MUHAMMAD FIAZ KHALID VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1831 (2005)

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----S.9(2)(a)---Sales Tax Act (VII of 1990), S.36(3)---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Complainant filed appeal against the order before the Collector of Appeals on 29-7-2005 and filed complaint in Federal Tax Ombudsman's Secretariat on 10-10-2005---Copy of appeal preferred before Collector of Appeals showed that the complainant was agitating therein the same issues, including the question of limitation under S.36(3) of the Sales Tax Act, 1990 as were being agitated in the complaint filed before the Federal Tax Ombudsman---Appeal was filed in Collectorate of Appeals prior in point of time to the filing of complaint in the Federal Tax Ombudsman's Secretariat---Case was sub judice before the appellate authority on the day that the complaint was filed---Complaint could not be investigated under the provisions of S.9(2)(a) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 in the circumstances and the same was closed by the Federal Tax Ombudsman.

Complaint No.805 of 2003 ref.

PTCL 1983 CL 2009 (sic) not relevant.

Muhammad Akbar (Advisor) Dealing Officer.

Akhtar Ali for the Complainant.

Saeed Akram, D.C. Sales Tax, Lahore for Respondent.

DECISION/FINDINGS

JUSTICE (RETD.) MUNIR A. SHEIKH, (FEDERAL TAX OMBUDSMAN).---Facts of the complaint are that the complainant---a commercial exporter of textile fabrics---exported fabrics and articles thereof during the period from August 2000 to August 2002. On the basis of invoices issued by the supplier the complainant filed refund claims for an amount of Rs.19407189 out of which an amount of Rs.2600293 was sanctioned to the complainant after necessary verification in terms of the prevalent Refund Rule. Subsequently, on the basis of audit of complainant's records a show-cause notice 10-1-2004 was issued which was contested. The D.C. (Adjudication) kept the decision in the case pending without any justification. He finally decided the case vide Order-in-Original No.146 of 2005, dated 30-6-2005 after a lapse of 17 months in violation of the provisions of section 36(3) of the Sales Tax Act, 1990, which bound that all orders be passed within 90 days of the issuance of show-cause notice or within the such extended period as the Collector may, for reasons to be recorded in writing fix, provided such extended period would in no case exceed 90 days. The order-in-original was passed after 542 days. The maximum period within which the adjudication officer was required to decide the case was 180 days provided that extension of another 90 days had been obtained. No such extension was obtained. The Honourable F.T.O. in Complaint No.805 of 2003 had held that the order passed in that case was clearly hit by time limitation as provided in law. Holding that the respondents had committed `maladministration', the F.T.O. recommended in the aforesaid case the cancellation of the order-in-original. The President of Pakistan confirmed F.T.O's. recommendation. The instant case was also hit by time limitation. The order-in-original needs to be cancelled. It is pleaded that the impugned order-in-original, which is hit by time limitation may be declared null and void.

2. In reply, the respondents have outlined the procedure for allowing refunds and have lime lighted the fact that the complainant had neither purchased any raw-materials nor made payments against the same. He got refund of sales tax on fake/flying invoices and showed phony Bank transactions to show that he had made payments to the suppliers. The complainant purchased only sales tax invoices against which refunds were claimed. Refund of Rs.2600283 was sanctioned. However, during audit it was observed that the-complainant had claimed refund on the basis of fake/flying invoices. Audit -observations were framed in the audit report as per the provisions of law. Audit revealed that the complainant had not complied with the provisions of law. A show-cause notice was issued. The case was decided in due course of time after considering various aspects vide Order-in-Original No.146 of 2005, dated 30-6-2005. However, the case was decided beyond 90 days due to adjournments sought by the complainant's counsel as well as due to complainant's non-appearance on different dates of hearing. The adjudication authority was conscious that if the case was decided without hearing the complainant, the order-in-original would not be accepted by the appellate forum as it normally happened. The adjudication authority was fair in its approach to decide the case after allowing the complainant to record his point of view. It was not a case of `maladministration'. The complainant had already appealed against the impugned order-in-original before the Collector of Appeals on 29-9-2005. The matter was already sub judice and beyond the powers of the Honourable F.T.O. in terms of section 9(2)(a) of the F.T.O. Ordinance, 2000. The complaint may be rejected and the complainant may be directed to pursue his appeal at the appellate forum where it was pending.

3. During the hearing, the A.R. admitted that while appeal was filed before the Collector of Appeals on 29-7-2005, the complaint was tiled in the F.T.O. Secretariat on 10-10-2005. He reiterated the arguments advanced in the written complaint saying that the show-cause notice was issued on 10-1-2004 for recovery of refund, alleged to have been wrongly obtained, under section 36(1) of the Sales Tax Act, 1990. Whereas the respondents were required to decide the case within 90 days as provided under section 36(3) of the Act, it was decided after a lapse of 542 days. The initial period had expired on 10-4-2004. The order was hit by time limitation. He contended that the respondents were responsible for delay in deciding the case, which was evident from the fact that during a period of eight months (from 28-6-2004 to 28-2-2005) they failed to fix any date of hearing. In support of his contention that the impugned order was hit by time limitation, the A.R. cited F.T.O's. findings in Complaint No.805 of 2003, which were sustained by the President of Pakistan's order dated 7-5-2005.

4. The D.R. submitted that the complainant had committed a grave offence and obtained refund fraudulently on the basis of fake/flying invoices. If there was any delay on the part of the respondents it was basically to ensure justice and to provide opportunities of hearing to enable the complainant to present his point of view and defend his case. The case was decided after due deliberation. The complainant never raised the question of time limitation during adjudication proceedings. He quoted Court's judgment PTCL 1983 CL 2009, (sic) according to which the goods of the complainant seized under the Customs Act were released due to department's failure to issue show-cause notice within the period prescribed under section 180 of the Customs Act, 1969 yet the relief was given subject to the condition that the petitioner would pay duty and taxes payable on the goods. The liability to pay duty and taxes did not quash, if time limitation was not adhered to. The same principle, the D.R. argued, should apply here. The appeal was sub-judice before the appellate authority when the complaint was filed. The A.R. submitted that if the offence committed by the complainant was as grave as made out by the D.R., the decision in the case should have been given quickly to effect timely recovery of escaped tax. He further added that the judgment cited by the D.R. involved section 180 of the Customs Act relating to seizure of goods. He also argued that since no goods were seized in the instant case the citation was irrelevant.

5. The arguments of the two sides and record of the case have been considered and examined. It is observed that the complainant filed his appeal against the impugned order before the Collector of Appeals on 29-7-2005. He filed the present complaint in the F.T.O. Secretariat on 10-10-2005. A perusal of the copy of appeal (on record) preferred before the Collector of Appeals shows that the complainant is agitating therein the same issues, including the question of time-bar under section 36(3) of the Sales Tax Act, 1990 (para. 2 of the grounds of appeal), as are being agitated in the complainant filed before the F.T.O. The appeal was filed in the Collectorate of Appeals prior in point of time to the filing of the present complaint in the F.T.O. Secretariat. The case was; therefore, sub-judice before the appellate authority on the day that the complaint was filed in this forum. In view of the foregoing position and the provisions of section 9(2)(a) of the F.T.O. Ordinance, the complaint cannot investigated. The same is filed and the case is closed.

C.M.A./5/FTOOrder accordingly.