed to file the required sales tax returns after enrollment a show-cause notice was issued for recovery of sales tax and other dues for the period from July 2001 to July 2002. The case could not be decided as the complainant sought adjournment of the hearing fixed for processing the case. As the annual turnover of Rs.15,00,000 fell within the turnover tax regime for. which enrollment certificate was dispatched to the complainant, the contention of the complainant that they did not have knowledge of assessment/enrollment was not true. The complainant had also not filed any representation against the assessment determined by the Survey Team or against the enrollment.

3. During the hearing the complainant added that he did not sign the portion showing turnover as Rs.15,00,000. It was filed by the Survey Team itself. He did receive the show-cause notice in June 2002 but not the so-called enrollment certificate referred to by the respondent and as such they were not aware of the so-called estimation of their sales or fact of enrollment. .

4. The respondents stated that since the sales/turnover was determined at Rs.15,00,000 by the Survey Team, which exceeded minimum turnover of Rs.5,00,000 the complainant was enrolled for turnover tax with effect from 14-7-2001 vide enrollment certificate, dated 20-7-2001. He was aware of this fact as well as of the fixation of turnover/sales of Rs.15,00,000 by the Survey Team, yet he did not make any representation or appeal against the assessment/enrollment. The proprietor or his agent present signed the survey form at the. time of survey in token of, assessment of turnover. The complainant cannot disown the survey form. The complainant, whoever, contended that he had not received the enrollment certificate, and that on 28-11-2002 he had approached the Assistant Collector with the request to produce the postal receipt showing dispatch of enrollment certificate but the staff of the A. ,C. could not find or produce any, which proves that . no such enrollment certificate was issued/dispatched. The Assistant Collector present during the hearing was asked to provide the-postal receipt in support of respondents' contention that the enrollment certificate had indeed been dispatched to the complainant.

5. The arguments of the parties to the dispute and the record of the case have been examined and considered. The complainant denies having any knowledge of the so-called assessment/turnover of Rs.15,00,000 made by the Survey Team. Also he denies receipt of Enrollment Certificate allegedly dispatched to him. As the complainant had denied the receipt of the enrollment certificate, the respondents produced, subsequent to the hearing, a copy of dispatch receipt, dated 31-7-2001 of Messrs High Speed Courier Service in token of proof of dispatch of enrollment certificate at the address of the complainant. They also produced a letter from the Courier. Service showing its inability to produce proof of actual delivery as according to them they do not keep such proof on record for more than two months after the delivery. It is observed that the so-called courier receipt produced by the respondent in proof of dispatch of enrollment certificate to the complainant is almost blank. It does not bear any signature. Its production as proof of dispatch of enrollment certificate is also contrary to the original claim made by the respondent in their written reply that the enrollment certificate had been dispatched to the complainant through registered post. It is a serious contradiction signifying that the enrollment certificate was not the complainant. Considering that the respondents have provided no proof of dispatch by the registered post of. enrollment certificate and the so-called unsigned/blank courier receipt cannot be accepted as proof of dispatch, it is concluded that the complainant was not made aware of his enrollment. This belies the respondent's claim that the complainant had been duly informed about his enrollment. Hades he been made aware of it, he would have either represented against the Department' action to enroll him, or, perhaps, fulfilled the legal requirements. Since the respondents have failed to establish that the enrollment certificate was served on the complainant, the show-cause notice for the period from 7/2001 to 7/2002 involving recovery of an amount of Rs.48,800 (sales tax and penalty) plus additional tax, based on the so-called enrollment of the complainant is ab-initio void and unsustainable. As for the determination for sales/turnover by the Survey. Team the complainant claims that he had declared Rs.4 lac only as. his turnover and he. emphatically denies having signed the relevant portion of the. survey form showing Rs.15 lac as the estimated turnover determined by the Survey Team and allegedly accepted by him. In fact, the complainant emphasized that. he neither himself nor any of his representatives signed that portion/entry of the survey form that showed Rs.15 lac as the turnover and was, therefore, totally unaware of such estimation. The respondents, on the other, hand, hold that the complainant. never filed an appeal against the assessment made by the Survey Team. The question is that if it is found that the complainant. had really not signed the relevant entry how could be expected to file an appeal against the so-called assessment made by the Survey Team? It is, therefore, necessary that this aspect of the case is investigated to ascertain whether or not the complainant or his representative had signed the entries showing Rs.15 lac as the annual turnover. If the investigation proves that he had not signed the relevant entry then the turnover shown on the survey form i.e. Rs.15 lac cannot be trade the assessment. If, however, it is found that the complainant or his representative had indeed signed the relevant entry and was aware of it, the department could then argue that he failed to file objection against the assessment made by the Survey Team within ,a reasonable time and proceed further in the matter. The complainant would even then have the right to file objection to the veracity or correctness of the entries made in the survey form and his objection regarding estimate of sales/turnover by the Survey Team wilt have to be considered by the competent authority on its merits.

6. Based on the above discussion, it is recommended that the C. B. R.

(i)Cancel the show-cause notice, dated 17-7-2002 as the complainant cannot be saddled with the liability of which he was not made aware.

(ii)Investigate, through an independent officer, the claim of the complainant that he neither himself nor his representative signed the survey form entry regarding annual sales/turnover determined by the Survey Team and proceed in the matter as indicated in para 5 above.

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

C.M.A./700/FTOOrder accordingly.