INTERNATIONAL CIGARETTE INDUSTRIES (PVT.) LTD., SWABI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 873 (2004)

Customs Act (IV of 1969)---

----Ss.17 & 180---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Sales Tax Act (III of 1951), Ss.37(c) & 45---Seizure---Adjudication---Show-cause notice---Mal administration---Complainant was manufacturer of cigarettes, customs staff impounded a truck load of consignment of cigarettes---Show-cause notice was issued by Additional Collector, Customs, which was duly responded---Hearing was held in 1998---Adjudication order was not received and was delayed for about 7 years---Delay in adjudication was cause of complaint---Department had alleged that delay was caused due to changes in jurisdiction and shifting/transfer of record the case file went missing---Validity---Very disturbing aspect was prevailing in the departments where there was no security for the record which was a serious maladministration---Federal Tax Ombudsman recommended that Central Board of Revenue to produce manual circular or instructions relating to maintenance, preservation and transfer of record from one office to another---Parties should be informed of such transfer---Transferee department should issue intimation to parties---Systemic reforms be suggested.

Ch. Riasat Ali for the Complainant.

Fazal Yazdani, Additional Director (Intelligence and Investigation).

Ahmad Rauf, Deputy Collector (Adjudication) Sales Tax, Gujranwala for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The main points in the complaint are as follows;--

(i) The complainant, a private limited company, is engaged in manufacture of cigarettes. On 25-9-1997 the customs staff of Gujranwala impounded a truck of the complainant enroute to Lahore from Swabi carrying the consignment of 289 packarites of cigarettes.

(ii) On the basis of seizure report dated 30-10-1997 the Additional Collector, Customs, Gujranwala issued show-cause notice dated 12-11-1997 which was duly responded by the complainant.

(iii) The last hearing its the case was held on 24-12-1998 at Gujranwala by Mr. M. Ghauri, the then Additional Collector, Customs.

(iv) Since the last hearing dated 24-12-1998 nothing has been heard from the respondent. The complainant has not received the adjudication order which has been delayed for about 7 years.

(v) The complainant's counsel tried to find out the actual position verbally and also in writing burin vain. The counsel finally sent registered letter dated 25-2-2004 to the Deputy Collector (Adjudication) Central Excise, Lahore considering to be the relevant authority in the matter but no response was received from him.

(vi) The complainant got the goods released along with the truck on furnishing bank guarantee of Rs.620,000 which is still lying with the department un-cleared. The complainant has so far paid mark up to the tune of Rs.150,000 which is a financial loss to the complainant with no fault on his part.

(vii) Such delay in adjudication of the case is against the norms of law and natural justice.

It has been prayed that the respondent be directed to 'finalize the adjudication forthwith and release the impugned bank guarantee to save the complainant from further loss.

2. In reply the respondent has forwarded the submissions of the Superintendent (Intelligence and Investigation) Customs, Sales Tax & Central Excise Gujranwala the facts have been admitted. It has been further stated that the complainant's case regarding evasion of sales tax amounting to Rs.93,831 was sent to Additional Collector, Sales Tax, Peshawar for adjudication on 24-12-1997 on the point of jurisdiction as directed by the Additional Collector, Sales Tax, Gujranwala and proceedings in this regard were still pending. However, the adjudication proceedings on the Central Excise side continued with the Additional Collector, Central Excise, Gujranwala. As regards delay in passing the adjudication order, the Superintendent has stated, the same is to be explained by the Deputy Collector (Adjudication) Gujranwala.

3. The representatives of the two sides attended. The learned counsel of the complainant reiterated the facts and contentions as stated in the complaint.

4. The respondent's representative who is also the dealing officer in the Collectorate submitted that action in the case was delayed due to the reason that at the time when show-cause notice was issued (12-11-1997) the jurisdiction over the case vested with the Collectorate of Customs. It was w.e.f. 1-2-2000 that the Central Excise was made part of Collectorate of Sales Tax Gujranwala. Further, w.e.f. 1-7-2000, for the propose of adjudication a new Collectorate was created. These changes in the jurisdiction and subsequent shifting/transfer of record from one Collectorate to the other was stated to have caused considerable delay and during these shiftings the case file went missing.

5. As regards the complainant's contention that he had suffered a loss of Rs.150,000 in the form of mark up paid to the bank on account of bank guarantee which is being renewed by the bank, the respondent's representative submitted that the bank was not authorized to renew the guarantee on its own. The customs/sales tax department had not asked for such a renewal and as such the complainant himself was responsible for renewal and payment of mark up after the expiry of the guarantee. This contention of the department is valid and the complainant cannot claim any damage on this score.

6. From the facts stated above systemic maladministration is quite obvious. The main defence advanced for the inexcusable delay in adjudication is change of jurisdiction and shifting of record. Such instances have been noted in all tax departments where jurisdictions are frequently changed, records are transferred but in practice there is no systemic procedure for shifting the record and its receipt by the transferee office. As is obvious from the statement of the Deputy Collector (Adjudication) that when the Central Excise was separated from Customs department the inventory of transferred cases was prepared but when it was again transferred to the Adjudication Wing no inventory was prepared. The explanation for this lapse is that the dealing clerk in the Sales Tax Wing was also transferred to the Adjudication Wing although the office premises were different and there was physical transfer of the record. It has been noted that on transfer of cases no proper checking is made by the receiving officer. It seems that record is dumped without any checking. In the present case the Deputy Collector (Adjudication) admitted that on taking charge and receipt of the record in his branch no list was prepared nor the status of the pending cafes was ascertained. This shows utter negligence because unless the record is checked and pending cases are sorted out it is difficult to proceed with those cases as there seems to be no record of such cases with any department. It was the duty of the transferor department to prepare inventory of disposed of and pending cases separately. If it was not prepared the Deputy Collector (Adjudication) was duty bound to sort out the pending cases. No step was taken for years and the matter remained pending. The complainant addressed letters without any result. The plea of the respondent is that it was addressed to wrong quarters. Unless the party is intimated of the transfer of case it is not possible for a party to know in which forum the hearing will take place. It is the duty of the transferor department to intimate the party that the case has been transferred to a particular jurisdiction. On receipt of record by the transferee department it is its duty to intimate the parties about the transfer of case and the next date of hearing. This procedure does not seem to be adopted by the department. It has been noted in many cases that the records are bundled or stored without preparing any inventory. The respondents were asked to produce any manual, instructions or circular of C.B.R. regarding transfer of record but they were unable to produce and had no knowledge about it at all. This is a very disturbing aspect prevailing in the departments where there is no security for the record which not only puts the public to harassment but may cause loss of revenue. It is a serious maladministration. In these circumstances the C.B.R. must advert to this aspect of the case which has been pointed out earlier without any result and therefore it is recommended as follows: --

(i) C.B.R. produce manual, circular or institutions relating to the maintenance, preservation and transfer of record from one office to another.

(ii) C.B.R. to direct the departments that if the record is transferred the parties should be informed about the transfer and the new jurisdiction. The transferee department should be directed to intimate the parties about the transfer of case and the date of hearing.

(iii) C.B.R. to suggest systemic reforms and proper methods for maintaining, preserving and transfer the records.

(iv) Compliance be made within 30 days.

M.I./260/F.T.O.Order accordingly.