AL-HAMAD WEAVING FACTORY, GOJRA VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1271 (2004)

Sales Tax Act (III of 1951)---

----S.14 [as amended by Sales Tax (Amendment) Act (VII of 1990)]---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Registration---Maladministration---Provisional Sales Tax Registration Certificate was issued on 29-4-2004 under Sales Tax Act, 1990 on the condition that Registration certificate would be issued after verification of documents under Sales Tax Ruling/Instructions No.21/2003 dated 16-8-2003 with oral order for personal appearance---Validity---Sales Tax Registration Certificate was not issued and was delayed without reasonable explanation---Neglect and inefficiency within the meaning of S.2(3)(ii) of the Federal Tax Ombudsman Ordinance, 2000 was a maladministration---Federal Tax Ombudsman recommended that Sales Tax Registration Certificate be issued and Central Board of Revenue letter bearing No.3(17)/STL &P/2003 dated 5-4-2003 be withdrawn.

Shamim Ahmad, Advisor, (Dealing Officer)

Muhammad Saleem Malik for the Complainant.

Muhammad Masood Sabir, AC, Sales Tax for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The brief facts of the case are that the complainant applied for registration under the Sales Tax Act, 1990 on 29-4-2004 along with the prescribed documents. After inspection by the functionaries of the Sales Tax Department, a Provisional Sales Tax Registration Certificate was issued on the condition that Sales Tax Registration Certificate will be issued as soon as the verification of all documents is made as per the provisions of Sales Tax Ruling/Instructions No.21/2003, dated 16-8-2003. It was also alleged by the complainant that the Assistant Collector Sales Tax orally ordered his personal appearance. This act was termed as immoral, illegal and arbitrary. In issuing the said Rulings/Instructions, the C.B.R. acted beyond its jurisdiction, it was contended. It was alleged that the oral order was issued with ulterior motives.

2. In reply, the respondent stated that, in pursuance of the procedure laid down by C.B.R's. letter bearing No.3(17)STL&P/2003 dated 5-4-2004, the Provisional Sales Tax Registration Certificate was issued on 5-5-2004. This certificate was issued prior to the physical verification of the unit to expedite the matter.

2.1 'Oral order to the complainant for appearing in person were denied by the respondent.

2.2 It was contended that Sales Tax Registration Certificate were being issued promptly after following the procedure. In the instant case no delay occurred and no extra conditions were imposed.

2.3 It was submitted that, following the recommendations by the Honourable F.T.O. contained in C.No.1669/03 dated 28-5-2004, sales tax Ruling/Instructions referred to in Para. 1 supra, were withdrawn by the C.B.R. and New Rules of Registration were issued vide S.R.O. No.485(I)/2004 dated 12-6-2004 which will come in force on 1st July, 2004. These instructions were being followed strictly. The impugned Provisional Sales Tax Registration Certificate, it was submitted, was issued on 5-5-2004 i.e. before the decision of the honourable F.T.O. and the issuance of New Rules of Registration by the C.B.R. Therefore, no maladministration was perpetrated.

3. The A.R. and the D.R. were heard. The learned A.R. objected to the issuance of the Provisional Tax Registration Certificate on the following grounds:---

(a) It was not lawful to rely on Sales Tax ruling No.21/2003 referred to in para. 1 supra.

(b) It was wrong to issue the provisional certificate relying on C.B.R's. letter referred to in para. 2 supra.

3.1 The A.R. submitted that there was an undue delay in the issuance of the provisional certificate. The application was filed on 29-4-2004 and the certificate was received on 12-5-2004. Relying on the judgment of the honourable F.T.O. in C.No.318/02 dated 30-5-2002, he stated that the dealing officer was accountable for each day's delay. He challenged the date of issuance of the certificate which was stated to be 5-5-2004. It was obviously wrong because the Assistant Collector gave the date of 7-5-2004 underneath his signatures.

3.2 Regarding the oral order of the AC for producing applicant before him, he averred that the order was issued to him and it was obviously with ignoble intentions. When asked whether he had any evidence to prove his allegations, the learned A.R. replied in the negative.

4. The D.R. stated that since the decision of the F.T.O. in C.No.1669/03, no provisional Sales Tax Registration Certificate was issued. He deposed that no applicant was asked to appear in person since. Now the instructions were being followed very strictly. He reiterated that the impugned certificate was issued prior to the said instructions. This act could not be termed as maladministration. Though the C.B.R. Circular referred to in para. 2 supra has not been withdrawn, the practice of issuing provisional certificate had been discontinued since the decision of the honourable F.T.O.

4.1 He, however, could not explain the obvious contradiction in the dates appearing on the certificate. Regarding the delay in issuance of the certificate, he stated that the normal processing took some time and that was not an abnormal delay. However, he could not satisfactorily explain each day by which the issuance of Registration Certificate was delayed after the submission of application which was complete in all respects.

5. The complainant, the respondent's reply and the rival arguments were considered. As no evidence could be produced regarding the A.C's intent of receiving illegal gratification, no action in this regard is warranted. Similarly, with the issuance of New Sales Tax Registration Rules, the complainant's grievance pertaining to C.B.R's. earlier Rulings and instructions has been settled. However, it is noted that the Sales Tax Registration Certificate has not been issued so far. Undoubtedly its issuance has been delayed for which no reasonable explanation could be given by the D.R. The contradiction in the dates on the Provisional Registration Certificate denote neglect and inefficiency. These acts are tantamount to maladministration within the meaning of section 2(3)(ii) of the F.T.O. Ordinance 2000. Regarding C.B.R's. letter referred to in para. 2 supra, it is observed that, though it has been superseded by the New Sales Tax Rules, its existence can be a source of confusion.

6. It is therefore, recommended that:

(i) Sales Tax Registration Certificate be issued to the complainant immediately.

(ii) `C.B.R's. letter bearing No.3(17)/STL&P/2003 dated 5-4-2003 be withdrawn.

(iii) Compliance of above mentioned recommendations be reported within 30 days of their receipt by the Revenue Division.

M.I./259/F.T.O. Order accordingly.