POR DIL KHAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 533 (2004)

Custom Rules, 2001---

----Rr.69 & 73---Custom Act (IV of 1969), S.195---Auction Rules, 2001, R.73---Auction---Forfeiture of earnest money for failure to deposit the balance amount without deciding application filed under R.73 of the Auction Rules, 2001-Validity-Forfeiture order passed without recording decision. on application filed under R.73 renders the forfeiture order perverse which would tantamount to maladministration---Neglect of and inattention to the application was also maladministration---Complainant had no onus to allege or prove mala fide for alleging maladministration---It was only in case of maladministration alleged on account of departure from established practice or procedure that the Department was allowed to plead and prove in his defence that it was bona fide and for valid reasons---Federal Tax Ombudsman recommended that (i) Collector of Customs, ensures appropriate counselling of tax employees involved in maladministration of neglecting the application filed by the complainant under R.73 of Auction Rules 2001 and passing the order for forfeiture of earnest money without deciding Application under R.73, (ii) the Collector takes cognizance of the perversity in forfeiture order under S.195 of the Customs Act, 1969 to fulfil his statutory obligation.

Complaint No. 1472-L of 2003 and Complaint No. 329 of 2004 rel.

S. M. Sibtain, Adviser (Dealing Officer).

Irshad Ahmad Durrani, Advocate for the Complainant.

Muhammad Arshad Khan, D.C. and Ms. Husna Jamil, A.C. Auction, Collectorate of Customs, Peshawar for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.---Maladministration is alleged in the instant complaint, on the part of Additional Collector of Customs, Peshawar for passing an arbitrary, perverse and unjust order under Rule 69 of the Auction "Rules notified vide Chapter-V of S.R.O. 450(I)/2001 dated 18-6-2001, forfeiting the earnest money amounting Rs.612,500 for alleged failure of the complainant to deposit the balance amount of the bid money into Government Treasury within 7 days of auction.

2. Briefly the facts are that miscellaneous goods were put to open public auction on 30-3-2004 vide Lot No. 05/PR/Misc/30-III/-04. The highest bid of Rs.2,450,000 was offered by the complainant. One fourth of the highest bid i.e. Rs.612,500 was deposited on the spot by successful bidder vide receipt No.513 dated 30-3-2004. The auctioned lot, inter alia, contained black tea. The said tea stock was in Customs State Ware House. It is alleged that at the time of auction it way openly announced in the presence of a large number of bidders that the tea on auction was Kenya Brand. Complainant has enclosed an affidavit sworn by 12 persons present in the auction in 'support of his foregoing averment. However, upon examination, after the auction it was noticed that "it was third class badly affected tea mixed with large quantity of CHILKA allegedly harmful for human life. The complainant riled an application with the respondent alleging that auction was mala fide. However, it was ignored while passing the forfeiture Order which was contrary to rules and regulations.

3. It is further alleged that the food item (tea) purchased by the complainant could not be delivered to him under the rules without certification from the Laboratory that it was fit for human consumption and unless such test was performed, the complainant could not be held a defaulter; hence the impugned Forfeiture Order allegedly premature, arbitrary, perverse and unjust.

4. The respondent, Assistant Collector (Auction), in the written comments offered on the complaint, has admitted that black tea weighing 19,305 K.G. was included in the lot auctioned on 30th March, 2004 but the origin of the tea was reported as "Foreign Origin" as per seizure report and not specifically Kenya Brand. The bidders were given every opportunity to visit the warehouse not only to check and examine the tea but draw samples also before giving the bid. The procedure of Auction is that lists of lots containing description and quantity of the auctionable goods are given to the bidders and are later on (at the time of auction) announced also (as written on the paper) to the public bidders. In this particular case too, black tea was announced as foreign origin as was written in the list given to the bidders and not as "Matte in Kenya". Moreover, the bidder is a professional bidder dealing in auction for quite some time and it was not possible that a professional bidder like him who had so many years of experience in auction could be made to purchase, a lot on the bid value without having satisfied himself about every aspect of the said lot. He along with some other fellows has managed to create a monopoly and they never allow any outside bidder to intrude in their domain. On that particular day of auction too the complainant gave a high bid just to prevent any body to purchase the lot at that time. This exactly is the modus operandi of these professional bidders of which the complainant is one, that at the time of auction they gave highest bid and afterwards try to cancel the auction on one pretext or the other for the sole purpose of discouraging every bidder from the outside and sabotaging the auction proceedings.

5. The respondent has averred that the tea was checked and examined by the complainant before offering the highest bid. As far as the laboratory test is concerned, there was no ground to create doubt for which a laboratory test should have been conducted. No test was conducted for any other lot of tea auctioned on that day. The respondent has stated that his office has no record of any complaint filed by the complainant and that the Forfeiture Order is in accordance with law and the auction rules.

6. Mr. Irshad Ahmed Durrani, the counsel of the complainant has submitted at the time of hearing that the complainant could not examine the tea before auction and when he examined it after the auction it was found to be 19,305 KG China Brand, while he was told before the auction that the lot included 24,200 K.G. Kenya Brand tea. He, therefore, filed an application on 31-3-2004 vide respondent's office Diary No.574 requesting either delivery of 24,200 K.G. Kenya Brand tea or appraisement be made on the basis of China Brand tea or the bid may be cancelled. It is claimed that the Application has been filed under Rule 73 of Auction Rules ibid.

7. Mr. Muhammad Arshad Khan, D.C. Customs, Peshawar appearing on behalf of the respondent, after rechecking with respondent's office, confirmed that the aforesaid application was received. He has produced a photocopy of the application available in the Office. The fact that the Forfeiture Order has been passed without recording decision on the Application filed under Rule 73 ibid renders the forfeiture order perverse which is tantamount to maladministration under section 2(3)(i)(b) of the Ordinance XXXV of 2000. Neglect of and inattention to the Application filed under section 73 is also maladministration per se under section 2(3)(ii) of the Ordinance ibid. The complainant has no onus to allege or prove mala fide for alleging maladministration. It is only in case of maladministration alleged on account of departure from established practice or procedure that the respondent is allowed to plead and prove in his defence that it is bona fide and for valid reasons. The foregoing view has been elaborately elucidated in the decisions on Complaint No. 1472-L of 2003 dated 17-7-2004 and Complaint No. 329 of 2004 dated 20-7-2004.

8. It is recommended:---

(i) That Collector of Customs, Peshawar ensures appropriate counselling of tax employees involved in maladministration of neglecting the Application filed by the complainant under Rule 73 of Auction Rules and passing the order for forfeiture of earnest money without deciding the Application under Rule 73 ibid.

(ii) That the Collector takes cognizance of the perversity in Forfeiture Order under Section 195 of the Customs Act 1969 and fulfils his statutory obligation.

(iii) Compliance be reported within 45 days.

C.M.A./350/FTOOrder accordingly.