SNOW LAND HOTEL, NARAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 768 (2002)

Sales Tax Act (VII of 1990)---

---Ss. 19, 26 & 45-A---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 11---Non-filing of monthly tax return by complainant after its ex parte compulsory registration---Imposition of penalty---Plea of complainant was that due to closure of communication means during winter season, he could not receive notice either prior to registration or afterwards regarding non-filing of return---Validity---Respondent could not furnish any proof regarding service of notice nor produced evidence providing basis for compulsory registration---No enquiry had been made to determine turnover of complainant---Impugned orders were arbitrary, baseless, contrary to law and suffered from abuse of authority---Maladministration was established---Federal Tax recommended to Revenue to cancel order of registration and order-in-original under S.45-A of Sales Tax Act, 1990 and conduct fresh proceedings after enquiries and proper service of show cause/hearing notice on complainant.

Muhammad Anwar, Consultant (Dealing Officer).

Mubarik Ahmad Qureshi for the Complainant.

Imtiaz Shaikh, DC (Sales Tax) Peshawar for Respondent.

DECLSION/FINDINGS

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---Brief facts of the case are that the complainant runs a hotel and restaurant in Naran. He received an ex parte order-in-original dated 14-7-2003 from the concerned Deputy Collector imposing a penalty of Rs.5,000 for non-filing of monthly sales tax return for March, 2003 and thus came to know that he had been compulsorily registered under section 19 of the Sales Tax Act. On contacting the sales tax office the complainant was further informed that a penalty of Rs.5,000 had also been imposed upon him vide an ex parte order-in- original dated 30-4-2003 for non-filing of return for the month of February 2003. It is contended that the complainant was penalized without hearing as no show-cause notice was served on him for compulsory registration or for imposition of penalty as alleged in the order-in-original dated 30-4-2003 which was personally collected by him and by then the time for appeal had expired. It is prayed that the complainant be declared exempt from levy of sales tax as he was not earning taxable turnover and the order-in-original dated 30-4-2003 be vacated.

2. In reply the respondent has stated that being a registered person the complainant was required to file sales tax return under the law and his failure to do so attracted the penal provisions. It is further stated that for registration under section 19 a notice was issued to the complainant on 31-1-2002 for 11-2-2002 and for its non-compliance the unit was compulsorily registered on 16-12-2002. It is further stated that penalty for non-filing of return for the month of February 2003 was imposed after giving two opportunities of hearing on 24-4-2003 and 30-4-2003. As regards complainant's contention that his business was seasonal which did not fetch him as much turnover as to make him liable to sales tax, the respondent has stated that it was the responsibility of the complainant to prove his contention but he failed to respond to the formal notices before compulsory registration as well as subsequent show-cause/hearing notices.

3. The representatives of the both sides were heard. The A.R. of the complainant argued that during winter season the business was closed and due to closure of Naran Road and suspension of communication the complainant did not receive any notice either prior to registration or afterwards regarding non-filing of returns which culminated in imposition of penalty vide ex parte Order-in-Original dated 30-4-2003. The respondent's representative could not furnish any proof regarding service of the said notices on the complainant. He also could not produce any evidence which provided basis for compulsory registration. In fact no enquiry was made by the department to determine the turnover of the complainant. In these circumstances the registration of the unit under section 19 and subsequent order-in-original for imposition of penalty are arbitrary, baseless, contrary to law and suffers from abuse of authority. Maladministration is thus established.

4. In the light of the above, it is recommended that:-

(i) The order of registration and order-in-original dated 30-4-2003 be cancelled under section 45A of the Sales Tax Act and fresh proceedings be conducted after enquiries and proper service of show-cause and hearing notices on the complainant.

(ii) Compliance be reported within 30 days.

S.A.K./184/F.T.O.Order accordingly.