PUNJAB TEXTILES, GOJRA, FAISALABAD. VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2003 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 205 (2002)

Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑S. 17‑‑‑Certificate of Registration‑‑‑Registration, Voluntary Regist ration and De‑Registration Rules, 1996, R. 3‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.10(4)‑‑ S.R.O. 550(I)/96 dated 1‑7‑1996‑‑‑Standing Order No. 4/2001 issued by the Collector Sales Tax‑‑‑Voluntary registration‑‑‑Demand of information/documents in addition to these required in the prescribed application form for registration through standing order issued by the Collector of Sales Tax‑ ‑Validity‑‑‑Rule 3 of the Registration, Voluntary Registration and De‑Registration Rules, 1996 prescribed the application Form at Annex. `A' to he submitted to Collector in pursuance of S. 15 of the Sales Tax Act, 190‑‑‑Prescribed Rule did not require even any information on the points stipulated in the Standing Order and demand of documentary evidence on the points was an extralegal instruction‑‑ Collector's view that the law did not prescribe any time limit to grant registration was also misconceived‑‑‑Section 17 of the Sales Tax Act, 1990 as well as F. 3(2) of the Registration, Voluntary Registration and De‑Registration Rules, 1996 provide that if Collector or such other officer as may be authorized by him in his behalf was satisfied that the application for registration was complete in all respects, he shall register the applicant and issue a certificate of registration in the prescribed Form Annex. `B'‑‑‑Cut off time to issue registration certification was the moment the Assessing Officer was satisfied that the prescribed application was comply to in all respects‑‑‑Once existence of the application for registration complete in all respects was available on record, the dealing officer was accountable for each day by which the issuance of registration certificate was delayed thereafter‑‑‑No evidence was available to the effect that application in the present case was not complete in any of the respects on the ‑date it was filed ‑‑‑Mal administration was established‑‑‑Federal Tax Ombudsman recommended that the Chairman Central Board of Revenue direct the Collector Sales Tax to withdraw the Standing Order No. 4 of 2001‑‑‑Revenue Division may, in their discretion, consider insertion of such requirements in the prescribed Form Annex 'A' as are reasonable and as are being contemplated in compliance of recommendations dated 8‑4‑2001 in Complaint No. 149‑K of 2002 (2002 PTD 2346) filed on behalf of Messrs Faisal Engineering, Karachi to ensure bona fides of the applicant so that the requirements are known to the applicant in advance.

Muhammad Saleem Malik for the Complainant.

Masood Sabir, A. C. S. T. for Respondent.

FINDINGS/RECOMMENDATAIONS

Maladministration is alleged in the instant complaint on the part of Collector of Sales Tax, Faisalabad for imposing conditions for registration under Sales Tax Act, 1990 (Act) in addition to those prescribed vide S.R.O. 550(I)/96 dated 1‑7‑1996.

2. Briefly, the facts are that the complainant, engaged in operating power looms, applied for voluntary registration under the Act on the prescribed form and furnished all the information required under the S.R.O. (supra) on 27‑9‑2001. It was alleged that the registration was delayed for almost 7 weeks due to the undated Standing Order No. 4 of 2001 issued by the Collector' of Sales Tax, Faisalabad directing the officers, authorized under the law, to adopt a particular procedure while performing their quasi‑judicial functions of processing the applications for registration.

3. It is alleged that the DCST/ACST concerned demanded from the applicant, in pursuance of Standing Order No. 4 of 2001, the following documents in addition to the information required in the prescribed application form:

(i) Copy of certificate of member of Chamber of Commerce and Industry, if applicable;

(ii) Attested certificate of registration with concerned association/trade body; and

(iii) Main operating bank account number(s) of the business concern with branches and bank names.

4. Besides, the Deputy Superintendent and Auditor went beyond the words of the Collector's unwarranted Standing Order by insisting upon production of such certificates in spite of the fact that the first was inapplicable, the second was' not possible because there was no local trade body and the third too, was not required in the prescribed form for the purpose.

5. It is alleged that such extra‑conditions are being imposed for ulterior motives. Registration is allowed after undue delay without gratification to those who resist the harassment as in the case of complainant; in other cases, it is issued as soon as the applicant gratifies in lieu of waiver of unlawful requirements.

6. Mr. Masood Sabir, the ACST, Faisalabad appearing on behalf of the Department reiterated the written submissions made by the Collector in response to notice under section 10(4) of the Ordinance No. XXXV of 2000. According to the Collector, he could, in order to streamline the working of the Collectorate, issue administrative orders/instructions to the sales tax officials/officers. Standing Order No. 4 of 2001, according to the Collector, was an administrative order which had been issued to expedite the process of registration and at the same time, ensure the genuineness of registration applications. The order under reference, according to Collector, specified duties of the registration staff to make them more responsible. Moreover, Standing Order No.4 of 2001 in his view was in no way inconsistent with the express provisions of law and was in no way creating any hindrance as alleged by the complainant.

7. The case according to Collector, was found lacking in respect of the Membership certificate of the Power Looms, Association and when the applicant intimated that there was no, such association in Gojra, the registration application was accordingly admitted and registration certificate was issued to the applicant.

8. The Collector further submitted that there was no law prescribing any time limit for finalization of registration application and issuance of registration certificate. Registration process was done on the basis of physical verification and satisfaction regarding genuineness of the applicant. Thus instead of causing hindrance in the process of registration as alleged by the applicant, the said Standing Order was facilitating smooth and early finalization of registration applications.

9. However, neither the Collector in his written submissions nor the ACST at the time of hearing could refer to any provision of law empowering the Collector to direct the registration staff to demand any document, as a precondition to processing of registration application, shat the registration form itself or the rule under which; it was prescribed or the provision of law under which such rule was framed, did not require.

10. It is distressing that the officers at Collectors' level do not appreciate the distinction between an administrative instruction and an order laying down extra‑legal conditions.

11. The Collector is required under the law to monitor and ensure that the officers working under him perform their function efficiently and promptly in accordance with law and the rules prescribed thereunder without imposing any burden upon the taxpayer or demanding him to meet any condition which is unwarranted in law. However, he cannot issue even such administrative instructions to his subordinates because under the Sales Tax Act, it is the exclusive domain of the C.B.R. in accordance with section 72 of the Act. The proviso to section 72 prevents even the C.B.R. to issue any such orders, instructions or directions that interfere with the discretion of officers of sales tax in exercise of their quasi‑judicial functions.

12. The written submission of the Collector in response to the notice, therefore, are misconceived and without any basis in law.

Misguided by his enthusiasm, he has issued in Part I of the Standing order No.4 of 2001, directions to the taxpayers regarding the manner ad mode of filing applications for registration and has proceeded to describe the documents to be enclosed with such applications. Parts 2 to of the Standing Order contain instructions on the obligations of the officials the fulfillment whereof is, in fact, required to be monitored and ensured by the immediate supervising officer. Rule 3 of the Registration. Voluntary Registration and De‑Registration Rules, 1996 notified vide S. R. O. 550(I)/96, prescribes the application form at Annexure "A" to be submitted to the Collector in pursuance of section 15 of the Act. The prescribed rule does not require even any information on the points stipulated in the Standing Order. As such, directing the concerned officers to demand documentary evidence on the points is an extra‑legal instruction.

13. The Collector's view that the law does not prescribe any time limit to grant registration is also misconceived. Section 17 of the Act as well as sub‑rule (2) of rule 3 of Registration Rules, 1996 provide that if Collector or such other officer as may be authorized by him in this behalf is satisfied that the application for registration is complete in all respects, he shall register the applicant and issue a certificate of registration in the prescribed form Annexure "B". Thus, the cut off time to issue registration certification is the moment the Sales Tax Officer is satisfied that the prescribed application is complete in all respects. Once existence of the application for registration complete in all respects is available on record, the dealing officer is accountable for each day by which the issuance of registration certificate is delayed thereafter. There is no evidence that application in the instant case was not complete in any of the respects on the date it was filed.

14. Maladministration alleged by the complainant is established.

15. It is recommended that the Chairman, C.B.R. direct the Collec tors, Sales Tax, Faisalabad to withdraw the Standing Order No.4 of 2001.

16. The Revenue Division may, in their discretion, consider insertion of such requirements in the prescribed form Annexure "A" as are reasonable and as are being contemplated in compliance of recommendations dated 8‑4‑2001 in Complaint No. 149/K of 2002 (2002 PTD 2346) filed on behalf of Messrs Faisal Engineering, Karachi to ensure bona fides of the applicant so that the requirements are known to the applicant in advance.

17. Compliance to be reported within 30 days of the date of this decision.

C.M.A./M.A.K./459/FTOOrder accordingly.