(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)-----

-----S. 9(2)(b)-----Sales Tax Act (VII of 1990), Ss.10 & 67---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Department filed Appeal after receiving notice from the Office of Federal Tax Ombudsman and challenged the jurisdiction of Federal Tax Ombudsman ---Validity---Appeal was not pending at the time the complaint was filed, the bar of jurisdiction under S.9(2)(a) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 was not attracted---Such was a crude attempt on the part of the Collector and staff members to circumvent the provision of law with mala fide intention to deprive the complainant of his claim and was also an attempt to obstruct the proceedings before the Federal Tax Ombudsman and to forge a defence to delay and frustrate the claim---Such was nothing but abuse of process of law for which all those officers and staff members who contributed in filing such appeal should be held responsible---Serious view of such mala fide act was being taken in which attempt was made to obstruct the course of justice- Such attitude of the officials of the Revenue Division was highly depreciated.

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

----Ss. 10 & 67---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 22---Refund---Recovery of sales tax not paid on disposal of fixed assets---Deputy Collector (Adjudication) decided that amount was refundable and advised to file claim for refund- Refusal to refund such amount of sales tax illegally recovered by filing appeal on receipt of notice from the Office of Federal Tax Ombudsman- Validity---Allegation of maladministration for not refunding the amount of sales tax was established---Federal Tax Ombudsman recommended that Central Board of Revenue to direct the Collector to refund the amount due to the complainants within thirty days if any interim order/ stay order has not been passed by the Appellate Tribunal.

Muhammad Arif, Assistant Manager.

Sanaullah Abro, Assistant Collector (Collection and Enforcement), Hyderabad.

M.R.K. Warsi, Superintendent.

FINDINGS/DECISION

The complaint has been filed against the Sales Tax and Central Excise. Department for refusal to refund the sales tax illegally recovered from them. The complainants have stated that the Assistant Collector (Audit-I) Central Excise and Sales Tax, Division-I, Hyderabad, issued a show-cause notice dated 8-5-2000 demanding the sales tax amounting to Rs.2,48,862 allegedly not paid on disposal of fixed assets. On receiving the notice they deposited the amount under protest. The case was heard by the Deputy Collector (Adjudication) who, vide order dated 15-11-2000, vacated the show-cause notice and decided that the amount deposited by the complainants was refundable and advised them to file claim for refund before the competent authority of the Hyderabad Collectorate.

2. The complainants filed refund application dated 13-1-2001; they sent reminders dated 22-12-2001 and 14-1-2002 followed by several applications and letters but received no reply and the amount too has not been returned. The money has been withheld by the Department for no reason and the complainants were facing cash flow problem. They requested that the respondents be directed to refund the amount of Rs.2,48,862 alongwith the interest @ 14% per annum under section 67 of the Sales Tax Act, and the cost of application may also be awarded under section 22 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000.

3. The Collector of Customs, Sales Tax and Central Excise, Hyderabad, replied to complaint that the Department has filed appeal against the order dated 15-11-2000 passed by the Deputy Collector (Adjudication) before the Appellate Tribunal and it was pending for decision. The refund case could not be finalized till the remedy of appeal was exhausted. The Collector stated that the complainants have unnecessarily wasted the time of Federal Tax Ombudsman as the case was pending before the Appellate Tribunal and under section 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, this office had no jurisdiction over cases where legal remedies of appeal, review or revision were available and the complaint be dismissed for lack of jurisdiction.

4. When the complaint was heard on 13-5-2003, the Assistant Collector submitted copy of the Tribunal's notice for hearing on 13-5-2003 as evidence of the fact that the department's appeal was sub judice before the Appellate Tribunal. He could not state the date on which the appeal had been filed. The complainants' Assistant Manager, Mr. Muhammad Arif, stated that he had received copy of the hearing notice (of the complaint) from the Lahore Head Office a little while ago and had not been briefed about the complaint. He promised to furnish the complainants response to the department's appeal in a day or two.

5. The Deputy Manager, Treat Corporation Limited, has informed vide Letter No.TCL/C/210, dated 14-5-2003 that the Order-in-Original was passed on 15-11-2000 and, accordingly, the refund application was filed before the Department on 9-1-2001. Two years have passed but the amount has not been refunded. He stated that the Deputy Collector's order dated 15-11-2000 was never challenged before any Court/authority of competent jurisdiction. Now when the complaint has been filed before this office, the Department has come up with the hearing notice to cover up the maladministration of the Department. He stated that the appeal filed by the Department was barred by time.

6. A notice dated 28-5-2003 was issued to the Collector of Sales Tax, Hyderabad, to submit a certified copy of the memo. of appeal filed before the Appellate Tribunal and the date of its presentation within two weeks. The Collector has submitted the certified copy of the memo. of appeal vide letter dated 2-7-2003, which shows that the appeal was received in the Tribunal on 22-2-2003. The appeal has been filed two years and three months after the issue of the Order-in-Original dated 15-11-2000. The complaint was filed in this office on 27-1-2003 and notice was issued to the respondent on 4-2-2003 for reply/comments. Therefore, the contention of the complainants that the appeal was filed after the registration of the complaint in this office seems to be correct as also the claim that the appeal is barred by time.

7. From the aforestated facts it is clear that the Department with a view to obstruct the proceedings before Federal. Tax Ombudsman filed an appeal after about two years and three months of the pronouncement of the Order-in-Original dated 15-11-2000. This clearly indicates the mala fide intention of the Department in creating a defence to plead the bar of jurisdiction, which they attempted to do by filing time-barred appeal after the service of notice of the complaint. It is also obvious from the facts that they first filed an appeal and then pleaded in reply that the department has filed-appeal against the order dated 15-11-2000 before the Appellate Tribunal Karachi and as the case is pending decision before Tribunal the refund case of the complainant cannot be finalized till the remedy of appeals is exhausted. It was further pleaded that the complainant has unnecessary wasted the time of the Federal Tax Ombudsman as the case is already pending decision before the Tribunal and that the jurisdiction is barred under section 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. The fact that the appeal was not pending at the time the complaint was filed, the bar of jurisdiction under subsection (2)(a) of section 9 is not attracted. It was a crude attempt on the part of the Collector and staff members to circumvent the provision of law with mala fide intention to deprive the complainant of his claim. This is also an attempt to obstruct A the proceeding before the Federal Tax Ombudsman and to forge a defence to delay and frustrate the claim. This is nothing but abuse of process of law for which all those officers and staff members who contributed in filing of appeal should be held responsible. A serious view of such mala fide act is being taken in which attempt is made to obstruct the course of justice. Such attitude of the officials of the Revenue Division is highly depreciated.

8. As regards objection to jurisdiction under subsection (2)(b) of section 9 on its literal interpretation the respondents claim that it is barred where remedy of appeal is available. In the present case as no appeal was filed by the Department against the order dated 15-11-2000, within the period of limitation the remedy of appeal being time-barred was lost and no such remedy was available at the time complaint was filed. Further more as observed in Complaint No. 1438 of 2002 consider ing the object and intention of the statute where mal-administration is proved the Federal Tax Ombudsman has jurisdiction to investigate.

9. The allegation of maladministration for not refunding the amount of sales tax on the basis of the adjudication order dated 15-11-2000 and the refund application filed on 9-10-2001 is established. It is recommended that C.B.R. to direct the Collector to:--

(i)refund the amount due to the complainants within thirty days if any interim order/stay order has not been passed by the Appellate Tribunal.

(ii)compliance be reported within one week thereafter.

C.M.A./894/FTOOrder accordingly.