Messrs MEHRAN OIL (PVT.) LTD., KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD

2007 P T D 1433

[Federal Tax Ombudsman]

Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman

Messrs MEHRAN OIL (PVT.) LTD., KARACHI

Versus

SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No. C-130-K of 2004, decided on 14th April, 2004.

Sales Tax Act (III of 1951)---

----S. 13---Sales Tax General Order No.2 of 2002---S.R.O. 987(I)199---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---Exemption---Complainant stated that machinery was imported vide bill of entry dated 22-12-1999; Indemnity bond was submitted in respect of Sales Tax under S.R.O. 987(I)/1999 and Installation-cum-production certificate was not issued in spite of repeated requests---Assistant Collector, Collection and Enforcement admitted acceptance of indemnity bond and receipt of letter dated 10-6-2002 and issuance of the certificate dated 29-6-2002 subject to condonation of delay by the Central Board of Revenue, however he denied the receipt of earlier letters and directed the complainant to approach the Collector for condonation of delay so that the indemnity bond could be released---Validity---Simple issue of installation certificate had become a contentious matter and had lingered on for about three years---Unwillingness of the sales tax officials to do their duty was deplorable, their inaction betrayed neglect, inattention, 'delay, inefficiency and inaptitude in discharge of their duties which may be identified and suitably dealt with by the Central Board of Revenue---Federal Tax Ombudsman recommended that Central Board of Revenue to direct the Collector to issue a new unconditional certificate of installation-cum production.

Noor Badshah for the Complainants.

Mumtaz Ali, Manager Finance.

Dr. Sarmad Qureshi, Deputy Collector of Customs for Respondent.

FINDINGS/DECISION

The complaint relates to the non-issuance of certificate of installation of machinery imported by the complainants. They have stated that on import of the machinery vide bill of entry, dated 22-12-1999, they had submitted an indemnity bond for Rs. 89,000 in respect of sales tax under S.R.O. 987(I)/1999. They applied to the Assistant Collector, Hyderabad, for issuance of installation-cum-production certificate on 9-7-2001 and sent reminders, dated 24-10-2001, 5-6-2002 and 10-6-2002. The Assistant Collector issued the installation-cum production certificate on 29-6-2002 with the remarks that the certificate had been issued "subject to the condonation of delay by Central Board of Revenue".

2. The complainants stated that they had submitted the application in time but the Assistant Collector issued the certificate after almost one year and delay occurred due to the negligence and inefficiency on his part. The department should have issued the certificate within time. It asked them time and again to submit details required under Sales Tax General Order No.2 of 2002 but did not take any action to issue the certificate. They complained that it was pathetic that the C.B.R. had given incentive of the development and growth of national economy but the field staff was acting differently.

3. The complainants reiterated that the delay had been caused by the Department but the sword was hanging over their head in the form of indemnity bond. The department was not allowing their lawful request for issue of a valid certificate for release of the indemnity bond even after lapse of three years; it was a case of negligence, inattention, unlawful delay, incompetence and inefficiency in discharge of duties which constituted maladministration. They requested that the department be directed to issue a valid production-cum-installation certificate and release their indemnity bond.

4. The Assistant Collector, Collection and Enforcement, replied to the complaint that indemnity bond, dated 22-9-1999 was accepted by the Assistant Collector, Hyderabad, but the complainants imported the machine through Karachi Custom House and furnished another indemnity bond to the Collector of Customs (Appraisement). Their letters, dated 9-7-2001 and 24-1-2001 were not received in the department. When the letter, dated 10-6-2002 was received after the expiry of the stipulated time-limit under S.R.O. 987(I)/99, the certificate was issued on 29-6-2002 subject to condonation of the delay C.B.R.

5. He stated that when the Consultant applied to forward their request to C.B.R., the complainants were asked vide letter, dated 30-1-2003 to explain the reasons of delay and to furnish information about the machinery which were furnished on 12-5-2003. They were advised vide letter, dated 16-5-2003 to approach the Collector (Appraisement) for condonation of delay in terms of STGO 2/1997. Instead of applying to the Collector (Appraisement), they filed a complaint to this office. He contended there was no maladministration on the department's part and requested that the complainants be directed to approach the Collector for condonation of delay so that the indemmity bond could be released.

6. During the hearing of the complaint, the Advocate representing the complainants reiterated that they had submitted application within time and it was for the Department to obtain condonation of delay, if any. Their request was very simple that firstly, there was no delay on their part and secondly it was for the Department to obtain the condonation (of delay on their part) from the C.B.R, and issue a proper installation certificate for release of the indemnity bond.

7. The Deputy Collector of Customs denied that the first application had been submitted on 9-7-2001; the only evidence available with the complainant was a postal receipt. The reminders sent by them were also not available on record of the Department the first application was in fact received on 10-6-2002. He contended that the delay should not be attributed to the Department and the allegation of maladministration was without any basis. He stated that the Department would obtain the approval of the C.B.R. and issue a proper installation certificate but insisted that the charge of maladministration be dismissed.

8. That Complainants have submitted photocopies of stamped postal receipts as evidence in support of their claim that the letters, dated 9-7-2001 and 24-10-2001 were sent to the Assistant Collector, Sales Tax, Hyderabad, under postal certificates (UPC). The Respondents denied the receipt of these letters and the reminders. Loss/misplacement of documents and letters from the members of the public/taxpayers is a common occurrence in Government offices. According to a news-report published in the news of March 30, 2004, "officials of the tax Tribunals are reported to have lost documents of more than 1000 out of 8000 taxpayers whose appeals are pending decisions for more than four years". The news-item lends credence to the Complainants' claim that their letters of 2001 were ignored (or lost) by the Department and no action was taken for issue of the certificate.

9. The simple issue of installation certificate has become a contentious matter which has lingered on for about three years. The importer/manufacturer rightly feels frustrated that the investment promotion policy of the Government is negated by the procedural difficulties created by the field staff. The unwillingness of the sales tax officials to do their duty in delivering service to the taxpayers involved in the manufacturing sector is deplorable. Their inaction not only betrays neglect, inattention, delay, inefficiency and ineptitude in the discharge of their duties but also shows an attitude which is perverse, arbitrary and oppressive. The officials responsible for this negative attitude should bell) identified and suitably dealt with by the C.B.R.

10. It is recommended that C.B.R.

(i) direct the Collector to issue a new unconditional certificate within fifteen days; and

(ii) direct the Collector of Customs concerned to release the indemnity bond within thirty days.

(iii) fix responsibility for inordinate delay in issue of installation certificate and take suitable action against the officials found guilty of delay.

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

M.I./265/FTOOrder accordingly.