2004 P T D 1161

[Federal Tax Ombudsman]

Before Justice (Retd), Saleem Akthar, Federal Tax Ombudsman

Messrs S.M. HASSAN

Versus

SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No. C-745 of 2003, decided 11^th August, 2003.

Sales Tax Act (VII of 1990)---

----S. 11(2)---Establishment of the Office of Federal Tax. Ombudsman Ordinance (XXXV of 2000), S.2(3)---General Clauses Act (X of 1897)-- Freedom of Information Ordinance (XCVI of 2002) Preamble-- Assessment--Evasion of tax---Complainant informed the sales tax authorities regarding evasion of sales tax and central excise duty on supply of telephone directories and on services rendered by Pakistan Telecommunication Company Limited on the basis .of audited accounts but sales tax authorities did not respond---Sales tax authorities contended that telephone directories were supplied to the subscribers without any charge and question of levy of sales tax thereon did not arise---Amount of duty collected against Revenue was erroneously printed in annual audit report---Complainant was not an aggrieved party and had no locus standi to complain against PTCL for alleged short-payment of duty/sales tax---Validity---Complaint against, Pakistan Telecommunication Company Limited about evasion of duty and taxes and sales tax on supply of telephone directories and services rendered, had not been substantiated by the complainant---Decision with regard to request for providing copies of sales tax returns and audit report rested with Pakistan Telecommunication Company Limited or the Central Board of Revenue---Since no maladministration had been reported by the complainant, the complaint was not maintainable and the same was dismissed by the Federal Tax Ombudsman.

S.M. Hassan the Complainant.

Amer Rashid Sheikh, Deputy Collector of Sales Tax, Islamabad.

FINDIGNS/DECISION

The complaint has been filed against the Pakistan Telecommunication Company Limited (PTCL) for evasion of sales tax and central excise duty on supply of telephone directories and on services rendered by them. The complainant has stated that the information regarding evasion of sales tax on supply of telephone directories was given to the Collector of Sales Tax Central Excise, Karachi, on 7-1-2002. He sent four reminders and the Collector, vide letter, dated 13-7-2002, informed him that the matter had been returned (on 29-1-2002) to the Collector of Sales Tax and Central Excise Rawalpindi.

2. He stated that he sent a letter, dated 27-1-2002 to the Collector, Rawalpindi, requesting (for information about the) progress of the case and intimating about the evasion of excise duty on services rendered by PTCL. He sent three reminders, dated 15-8-2002, 28-8-2002, and 16-8-2002. The Collector, vide letter, dated 2-10-2002, informed that the audit of PTCL Islamabad was in progress and the points indicated in his letter were being checked and the result would be communicated as soon as the audit was completed. After, receipt of the letter from the Collector, the complainant wrote letters, dated 14-10-2002, 21-10-2002; 11-11-2002, 19-12-2002, 26-12-2002, 13-1-2003 and 17-3-2003 given different informations about non-payment of excise duty by the PTCL. But the Collectorate did not provide the information about the progress of audit of PTCL.

3. The complainant stated that he informed the Collector vide letter, dated 26-12-2002, with supporting documents, that PTCL had shown domestic Revenue at Rs.47.18 billion and excise duty as Rs.4.38 billion, whereas in the previous year 2001, the domestic Revenue was Rs.42.93 billion and the amount of excise duty was Rs.6.12 billion. He stated that at the rate of 15 %, the correct amount of duty on domestic Revenue should be Rs.7.08 billion there was short payment of 2.68. The Collector did not respond to his letter and he sent another reminder, dated 31-1-2003.

4. The complainant stated that huge amount of sales tax and central excise duty were recoverable from PTCL and the Collector was avoiding to recover the legitimate revenue of the state and to intimate the action progress of the case. He requested that matter be inquired into and the respondent be directed to recover due central excise duty and sales tax and his claim be worked out and ordered to be paid accordingly.

5. The Collector, Sales Tax and Central Excise, Rawalpindi, replied to the complaint that there was no evasion of sales tax on supplies of telephone directories. The publication of telephone directors was an open action and non-payment of sales tax might be the result of some procedural lapse. He stated that the routine audit of PTCL, a giant taxpayer, was initiated in February 2002 prior to receipt of the information from the complainant. During the audit no evidence was found to prove that PTCL had collected the price of telephone directories. The PTCL management denied knowledge of collection of money for the directories. The audit of PTCL was still in progress and the auditor had been directed to look for any specific invoice/bill showing that PTCL had charged money from its customers on this account.

6. The Collector stated that the complainant was informed vide letter, dated 2-10-2002 that the result of audit would be communicated as soon as it was completed, the audit was still in progress, and several aspects retrained to be checked. He stated that many aspects of PTCL operations already on the check-list had been examined. He stated that actual central excise duty deposited by PTCL was not correctly printed in the audited account's. He reported the actual output tax of PTCL in sales tax returns for 2001-2002 as follows:--.

7. The Collector further stated that the complainant's contention that PTCL had shown domestic revenue as Rs.47.17 billion and excise duty as Rs.4.39 billion compared to domestic revenue for 2001 at Rs.42.92 billion and excise, duty at Rs.6.12 billion was flimsy because PTCL revenue accounts were maintained on the basis of fiscal years and not calendar year. He staged that PTCL actually paid Rs.8896.95 million, which exceeded the figure of Rs.7.07 billion.

8. The Collector contended that this type of complaints were not based on any sound footing. The information consisted of bits and pieces collected from media reports and unauthentic sources. There was no real effort which could qualify as information as specified/defined in the relevant Reward Rules. He requested that the complaint being devoid of any substance and solid ground be rejected.

9. The hearing of the complaint was fixed on 2-7-2003 when Mr. Zahid Hussain Bhyo, Additional Collector of Sales Tax and Central Excise, Rawalpindi, attended the hearing. The complainant, however, faxed a letter, dated 19-6-2003 requesting for adjournment to another date. The hearing was therefore adjourned to 24-7-2003 vide notice, dated 2-7-2003.

10. The complainant sent copies of two letters, dated 9-7-2003 and 17-7-2003 addressed to the Collector Rawalpindi asking that interim audit report and sales tax returns of PTCL for the period 2001-2002 be provided to him. The same request was reiterated vide his application, dated 22-7-2003 that (i) proper reply of the respondent's comments as well as detailed submissions/clarification and copy of interim audit report and sales tax returns be provided to him under section 24-A of General. Clauses Act as laid down in various rulings of the superior Courts; and (ii) all correspondence /noting related to the case be provided under Freedom of Information Ordinance of 2002. He requested that the respondent be directed to provide the above documents and thereafter three weeks time be allowed for clarification/detailed submission:

11. The complainant did not attend the hearing on 25-7-2003. Mr Amer Rashid, Deputy Collector of Sales Tax, Islamabad, attended the hearing and stated that the telephone directories were supplied by PTCL to the subscribers without any charge and, therefore, the question of levy of sales tax thereon did not arise. He stated PTCL have clarified that in Financial Year 2001-2002 its revenues increased to Rs.47.178 billion and the amount of duty collected thereon was Rs.6.9 billion as against the erroneously printed amount of Rs.4.4 billion in the annual audit report of 2002. The Deputy Collector argued that the complainant was not an aggrieved party and had no locus standi to complain against PTCL for alleged short-payment of duty/sales tax. He requested that the complaint be dismissed.

12. The complaint against the PTCL about the evasion of duty taxes and sales tax on supply of telephone directories and services rendered by them has not been substantiated by the complainant. The decision with regard to his request for providing copies of sales tax returns and audit report rests with the PTCL or the C.B.R. Since no; maladministration has been reported by the complainant, the complaint is not maintainable and, is therefore, dismissed

C.M.A./984/FTO Complaint dismissed.