S.A. WASTI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1094 (2004)

Customs Act (IV of 1969)---

----Ss. 193 & 193-A---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Appeals to Collector (Appeals)---Procedure in appeal---Hearing of appeal---Appeal was not heard by the Collector of Customs (Appeals) but files were handed over to Assistant Collector (probationer) to conduct hearing---Validity---Power to hear and decide the appeal could not be conferred, even by consent, to any officer other than the one notified by the competent authority i.e. the Central Board of Revenue, which had the statutory powers to appoint the officers through gazette notifications vesting them with the authority to hear and decide the appeals against the order passed by the officers lower than the Additional Collector---Only the person who had heard the appeal had to pass the order and the process could not be delegated; otherwise the order would be illegal---Department, in the present case, had misstated the facts; interpolated the conduct of hearing in the record; order was contrary 'to law; it was a decision taken' in complete disregard of the established practice and procedure, not bona fide and without valid reason; it was perverse, arbitrary and unjust; it was based on irrelevant grounds and it was a' clear evidence of the inefficiency and the inaptitude of the officer in the discharge of his duty and responsibility---Manner in which the order in appeal had been passed by the Collector (Appeals) was not only arbitrary but lacked bona fides---Maladministration thus was established---Arguments against jurisdiction of Federal Tax Ombudsman had no merit and the same was rejected as frivolous---Federal Tax Ombudsman recommended that Central Board of Revenue to take into consideration the case of gross miscarriage of justice in the disposal of the appeal and similar appeals decided by the officer; set aside the order in appeals; entrust the appeals to another officer with the direction to carefully examine the facts of the case, and the precedents quoted by the complainant/ Consultant i.e. the decisions of the Supreme Court, the high Court, the Appellate Tribunal and the recommendation of this office.

M. Mubeen Ahsan, Advisor (Dealing Officer). S. A. Wasti, Consultant.

S.T.R. Zaidi, Additional Collector (Adjudication).

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The complaint has been filed against an allegedly arbitrary order-in-original passed by the Collector (Appeals) without granting personal hearing to the consultant representing the complainants. The consultant stated that Messrs Shah & Co. had imported a consignment of Hot Rolled Steel of second quality from South Africa at the rate of DM316/MT but the assessment was made by the customs officials on VDB system @ $ 270/MT. They had no choice but to pay the duty and taxes on the basis of value on the VDB system.

2. He stated that C.R.R., vide its letter dated 22-7-2000, had discontinued the valuation database. In the case of Messrs Qasim Brothers, the Federal Tax Ombudsman had declared VDB system as unlawful and directed the Collector of Customs to examine their refund application in accordance with the valuation of goods under the transaction value system. On the basis of this decision, Messrs Shah & Co (the present complainants) also filed the refund application which was rejected by the Assistant Collector' of Customs (Appraisement) Group-V as time-barred.

3. They filed an appeal, which was fixed for hearing on 2-7-2003 but was adjourning to 10-7-2003 on the request of the departmental representative. The consultant solemnly stated that on 10-7-2003 neither the Collector of Customs (Appeals) held hearing of the appeal himself nor he (the consultant) or the U.R. were given opportunity to appear before him to submit arguments. When he attended the Collector's office on the date of hearing, his personal assistant asked him to go with a sepoy to the office of Deputy Collector. His objection was over-ruled and he was sent to the Deputy Collector. The Deputy Collector handed over a bunch of files to an Assistant Collector Probationer to conduct hearing.

4. The consultant stated that, in paragraph 5 of the order-in-appeal dated 29-7-2003, the statement that he was heard on 10-7-2003 was totally fabricated. He added that the Collector (Appeals) had "twisted and concealed the particulars of letter of C.B.R. dated 22-7-2000' and disregarded the findings" of the Federal Tax Ombudsman. In the -same paragraph the Collector had stated that he had heard the arguments of the appellant and perused the judgment of the Appellate Tribunal, the Federal Tax Ombudsman, the High Court and C.B.R's. letter about discontinuation of the valuation database etc. He emphasized that in fact no hearing had taken place on 10-7-2003, and that on 25-7-2003 the representative of the department was absent and the hearing of the department also did not take place.

5. The consultant concluded that (i) on 2-7-2003 the hearing of appeal was adjourned on the request of the departmental representative, (ii) on 10-7-2003 the hearing of the appeal was not held by the Collector, and (iii) on 25-7-2003 the departmental representative was absent. He contended that not only the contents of paragraphs 4 and 5 were false and fabricated, but the findings in paragraph 9 of the order passed by the Collector were also totally incorrect and fabricated. He claimed that this was a case of maladministration as defined in the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. He requested that the order issued by the Collector (Appeals) be set aside and the customs authorities be directed to decide the matter in the light of judgments of the Lahore High Court and the Supreme Court on the issue of time-barred.

6. The Collector (Appeals) replied to the complaint that the order -in-original was issued in the process of quasi-judicial proceedings under section 193 of the Customs Act and the remedy against this order lay with the Appellate Tribunal under section 194-A of the Customs Act. No appeal has been lodged by the complainants as they were "apprehensive'." that the appeal would "fail on merits". Therefore, they have preferred a complaint before the Federal Tax Ombudsman "on flimsy grounds". He stated that the complaint was not maintainable in terms of section 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000.

7. Besides raising objection about the jurisdiction of this office, the Collector stated in his comments that hearing of the appeal was conducted on 10-7-2003 and 25-7-2003 when the Counsel for the complainants reiterated the points stated in the written appeal and did not put forward any additional points, and departmental representative defended the department's position. Commenting on the valuation database and the assessable values of $ 270/MT, he stated, the goods were assessed and cleared on 3-1-2000 before the issuance of C.B.R's. directive relating to valuation database. He stated that Probationer Officers were attached with different officers for on-the-job training and they were trained to scrutinize the contravention reports, show-cause notices, written replies etc. In this case when the Advocate did not offer any arguments, he was "requested to argue the case before the Assistant Collector Probationer as if he has to argue before the collector Appeal". He stated "With his consent the sham hearing was conducted by a Probationer Officer". The Collector stated that the Advocate "has made out a whole issue out of a small favour extended to us for the purpose of training junior officers". He claimed that the complaint was devoid of any merit, the Advocate has tried to plead his complaint with irrelevant facts/issues, and no maladministration of any sort has taken place. He requested that the complaint be dismissed for lack of jurisdiction.

8. Mr. S.A. Wasti, consultant, stated during the hearing of the complaint that the complaint was directed against the appellate order where it was, stated in paragraph 4 that he (S.A. Wasti) appeared on 10-7-2003 and reiterated his earlier points of view etc. He invited attention to paragraph 10 of the complaint were he had solemnly stated that the Collector of Customs (Appeals) did not hold hearing of this case and he was not given an opportunity to appear before him to offer his arguments.

9. Mr. Wasti stated that, in the reply to the complaint, the department has offered no comments on paragraphs 7 to 20, which showed that the allegations made in the complaint had been admitted by the respondent. He specifically invited attention to point mentioned in the department's reply, which according to him, was the basis of the negative attitude taken by the department particularly the Collector (Appeals) in dealing with such cases. It has been stated by the Collector that if the request of the complainants was accepted, the department would have to pay million of rupees as refund to all such importers which were assessed on the same value agreed by the trade body. He averred that the officers should decide the cases and the appeals on the basis of justice and fairplay and not deny their rights merely on the consideration that they would be entitled to obtain rightful refunds if justice was meted out to them. He stated that unfortunately this was the mindset with which the customs officers responsible for adjudication work mostly decided the cases.

10. The Additional Collector of Customs replied that the Collector had conducted hearing on three dates and the record of hearing was available on the file. However, since Probationer Officers were attached with the Collector for training in the adjudication process, mock hearing was also conducted by these officers. However, no findings were recorded by them and they did not make any contribution in the appellate order.

11. Mr. Wasti again emphasized whatever hearing was conducted was done by the Probationer Officers and it was wrong on the part of the respondent to claim that the Collector (Appeals) had also heard the appeal.

12. The Collector (Appeals) has raised objection that the complainant's should have filed appeal in the Appellate Tribunal instead of approaching this office as, according to him, it lay outside this jurisdiction of this office. He has also stated that since the complainants knew that their appeal would fail, they made this complaint on flimsy ground. The Collector has prejudged the decision of the Tribunal. He has in fact admitted the genuineness of the complaint that the appeal was not heard by him as, in his own words, "the sham hearing was conducted by a Probationer Officer". While he has admitted the allegation that hearing was conducted by a Probationer Officer who had no jurisdiction to hear the appeal.

13. It is an established fact that the power to hear and decide the appeal cannot be conferred, even by consent, to any officer other the one notified by the competent authority i.e. the C.B.R., which has the statutory powers to appoint the officers through gazette notifications vesting them with the authority to hear and decide the appeals against the orders passed by the officers lower than the Additional Collector. Only the person who has heard the appeal has to pass the order and the process cannot be delegated; otherwise the order would be illegal. This office has taken cognizance of the complaint against the order passed by the Collector (Appeals) as it has been established that the respondent has:

(i) misstated the facts, interpolated the conduct of hearing in the record;

(ii) his order is contrary to law;

(iii) it is a decision taken in complete disregard of the established practice and procedure, not bona fide and without valid reason;

(iv) it is perverse, arbitrary and unjust;

(v) it is based on irrelevant grounds; and

(vi) it is clear evidence of the inefficiency and the ineptitude of the officer in the discharge of his duty and responsibility.

14. The manner in which the order-in-appeal has been passed by the Collector (Appeals) is thus not only arbitrary but lacks bona fides, and maladministration as defined in subsection (3) of section 2 of Ordinance, XXXV of 2000 is established. In view of the aforesaid circumstances, the argument against the jurisdiction of this office has no merit and is rejected as frivolous.

15. It is recommended that C.B.R:--

(i) take into consideration the case of gross miscarriage of justice in the disposal of his appeal and similar appeals decided by the officer;

(ii) set aside the Order-in-Appeals Nos.174 to 177 of 2003 dated 29-7-2003;

(iii) entrust the appeals to another officer with the direction to carefully examine the facts of the case, the precedents quoted by the complainants/consultant i.e. the decision of Supreme Court, the High Court, the Appellate Tribunal and the recommendation of this office;

(iv) decide the appeal within thirty days; and

(v) compliance be reported within forty-five days.

S.A.K./97/F.T.O.Order accordingly.