MUHAMMAD KHURSHID VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1865 (2004)

Sales Tax---

----Central Excise---Establishment of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9(4), 11 & 13---Information about evaded duty---Reward---Reward rules---Malpractices---Complainant and one other person provided information to Collector regarding evasion of Central Excise Duty by a company---Recovery of evaded Central Excise Duty was made---Collector rewarded Rs.1,46,667.to the informers but they were not satisfied and demanded larger amount of reward---Since their prayer was turned down, they lodged complaint with the Wafaqi Mohtasib (Ombudsman), who transferred the same to the Federal Tax Ombudsman--Validity--Information was supplied from the official record of the Collectorate where the complainant had worked before his retirement---Complainant was acting in collusion with the other complainant citing him as informer---Complainants had not come with clean hands---Reward rules were not comprehensive---In giving the reward the concerned authorities had not given proper consideration to the issues involved and doled it out in a negligent manner which cast doubt on their bona fides---Revenue authorities were required to investigate the matter to stop such malpractices to avoid erosion in the credibility of the department---C.B.R. was recommended to set up a Rule Committee to consider the existing Reward Rules and submit its report for enforcing comprehensive and uniform Reward Rules in respect of Income Tax, Sales Tax, Customs and Excise Duty.

Muhammad Anwar, Consultant (Dealing Officer).

Muhammad Khurshid and Amir Ahmad, the Complainants in person.

Zahid Hussain Bhayo, Additional Collector (Sales Tax) for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This is a joint complaint made by the alleged informers namely Mr. Muhammad Khurshid and Mr. Amir Ahmad for non-payment of reward to them for providing information regarding evasion of central excise duty allegedly committed by Pakistan Telecommunication Company Ltd. (PTCL). It is stated in the complaint that Mr. Muhammad Khurshid (termed as complainant No.1) retired from the post of Statistical Officer in the Collectorate of Sales Tax and Land Customs (now /Sales Tax) Rawalpindi on 15-1-1998. In December, 1997 while he was in service his old friend Agha Amir Ahmad (termed as complainant No.2) gave him a typed report containing information that the PTCL was evading CED on lines leased to mobile companies. This information was submitted by complainant No.1 on 15-12-1997 under his signature and stamp to the Collector who passed it on to the Deputy Collector on 22-12-1997 to carry out the audit of PTCL record to ascertain CED evasion on service rendered by PTCL to mobile phone companies. It is further stated that in July, 1999 Agha Amir Ahmad informed him (Muhammad Khurshid) that recovery of certain evaded CED had been made on the basis of information provided in the report.

They both met the Collector who gave a sum of Rs.146,667 as reward under the thumb-impression and initials MK of Muhammad Khurshid. On pointing out by Agha Amir Ahmad that according to his estimates a much large amount of reward was admissible, the Collector informed that an agreement had been made with the PTCL by the C.B.R. and all CED arrears up to June, 1998 had been settled for Rs.850 million. Thereupon Mr. Amir Ahmad requested the Collector that reward be given on the basis of recovery of Rs.850 million but the Collector did not accede to his request stating that the matter settled at C.B.R. level did not specifically include any CED evasion on lines leased to mobile phone companies. Therefore the complainants lodged a complaint with the Wafaqi Mohtasib (Ombudsman which was allegedly signed by Mr. Muhammad Khurshid and Agha Amir Ahmad had put his LTI on it. The Excise Department submitted before the Ombudsman that reward could not be granted for the reason that in respect of the period upto June, 1998 due to an agreement between the C.B.R. and PTCL recovery could not be effected and after June, 1998 the evasion of CED was detected by the Department and was not the result of information provided by the complainants in December, 1997. On establishment of Office of the Federal Tax Ombudsman the Wafaqi Mohtasib advised the complainants to approach him.

2. The complainants allegedly filed a complaint before the FTO in the name of one Mr. Khalid Zubair as Complaint No.98-K of 2001 which was not considered maintainable on the ground that Mr. Khalid Zubair was not aggrieved party. Another complaint was filed in the name of Mr. Amir Ahmad as Complaint No.1262 of 2002 in which it was observed that since Mr. Muhammad Khurshid had submitted the information to the Collector the complaint from Agha Amir Ahmad as informer was not maintainable. Now the instant joint complaint has therefore been filed stating that both the complainants had been making efforts since 1998 for getting reward for supplying information to the Excise Officers involving evasion of over 100 million rupees of CED. It is prayed that the Collector be directed to pay reward to the complainants jointly in the same manner in which reward of Rs.146,667 was made in August, 1998.

3. In reply the respondent has stated that firstly Mr. Muhammad Khurshid and Mr. Amir Ahmad tried to get reward in a spurious manner by filing complaint (Complaint No. 98-K of 2001) in the name of Mr. Khalid Zubair which was held non-maintainable. Mr. Amir Ahmed made a second attempt by filing another complaint (Complaint No.1262 of 2002) which was also dismissed. Now through the instant complaint which is signed by both, a third attempt has been made. It is stated that the real motivation and beneficiary was Mr. Muhammad Khurshid who was making complaints through his front men and it was he who was earlier given a reward of Rs.146,667 which was allegedly shared by him with Amir Ahmed. It is further stated that Mr. Muhammad Khurshid remained posted in the Collectorate as Statistical Officer till his retirement on 15-1-1998 and during his posting he became privy to certain information about dutiable services of the PTCL and the reward which he had received is recoverable from him. It is further stated that pursuant to the ECC of Cabinet's decision dated 4-4-1998 an agreement was reached between PTCL and C.B.R. whereby PTCL agreed to pay Rs.850 million in settlement of all liabilities upto 30-6-1998. Since there was no mention of any specific services in the agreement no reward became due.

4. It is further stated by the respondent that information regarding period after 30-6-1998 was collected from the mobile companies by the Assistant Collector concerned on the basis of which contravention reports were prepared against the said companies for recovery of evaded duty. It is further stated that submission of a joint complaint established the connivance between Mr. Khurshid and Agha Amir Ahmad and the complainants have raised the same issue which already stood settled by the honourable FTO. It is prayed that the complaint be dismissed as no reward is admissible to the complainant and appropriate action be taken against them.

5. Representatives of the both sides were heard. The contention of Mr. Muhammad Khurshid that the information which he passed on to the Collector on 15-12-1997 under his signature was actually given to him by Mr. Amir Ahmad is not borne out from the record. The complainants had previously made two attempts to get the award, which were rejected. In the entire exercise centre point was Mr. Muhammad Khurshid who was using Mr. Agha Amir Ahmad as a front man. The conduct and behavior of both the complainants is doubtful and they seem to be in collusion with each other. The contention of the Department that Mr. Muhammad Khurshid obtained this information from the official records in discharge of his duties as Statistical Officer in the Sales Tax Collectorate carries force. The complainants have not come with clean hands. In giving the reward of Rs.146,667 the concerned authorities do not seem to have given proper consideration to the issues involved and doled it out in a negligent manner which casts doubt on their bona fides. The Revenue authorities will be justified in investigating the matter lest such malpractices be adopted in the name of practice, which is bound to erode the credibility of the department. Considering nature, facts and circumstances of the case the complaint is rejected.

6. It has been noted that the Reward Rules are not comprehensive and do not seem to take note of situation as in the present case. It requires re-consideration.

7. It is recommended that:

(i) C.B.R. to set up a Rule Committee to consider the existing Reward Rules and submit its report for enforcing comprehensive and uniform Reward Rules in respect of Income Tax, Sales Tax, Customs and Excise Duty.

(ii) Compliance be reported within three months.

M.I./108/FTOOrder accordingly.