FAQIR GUL VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2008 P T D 1153
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
FAQIR GUL
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.282 of 2004, decided on 30/06/2004.
Sales Tax Act (VII of 1990)---
----Ss.3A---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9(2)(a) & 2(3)---Adjudication---Jurisdiction- Maladministration---Assessment--=Complainant was running a soap manufacturing factory---Railway authorities demolished the factory building and occupied the premises---Manufacturing was closed---Complaint was that Sales Tax Authorities were pestering the complainant with different notices and visits of the audit teams---Department in reply submitted that complainant was evading sales tax; Sui gas bills showed that factory was running; owner had given certificates of his monthly average sales; matter was ser}t to the Collector (Adjudication) in form of "Contravention Report" and was pending adjudication and did not fall within the jurisdiction of the Federal Tax Ombudsman---Validity---Complaint was filed not challenging the amount of tax assessed but the manner in which the proceedings had been conducted---Complainant had stated that the process employed on the basis of a biased complaint filed in the Central Board of Revenue, denied the legal right to the complainant---Maladministration included, decisions, processes, acts of omission or commission which were contrary to law, rules regulations and were arbitrary---Manner in which the proceedings were conducted, then kept in abeyance and revived once again indicated maladministration---Adjudication did not fall within the definition of "being sub-judice before the Court of competent jurisdiction" within the meaning of section 9(2)(a) of the Federal Tax Ombudsman Ordinance, 2000---Objection was therefore overruled---Federal Tax Ombudsman recommended that the Deputy Collector (Adjudication) of Collectorate of Customs, Sales Tax and Central Excise to decide the case of the complainant on basis of impartial inquiry excluding the Senior Auditor who was author of contravention report.
Shamim Ahmad, Advisor, (Dealing Officer)
Faqeer Gul Khan for the Complainant.
Imtiaz Sheikh, DC Sales Tax, Peshawar for Respondent.
FINDINGS/DECISION
JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).--The complaint under consideration was filed to allege high handedness of Sales Tax authorities. The brief facts of the case are that, according to the statement of the complainant, he was running a soap manufacturing factory in Ghareeb Abad, Industrial Area. Due to adverse circumstances, the factory was closed. Additionally, the Railway authorities demolished the factory 'building and occupied the premises. Presently there is no factory and consequently no manufacturing is being done, it was alleged. However, the Sales Tax authorities pester the complainant with different notices and visits of the audit teams. It was prayed that they may be ordered to stop taking illegal action and an inquiry team may be constituted to enquire into the facts of the case.
2. In his reply, the Collector of Customs, Sales Tax & Central Excise, Peshawar stated that the inquiries against the complainant were initiated on the receipt of a complaint by Secretary (STM&I), C.B.R., Islamabad alleging that Messrs Ilyas Soap Factory, which is owned by the complainant, was evading sales tax on taxable supplies of soap manufactured by them. In compliance, an audit team was constituted to visit the factory premises and investigate the allegations.
2.1 The respondent further submitted that when the said team visited the premises and asked for production of various tax records, the complainant produced only a few Sui gas bills and no other record. During the course of enquiry, the owner gave a certificate stating that his monthly average sales amounted to. Rs.70,000. This fact was corroborated from the figure of original invoices for the 12 months from November, 1999 to October, 2000.
2.2 On this basis, the value of taxable supplies was estimated at Rs.600,000 to Rs.800,000 per annum and the complainant was enrolled under section. 3A of the Sales Tax Act, 1990. His liability was assessed and the matter was sent to the Collector (Adjudication) in the form of "Contravention Report". On the basis of this report the Collector issued a show-cause notice on 13-9-2000. This notice remained uncomplied to date.
2.3 The Collector also stated that the matter was under adjudication with the Deputy Collector (Adjudication), Peshawar. It was submitted that the matters which are pending adjudication do not fall within the jurisdiction of the Federal Tax Ombudsman within the meaning of section 9(2)(b) of the Establishment of the Office of F.T.O. Ordinance, 2000.
3. The complainant and the Departmental Representative attended. The former had a lengthy story of woe to tell. It was stated that one of the functionary of the Sales Tax department, who was also the author of the contravention report, was creating all the trouble for him. The matter was dealt a number of times and it was, at one point of time, decided to drop the proceedings. However, it was revived once again.
3.1 The complainant repeated his pleas regarding the demolition of the factory and the cessation of the manufacturing activity. He denied to have given a certificate to the Sales Tax authorities which was purported to have stated that the sales amounted to Rs.70,000 p.m. He further stated that the signatures appearing on the said certificate were not his.
4. The Departmental Representative presented copies of a number of Sui gas bills showing sufficient consumption of the gas as apparent from the amounts of bills. The said bills bore the name of the complainant and of Ilyas Soap Factory. They depicted that the consumption continued till recent past. According to the DR, the said gas bills proved that the complainant continued the manufacturing activity and was avoiding to produce other record in order to evade the sales tax liability.
5. Rebutting the argument of the DR, the complainant submitted that the premises had been rented out to a Tandoor Wala and the consumption of the gas pertained to latter's business. He further stated that he was in a position to prove his claim that no manufacturing of soap was being done by him provided an impartial inquiry was conducted. He also showed his willingness to comply with the show-cause notice issued by the Collector of Adjudication.
6. The objection taken by the Collector of Customs with regard to the jurisdiction of the F.T.O. was also considered. The complaint was filed not to challenge the amount of tax assessed but the manner in which the proceedings have been conducted. According to the complainant the process employed on the basis of a biased complaint filed in the C.B.R., denied the legal right to the complainant. The objective of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 is to eradicate maladministration. The definition of maladministration is wide and inclusive in its nature and includes decisions, processes, acts of omission or commission which are contrary to law, rules or regulations and are arbitrary. Reliance is placed on the F.T.O's. order cited as 2002 PTD 1918. The manner in which the proceedings in this case were conducted, then kept in abeyance and revived once again indicates that mal administration was committed. Further the matter pending for adjudication does not fall within the definition of being sub judice before a Court of competent jurisdiction, within the meaning of section 9(2)(a) of the F.T.O. Ordinance. It is pointed out here that even the assessment of Sales Tax liability has not been determined as yet. The objection is, therefore, overruled. Maladministration is established.
7. In view of the above discussion, it is recommended that:---
(i) The Deputy Collector (Adjudication) of Collectorate of Customs, Sales Tax & Central Excise to decide the case of the complainant on the basis of impartial inquiry to be conducted. The inquiry should not involve the Senior Auditor who was the author of the contravention report.
(ii) The compliance of the above mentioned recommendation be reported within 45 days of its receipt by the Secretary, Revenue Division.
M.I./254/F.T.O.Order accordingly.