Messrs JAFF TRADE VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2006 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1735 (2004)

Sales Tax Refund Rules, 2002---

----Rr. 4 & 9---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3), 9 & 11---Refund claim---Non- processing of claim by department---Complainant alleged to have submitted all documents required under Sales Tax Refund Rules, 2002---Department claiming to be not at fault alleged non-filing of supportive documents by complainant as evident from Computerized Refund Claim Receipt showing type of document and number of documents submitted by him---No explanation was given for not replying to several letters written by complainant---No reason was given for not identifying missing documents and not asking complainant to furnish same---Held: Department had not dealt with claim with seriousness same deserved---Such was a case of maladministration arising out of action contrary to established practice and procedure without valid reasons, neglect, inattention, delay and deliberate withholding of refunds---Federal Tax Ombudsman recommended to C.B.R. to direct Collector to identify and obtain missing documents, decide claim within specified time and fix responsibility against officials responsible for maladministration and take suitable action against them.

Abdul Rahim Lakhany for the Complainant.

S.M. Shoaib, Deputy Collector of Sales Tax (Refund) Enforcement Collectorate.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.---The complaint has been filed against the Sales Tax Department for non-payment of refund of Rs.1,219,555 for the period August, 2002 to May, 2003 under section 10 of the Sales Tax Act, 1990. The complainants have stated that they submitted all the documents required under the Refund Rules vide S.R.O. 575(0/2002 and approached the Assistant Collector vide letters, dated 13-10-2003, 21-10-2003, 30-10-2003 and 6-12-2003 etc. but received neither the refund nor any response to these letters.

2. The Complainants stated that under Rule 9 of the Refund Rules the refund claims should have been processed and finalized within thirty days of the submission of the supportive documents. Due to non-payment of refund the business of the Complainants has suffered seriously and caused loss of Foreign Exchange to the national exchequer. They contended that the inaction on the part of the Respondent constituted maladministration as defined under section 2(3)(i)(a), (ii)(v) of the Ordinance No. XXXV of 2000. 'They requested that Respondent be directed to issue the refund claims legally due to them instantly and grant any other relief deemed fit in the circumstances.

3. The Deputy Collector (Refund), Division-II, replied to the complaint that the Complainants did not submit complete documents and therefore, the condition of refund within thirty days did not apply to their claims. He submitted copy of a Refund Claim Receipt, dated 14-7-2003 as evidence that the Complainants did not provide bank credit advice. He contended that non-processing of refund due to non-submission of documents could not be termed as maladministration and the complaint was liable to be rejected.

4. During the hearing of the complaint, Mr. Abdul Rahim Lakhany, Advocate, stated that the Complainants had submitted complete documents for refund to the sales tax authorities but no action was taken for grant of refund nor any intimation was given to them. However, after filing of the complaint, the Department has disposed of five claims and paid Rs.402,627 out of the 10 claims for refund of Rs.1,219,555.

5. The Deputy Collector of Sales Tax replied that since the claimants knew about the documents required to be submitted, it was not felt necessary to inform them about the missing documents. In respect of five claims, he stated, the claims were sanctioned on receipt of complete documents. When complete documents of the remaining are submitted, the same would also be disposed of. On repeated inquiry why requisition of missing documents was not made, the Deputy Collector replied that the computerized Refund Claims Receipts were handed over to the claimants, which sufficed as official intimating about the documents. He stated that the record of the refund claims was available on the Department's computer, the claimants had received the computerized receipts and it was their responsibility to furnish the missing documents. He contended that under the existing procedure there was no provision to inform the claimants about the missing documents or replying to their reminders or queries.

6. The Advocate stated that the system of maintenance of records in the Department was so poor and haphazard that the sales tax staff had no clue about the pending files. The files have been stuffed in gunny bags and nobody knows where to look for the files. He complained that the sales tax officers and staff was inaccessible and if one were to seek interview with a Superintendent of Sales Tax it would take at least two days to get an appointment. In the final analysis it was left to the claimants to either search for their files from the heaps of papers or submit duplicate documents for processing of the claims. According to him the shifting of the office to the new premises has only added .to the problems of the taxpayers and has not brought about any improvement in the delivery of services.

7. From the contents of the complaint, the Respondent's reply, and the submissions made at the hearing it is apparent that the Departmental Representative has not attached any importance to the complaint and has disposed it of by one sentence that non-processing of refund due to non-submission of documents cannot be termed as maladministration. No explanation has been given for not replying to several letters written by the Complainants. The Departmental Representatives emphasized that the Computerized Refund Claim Receipt showing the type of documents and number of document submitted by the claimant was adequate action on the part of the Department. He did not give any reason for not identifying the missing document and not asking the claimants to furnish the same. He insisted that that Department was not at fault and the sales tax authorities had a very pragmatic approach towards the problems of the taxpayers. He had no reply to the disorderly condition of the documents mentioned by the Complainant's Counsel.

8. It is clear that the Respondent has not dealt with the complaint with the seriousness it deserved and the callous attitude of the DR is deplorable. It has been admitted that the claims of August to December, 2002 was paid by the Department on 21-2-2004, more than a month after notice of complaint was sent to the Respondent by this office, and the fate of the remaining five claims is unknown. It is a clear case of maladministration arising out of action contrary to the established practice and procedure without valid reasons, neglect, inattention, delay and deliberate withholding of refunds, as defined under subsection (3) of section 2 of the Ordinance No.XXXV of 2000.

9. It is recommended that C.B.R. direct the Collectors to ensure that the complaints forwarded by this office are seriously examined and the factual position is fully and properly explained in their replies. C C.B.R. may also direct the Collector of Sales Tax

(i) to identify and obtain the missing documents of the pending refund claims within fifteen days;

(ii)decide the claims within thirty days; and

(iii) fix the responsibility against the officials responsible for maladministration and take suitable action against them.

(iv) Compliance be reported within forty-five days.

S.A.K./233/FTOOrder accordingly.