(a) Central Excises Act (I of 1944)---

----S. 26---Establishment of office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Powers of stoppage, search and arrest---Audit---Repetition of objections---Validity---Auditors and the relevant authorities should take care not to repeat the objections ---No timeframe should be fixed within which audit should be completed but it should not be prolonged unnecessarily causing constant threat and harassment to the taxpayers.

(b) Central Excises Act (I of 1944)---

----S. 26---S.R.O. 617(I)/2000, dated 2-9-2000---Establishment of office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)-- Powers of stoppage, search and arrest---Issuance of notices by repeating objections---Unnecessary prolongation of case ---Complaint-- Adjudicating Officer stated that he would decide the case with free mind without any prejudice and on merits---No reason existed to doubt the statement---Attitude of Adjudicating Officer should be such which may inspire confidence and trust of the parties in his decision---All actions, be they verbal or in writing should be in a manner which may create a fair atmosphere so that the parties may look forward for justice without any bias or prejudice---Adjudicating Officer promised to decide the case within 5 days on merits and fairly and the same was recommended by the Federal Tax Ombudsman.

Muhammad Afzal Awan for Petitioner.

Abdul Hameed Memon, D.C. LTU

Saeed Jadoon, Deputy Collector Adj. (iii)

DECISION

The complainant is a registered person under the Central Excise Act 1944. Since 1993 it is engaged in providing and rendering travel facilities to the public for journey originating and terminating within Pakistan. It has been pleaded that the complainant has been collecting leviable Central Excise Duty under the Central Excise Act, 1944 on travel facilities and has been depositing the same into the national exchequer as provided by rules 96 ZZA of the Central Excise Rules 1944. It has been alleged that the senior auditor, the respondent No. 1, adopted discriminatory attitude towards the complainant while conducting the audit of accounting record for the year 2000-2001. He issued audit observations in different parts which were not issued to the others like Pakistan Airlines Corporation and the other respondents are also following the same. The respondents issued notices one by one, again and again based on irrelevant grounds and exercised power due to corrupt and improper motives. The audit observations No. 1 and 2, dated 10-12-2001 were duly replied alongwith annexures but no reply was received from the auditor nor any further clarification in this respect was given. Audit observation No.3 issued on 13-12-2001 leveling different allegations accusing the complainant of valuation of S.R.O. 617(1)/2000, dated 2-9-2000 which required that tax on domestic travel by air will be charged collected and paid in the manner in which sales tax is being collected on taxable supply under the Sales Tax Act, 1990. It further recited that the complainant had not included the embarkation airport tax in the amount so received and did not pay the sales tax levied thereupon. After the lapse of more than two months the audit observation No.4 was issued on 20th February, 2002 alleging that claim/adjustment made was in violation of sections 7 and 8 (1)(a) of the Sales Tax Act, 1990. The complainant replied to all these observations/objection but no response was received from the respondents/auditor. Again the Deputy Collector (Audit Division) issued a notice, dated 21-1-2003 in respect of audit observation for the period 2000-2001 which almost repeated audit observations which had already been replied. Thereafter the matter was referred to adjudication much before that the complainant had 'filed Suit bearing No.795 of 2000 in the High Court of Sindh against the show cause notice, dated 7-6-2000 for declaration that it was illegal, void and barred by time and further declaration was sought that the complainant was not liable to pay any amount in respect of Central Excise duty. This issue is not involved in the present case. It has been pleaded that while the matter was before the Adjudication Authority the complainant filed this complaint. However, considering that the Adjudication Authority was rushing with the complainant's case to pre-empt this complaint the complainant sought adjournment. The complainant has pleaded that it has been discriminated with the PIR. Several audit observations have been issued to which reply was submitted but they have not been acknowledged. The action taken is arbitrary.

The reply has been submitted by the Collector of Customs, Central Excise (Adjudication) as well as by the Director large Taxpayer Unit, Karachi. The Collector Adjudication has submitted that the complainant has violated section 26 of the Sales Tax Act in view of S.R.O. 617(I)/2000, dated 2-9-2002. It has been denied by the Senior Auditor that he had acted in association with the Deputy Collector (Audit Division), the respondent No.2. It has been submitted that the show cause notice was issued to obtain the views and explanation of the complainant which are on record with the Adjudication Authority who will hear the case and decide on merits. Discrimination has been denied. It has been denied that the proceedings have been initiated with mala fide intention and ulterior motives. The show-cause notice has been issued by the collector adjudication. The Collectorate of the Large Taxpayer Unit has pleaded that the jurisdiction was barred under subsection 2(a)(b) of the Ordinance XXXV of 2000. The audit observation sent by the respondent No.2, the Deputy Collector Audit, Large Taxpayer Unit, Karachi was based on the findings of auditors of Directorate of Revenue Receipt Audit Karachi. So far no adverse action has been taken, the collection of duty was to be paid/charged by the complainant in terms of S.R.O. 617(I)/2000,, dated 2-9-2000. The complainant has not complied with section 26 of the Sales Tax Act read with S.R.O. 617. The reply of the complainant to the audit observations were found not tenable by the department as such-show-cause notice was issued and decision was pending with the Collector Adjudication. The audit observation, dated 21-1-2003 by the respondent No.1 is based on findings of the auditors of Directorate of Revenue Receipts Audit. It has been prayed that complaint is dismissed.

The learned counsel for the complainant has contended that the department has been sending repeated notices some time repeating the same observations which causes harassment and inconvenience to the taxpayer. In the present case the learned counsel has obviously referred to the audit objections which were conveyed to it from time to time. These observations were sent by the Senior auditor in order to seek clarification for preparing a comprehensive report for consideration of the Deputy Collector as according to the department this is the procedure adopted during audit. If it is a procedure already in vogue for the convenience of the parties and also for the auditing party there should be no objection as it gives opportunity to explain the objections. However, the auditors and the relevant authorities should take care not to repeat the objections. Further more there should be time frame within which audit should be completed and should not be prolonged unnecessarily causing constant threat and harassment to the taxpayers. The department has already issued a show-cause notice, dated 29-1-2003 and the matter is under D.C. Adjudication. The learned counsel pointed out that the Adjudication Officer has shown undue haste in hearing in its case merely to pre-empt the proceedings of this complaint. Mr. Jadoon

explained that he has to complete the proceedings within 45 days but at the same time he admitted that there are about 900 cases pending for adjudication most of which are older than the complainant's case. He stated that he has devised procedure that he picks up cases from the new one and from the old lox. This may be a good effort on the part of the officer concerned but it would not be fair to pick up some cases for adjudication and rush with them particularly in the circumstances where a complaint has been lodged here. He has further stated that after the complainant protested the Collector has adjourned the case and has not fixed any date of hearing as yet. The learned counsel for the complainant expressed his apprehension that in view of the proceedings filed here the department and the relevant officers seem to be prejudiced. Mr. Jadoon has stated that he would decide the case with free mind without any prejudice and on merits. There is no reason to doubt this statement. However, the attitude of adjudication officer should be such which may inspire confidence and trust of the parties in his decision. All actions be it verbal or in writing should be in a manner which may create a fair atmosphere so that the parties may forward for justice without any bias or prejudice. The Adjudication Officer has promised td decide the case within 15 days d fairly. The Adjudication Officer to decide the case within 15 days and submit a copy of the decision to this office within one week thereafter.

C.M.A./834/FTO Order accordingly