Messrs CH. FABRICS PVT. LTD., HATTAR VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2004 P T D 1809
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Messrs CH. FABRICS PVT. LTD., HATTAR
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 205 of 2003 decided on /01/.
th
August, 2003. Sales Tax Act (VII of 1990)‑‑‑
‑‑‑‑Ss. 3‑1(A), 3‑b(1) & 34‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)‑‑‑Scope of tax‑‑‑Input tax adjustment‑‑‑Sales tax was collected by WAPDA on electricity bill‑‑ Input tax adjustment was claimed‑‑‑Credit of such collected sales tax was subsequently given by WAPDA and taxpayer accordingly did not reduce the same from input tax which caused short payment‑‑‑Demand of such principal amount alongwith additional tax‑‑‑Principal amount was paid alongwith part payment of addition tax‑‑‑In respect of remaining part payment of additional tax, assessee contended that WAPDA was responsible for payment of .sales tax instead of refunding the same and thus he was not responsible to pay additional tax‑‑‑Such fractional amount of additional tax was demanded by a non‑speaking order‑‑ Validity‑‑‑Order was not a speaking order rather, it could hardly be considered as order‑‑ ‑Adjudication Officer had not given any consideration to the arguments of the complainant submitted in reply to the show‑cause notice‑‑ ‑Order‑in‑original was not a valid order and the charge of additional tax created could not be considered a legal charge‑‑ Order was arbitrary and contrary to law‑‑‑Maladministration was established‑‑‑Federal Tax Ombudsman recommended that the demand of addition of Rs.14,757 created against the complainant be deleted and the amount of Rs.14,769 additionally paid by the complainant be refunded to him.
Sajjad Ahmad Chaudhry alongwith S.K. Jodoon for Petitioner.
Ziaullah Shams, Assistant Collector, Sales Tax and Bakht Dauran, Senior Auditor, Sales Tax, Peshawar for Respondent.
FINDINGS/DECISION
Brief facts of the case as stated by the complainant are that WAPDA charged and collected from the complainant as sales tax a sum of Rs.59,372 in the electricity bill for the billing month of February, 2000. The complainant made the payment on 28‑2‑2000 and claimed the amount as input tax against output tax in the monthly return. Subsequently in the bill for March, 2000 the complainant was given credit of Rs.59,076 by WAPDA. Since the nature of credit/refund was not indicated and the amount of credit was different from the amount charged ‑as sales tax the complainant did not make any enquiries from the electricity department in this regard.
2. The Sales Tax Audit Department made a contravention case against the complainant observing that the complainant had failed to reduce the amount of input tax to the extent of amount refunded to him by WAPDA and thus caused a short payment of sales tax to the tune of Rs.59,076 entailing an additional tax thereon of Rs.29,226, the total amount payable aggregating to Rs.88,302. The complainant deposited the principal amount of Rs.59,076 alongwith additional tax of Rs.14,769 in sales tax return, dated 14‑6‑2001. The sales tax department vide letter, dated 25‑4‑2002 directed the complainant to deposit the balance amount of additional tax of Rs.14,757 up to 15‑5‑2002. As the complainant did not pay the said amount the case of contravention was forwarded to the competent authority for adjudication. The Collector Sales Tax (Adjudication) Peshawar issued a show‑cause notice on 30‑9‑2002 and after obtaining the complainant's reply and giving hearing passed an Order‑in‑original, dated 25‑10‑2002 for payment of additional tax of Rs.14,757.
3. The complainant being aggrieved with the adjudication order has filed this complaint stating that he has not committed any fault and was being punished for the erroneous act of the electricity department.
4. The respondent in his reply has submitted that the complainant unit, adjusted Rs.59,372 as input tax (GST on electricity during 12 of 1999 and 1 of 2000) from their output tax during the tax period 1 of 2000. In the electricity bill of March, 2000 WAPDA gave credit of the said GST to the party. The unit was required to reduce their input claim during 3. of 2000 to the tune of credited amount, but they failed to do so. After observation of departmental audit team, the principal amount and a portion of the additional tax was deposited by the complainant through their return on 14‑6‑2001 but an amount of Rs.14,769 on account of additional sales tax is still outstanding against them which is recoverable. It is further submitted by the respondent that since the amount due was not deposited on time the provisions of section 34 of the Sales Tax Act are applicable with regard to liability for payment of additional tax.
5. Representatives of both sides have been heard. The AR of the complainant further submitted that the Adjudication Authority has not considered the argument put forth by him. As per record the complainant had submitted the following reply to the show‑cause notice:
(i)In term of section 3‑1(A), the payment of sale tax is the responsibility of the supplier and the recipient is in no way responsible for payment of sales tax. Hence the demand raised in the show‑cause notice is not legal.
(ii)Our unit has neither adjusted nor claimed refund from the department hence under no letter of Sales Tax law, the recipient of supply is held liable for payment of sales tax or additional tax.
(iii)It is not duty cast on the unit to have enquired from WAPDA as to why they have refunded the amount on their own accord without informing the unit about particulars of sales tax refund.
(iv)In terms of section 30b(1) of Sales Tax Act, 1990 WAPDA was responsible to pay; the amount of tax collected in excess to the Federal Government instead of refunding the same in the unit.
The Adjudication Officer after reproducing the complainant's reply as well as the rejoinder of the sales tax audit department passed the following order as per para. 7 of the order‑in‑original:‑‑
"I have gone through the case record and considered the oral as well as written submissions of the unit and the sales tax department. The unit has already deposited the principal amount of sales tax alongwith the additional tax and now only a fractional amount is outstanding. The unit is therefore, directed to deposit the same additional tax to be calculated till the actual date of deposit."
6. The above order is not a speaking order: Rather, it can hardly, be considered an order. The Adjudication Officer has not given any consideration to the arguments of the complainant submitted by him in reply to the show‑cause notice. The Order‑In‑Original is therefore, not a valid order and the charge of additional tax created thereby cannot be considered a legal charge.
7. In view of the factual and legal position as discussed above, the impugned order is arbitrary and contrary to law. Maladministration is proved.
8. It is therefore, recommended that:‑‑
(i)The demand of addition of Rs.14,757 created against the complainant deleted.
(ii)The amount of Rs.14,769 additional paid by the complainant be refunded to him.
(iii)Compliance be made within 30 days.
C.M.A./983/FTOOrder accordingly