QUALITY WEAVING MILLS LTD., MULTAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 565 (2004)

Customs Act (IV of 1969)---

----Ss.195C & 19---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---S. R. O. 962(I)/90 dated 12-9-1990---S.R.O. 722(I)/89---Alternate Dispute Resolution---General power to exempt from customs duties---Import of textile weaving machinery---Exemption from customs duty, Iqra surcharge and other taxes---Levy of taxes and penalties on the ground of violation of provisions of S.R.O. 722(I)/89 which was interlinked with S.R.O.962(I)/90 dated 12-9-1990---Textile unit was placed under attachment order---Appeal against order-in-original was rejected---Revision Petition moved before Secretary, Finance Division remained pending compelling complainant to file writ petition---High Court directed to dispose of the same within a period of four months---Revision petition was not decided on the ground that revisional powers of the Federal Government having been withdrawn consequent on creation of Customs, Central Excise and Sales Tax Appellate Tribunal, jurisdiction no longer vested with the Federal Government to adjudicate on Revision Petitions under S.196 of the Customs Act, 1969---High Court, on approach, informed that Writ petition stood finally disposed of and observations by Secretary, Finance Division in his administrative capacity did not warrant action by the High Court which may be invoked by the party or parities through fresh petition---Complainant moved the complaint pleading that he had no financial resources to pursue the case before the High Court---Validity---Complainant had shuttled vertically and horizontally from one authority to another although evident discrimination and legally strong favourable grounds supported this case---Complainant was still being denied justice and was suffering in consequence---Revision Petition remained unattended despite directions by High Court---Secretary, Finance Division felt that he could not adjudicate the matter as his jurisdiction for revision had ceased to exist on creation of Appellate Tribunal but at the same time it was hard to ignore that issues raised in pending petition warrant judicious resolution---Long drawn proceedings had adversely affected the complainant in asmuchas during the hearing of case he feinted and emergency medical aid had to be provided---Case was a hardship case which had caused undue suffering to the complainant financially, mentally and 'health-wise---Complainant was prepared for Alternate Dispute Resolution as provided under S.195C of the Customs Act, 1969---Provisions of S.195C of the Customs Act, 1969 were beneficial in nature and any person in connection with any matter of Customs specified in S.195C of the Customs Act, 1969 may apply to the Central Board of Revenue for appointing a Committee for the resolution of any hardship or dispute mentioned in detail in the application for Alternate Dispute Resolution---Complaint was admittedly a hardship case and fulfilled all the conditions for referring the matter to Secretary, Finance Division---Federal Tax Ombudsman recommended Central . Board of Revenue to treat and accept the complaint filed by the complainant before the Federal Tax Ombudsman bearing No. 506/2004 as an application under S.195C of the Customs Act, 1969 and the Board to take necessary action as provided under S.195C of the Customs Act, 1969 and pass such orders as provided by law.

A. A. Zuberi, Advisor (Dealing Officer).

Sh. Abdul Hakeem (Chief Executive) the Complainant.

Habib Ahmad (Deputy Collector, Customs, Multan) for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.---This complaint protests against withdrawal of the facility of exemption from Customs duties/taxes allowed in 1990 on import of certain textile weaving machinery.

2. Briefly the facts are that the Complainant-Company is engaged in weaving of cloth. In the year 1990 they imported textile weaving machinery which was exempt from Customs duty, Iqra surcharge and other Taxes under S.R.O. 962(I)/90 dated 12-9-90. Subsequently, after a Show-Cause Notice on 17-6-91, a Contravention Report was prepared on 16-9-91 alleging violation of provisions of S.R.O. 722(I)/89 which was interlinked with S.R.O. 962(I)/90. Consequently the Complainant was asked to deposit taxes and penalties aggregating Rs.940,021, In the meantime a sum of Rs.335,000 was recovered and the Complainant's textile unit placed under attachment order. The Complainant's appeal against Order-in-Original dated 18-10-1993 having been rejected by Member (Judicial) on 18-12-1993, a Revision Petition was moved on 9-1-1994 before Secretary, Finance Division, Government of Pakistan. This Revision Petition remained pending compelling the Complainant to file a Writ Petition in 1998 before the Multan Bench of Lahore High Court and was finally decided on 9-10-2003 in the following terms---

"Let a copy of Annexure "G" be sent to respondent No. 1 along with a copy of this writ petition who is directed to dispose of the same in accordance with law within a period of four months from the date of receipt of this order.

With the above direction this writ petition stands disposed of."

In pursuance to the above direction by the High Court, the Secretary, Finance Division, Government of Pakistan after holding a meeting attended by (a) the Collector (Customs) Multan, (b) Deputy Collector (Customs) Multan, (c) Deputy Secretary, Finance Division and (d) the Complainant, made the following observations on 3-4-2004:---

"Having considered the points of view of both the parties, I feel that the balance is in favour of the Appellant. Firstly, in at least two identical cases which have been brought to my notice, the relief given to the parties has not been extended to the Appellant. Secondly the SRO 722(1)/89 was delinked by Government itself from SRO 962(I)/90 under which the petitioner has been punished. As such the S.R.O. itself appears to have some anomalies which later on were removed by the Government." (here underlined for emphasis).

Despite the above conclusion, the Secretary agreed with the Department's view that the revision powers. of the Federal Government having been withdrawn consequent on creation of Customs, Central Excise & Sales Tax Appellate Tribunal (hereinafter called the Tribunal) vide Finance Act, 1989 (established with effect from 30-3-1995), jurisdiction no longer vested with the Federal Government to adjudicate on Revision Petitions under Section 196 of the Customs Act. He, then closed the proceeding with the following observation:---

"In view of the above Honourable Lahore High Court, Multan Bench, Multan is requested that if it deems fit, it may agree to transfer the case to the above Appellate Tribunal for adjudication to meet the ends of justice".

When the Complainant approached the High Court, their Judicial Branch informed him that Writ Petition No.7175 of 1998 stood finally disposed of and, therefore, observations by the Secretary, Finance Division in his administrative capacity do not warrant action by the High Court which may be invoked by the party or parties concerned through fresh petition. The Complainant has now moved the present complaint pleading that he has no financial resources to pursue the case before the High Court.

3. The Respondents have forwarded para-wise comments by the Collector (Customs), Multan which admit facts as set out but contend that the High Court has been requested to transfer the case to the Tribunal for decision hence the matter being sub judice is beyond the jurisdiction of the Federal Tax Ombudsman to entertain the complaint in view of the bar as per Section 9(2) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (hereinafter called the FTO Ordinance).

4. Sheikh Abdul Hakeem, Chief Executive of the Complainant appeared personally and dilated at length on the chronology of events and emphasized that inter-linking of SRO 962(I)/90 with SRO 722(I)/89 was found to be unworkable and the two were delinked. According to him, whereas others were given benefit of delinking, he is discriminated by way of withdrawal of exemption and imposition of penalty. The Complainant gave a detailed account of the financial set-back he suffered due to Attachment of the Mill and recovery of duties/penalty through coercive measures. The injustice in the process was highlighted by submitting that though he acted vigilantly and promptly at each stage, the Department slept over the matter for long and his Revision Petition of 1994 remained unattended for four years compelling him to file Writ Petition in 1998. It was vociferously insisted that the Department's apathy was glaring because they did not care to carry out the directions of the High Court to decide the Revision Petition "within four months". The Complainant expressed astonishment that despite having found that (i) the "balance in favour of the Appellant", (ii) more so when "in at least two identical cases" relief as allowed was not extended to the Complainant, and (iii) "the SRO under which the Complainant had been punished" had to be delinked due "to anomalies which later on were removed by the Government", the Secretary still passed on the buck to the Lahore High Court. This, according to the Complainant, was an example of "maladministration" as also of grave injustice.

5. Mr. Habib Ahmad, Deputy Collector (Headquarter) Customs, Multan, representing the Respondents, had no way from agreeing with the findings by the Secretary, Finance Division that the balance lay in favour of the Complainant and submitted that (a) the changes in law, (b) the deletion of Revisionary power of the Federal Government, and (c) the establishment of the Tribunal, left no choice with the Secretary but to request the High Court for transfer of the case. The DR further submitted that the complaint is not competent for admission as pointed out by the Collector due the matter being pending before the Lahore High Court.

6. The objection by the Respondents to the competence of the complaint is overruled because no evidence has been tendered to show that the Department has addressed any communication directly to the High Court nor any Miscellaneous Application moved seeking amendment of High Court order dated 9-10-2003.

7. The scrutiny of record and the arguments by the two sides revealed no disagreement as respects facts of the case and their chronology. The Respondents Representative appeared equally keen to resolve the issue but felt handicapped by changes in law. However, there is no explanation as to why:---

(i) the Revision Petition was not promptly decided when filed in 1994, and

(ii) when section 195A was omitted vide Finance Ordinance, 2001 (reported as PTCL 2000 BS.17) and the Tribunal created through insertion of section 194C, pending proceedings were not transferred to the new Forum as required by section 196(4).

The complainant's case has shuttled vertically and horizontally from one authority to another, although evident discrimination and legally strong favourable grounds support his case, he is still being denied justice and is suffering inconsequence. Maladministration is established.

8. At this point of time the position is that Complainant's Revision Petition moved under the then Section 196 of the Customs Act filed in 1994 lies unattended despite directions by the High Court. The Finance Secretary, Federal Government feels that he cannot adjudicate the matter as his jurisdiction for Revision has ceased to exist on the creation of the Tribunal with effect from 1995. At the same time it is hard to ignore that issues raised in this pending petition warrant judicious resolution.

9. The long drawn proceedings have adversely affected the Chief Executive of the complainant in as such as during the hearing of the case he fainted and emergency medical aid had to be provided.

10. The case as stated above is admittedly a hardship case which has caused undue suffering to the complainant financially, mentally and health-wise. To resolve the dispute the complainant has stated that he is prepared for Alternate Dispute Resolution as provided under section 195C of the Customs Act which has been inserted by Finance Act, 2004. He further stated that the complaint filed before the Federal Tax Ombudsman may be treated as an application for Alternate Dispute Resolution under section 195C of the Customs Act.

11. The provisions of section 195C are beneficial in nature and start with non-obstante clause "notwithstanding any other provision of this Act or the Rules", Therefore any person in connection with any matter of Customs specified in section 195C may apply to the C.B.R. for appointing a Committee for the resolution of any hardship or dispute mentioned in detail in the application for Alternate Dispute Resolution. The complaint is admittedly a hardship case and fulfils all the conditions for referring the matter for Alternate Dispute Resolution.

12. It is therefore recommended that:---

(i) C.B.R. to treat and accept the complaint filed by the complainant before the Federal Tax Ombudsman bearing No. 506/2004 as an application under section 195C of the Customs Act.

(ii) C.B.R. to take necessary action as provided under section 195C and pass such orders as provided by law.

(iii) Compliance be reported within 30 days.

C.M.A./367/FTOOrder accordingly.