DOSSA COTTON & GENERAL TRADING (PVT.) LTD., KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2008 P T D 962
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Messrs DOSSA COTTON & GENERAL TRADING (PVT.) LTD., KARACHI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.C-41-K of 2004, decided on 18/05/2004.
(a) Sales Tax Act (VII of 1990)---
----Ss. 3, 33 & 34---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 11---Claim for refund of additional tax and penalty deducted from sales tax not leviable on exported goods---Non-filing of appeal against order of deduction---Refusal of department to pass order on such claim alleging such deduction to have been made with consent of complainant's attorney---Validity---Complainant had not denied such consent given by attorney and his authority to give same---Officials of Department were bound to suitably advise complainant and give him appropriate information about rules and procedure---Refusal to reply or pass any order on complainant's request to review order of deduction, would amount to maladministration---Federal Tax Ombudsman recommended to Revenue to decide complainant's application after hearing him.
(b) Sales Tax Act (VII of 1990)---
---S.3---Exported goods---Exporter not liable to pay sales tax or penalty thereon.
(c) Sales Tax---
---Duty of officials of Sales Tax Department is to suitably advise taxpayer and give him appropriate information about rules and procedure after passing any order against him---Taxpayer is expected to know the law as if he has engaged the services of a professional for dealing with case---Principle illustrated.
M. Mubeen Ahsan, Advisor (Dealing Officer) M. Nissar Dossa, Chairman of Company.
S.M. Shoaib, Deputy Collector of Sales Tax, Karachi.
FINDINGS/DECISION
JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The complaint has been filed against the Sales Tax Department on account of deduction of Rs.1,52,917 from the sales tax refunded on export of raw cotton. The complainants have stated that during September and October, 2000 they purchased raw cotton which was exported to Bangladesh in November and December, 2000. They were entitled to refund of sales tax amounting to Rs.3,398,153 but when they received the amount, after a lapse of seven months in August, 2001, they found that the Department had deducted Rs.1,52,917.
2. The complainants stated that the demand for sales tax for September, 2000 was deposited on 12th October, 2000, and for October, 2000 on 11th November, 2000, the 10th 'day of each month. They stated that the penalty of Rs.152,917 levied for the delay of one/two days was quite harsh and not justified. The department conveniently ignored that they had delayed the payment of refund by seven months due to which their business had suffered.
3. The complainants further stated that in a similar case of delay of two and four days, C.B.R. had allowed exemption to. Messrs Volcot Limited, Karachi, vide its Order No.15/2001 dated 28-6-2001, whereas they had suffered the penalty. They had made representations dated 13-8-2001, 21-5-2002 and 27-8-2002 to the Deputy Collector of Sales Tax but received no response to their applications. They requested that the Collector of Sales Tax be directed to treat the exporters of raw cotton on equal basis.
4. The Deputy Collector of Sales Tax replied to the complaint that the deduction had been made under sections 33 and 34 of the Sales Tax Act with the consent of the complainants who did not file an appeal against the adjustment order dated 2-8-2001. He stated that after two years, the complainants have filed the complaint without approaching the proper appellate forum within the time limit, which was mala fide. He reiterated that since the complainants had given their written consent and had not filed appeal against the' adjustment order, the order had become final.
5. The complainants stated in the rejoinder that their consent was obtained under duress. They reiterated that C.B.R. had waived additional tax and penalty in cases of Messrs Volcot and Messrs Beavers Ltd. with regard to the objection that they did not file an appeal before the Collector (Appeals), they submitted that there was no mention in the adjustment order that an appeal could be filed against it. They sent applications dated 13-8-2001, 21-5-2002 and 27-8-2002 to the Deputy Collector and letters to the Chairman and Member, C.B.R., but received no reply or acknowledgment. They added that due to seven months' delay in payment of refund of Rs.3,398,153, they had to incur huge interest on the borrowed amount.
6. Mr. Nissar Dossa, Chairman of the Company, stated during the hearing of the complaint that he was not aware what commitment his authorized agent had made to obtain the refund of a huge amount. The agent only brought the adjustment order dated 2-8-2002 against which he applied to the Deputy Collector requesting for waiver of additional tax and penalty. He also sent letters to different committees constituted by the C.B.R. to look into the problems of the taxpayers and redress their grievance but no action was taken. His company was entitled to exemption because the entire quantity of cotton was exported to Bangladesh and was not liable to sales tax, penalty or additional tax.
7. The Deputy Collector replied that the complainants had the option either to approach the C.B.R. for special exemption or the Collector (Appeals) to allow filing of appeal against the adjustment order. Mr Nissar Dossa responded that it was incumbent on the department to reply to his letters and intimate about the appropriate course of action under the sales tax law to approach the C.B.R. or the appellate authority.
8. It is evident from the facts brought out in the foregoing paragraphs that the complainants were entitled to refund of sales tax of Rs.3,398,153 for cotton exported to Bangladesh. The deduction of additional tax and penalty was made on account of one and two days' delay in payment of sales tax. The reply of the department that the complainants should have either filed an appeal or approached the C.B.R. for condonation of delay is irrelevant at this stage because this advice should have been given to them when they had first applied to the department. It seems that the officials in the Sales Tax Department do not consider it their duty to suitably advise the taxpayers and give them appropriate information about the rules and procedure. The exporters were not liable to any domestic tax or penalty on the exported cotton and the whole amount of sales tax paid by them should have been refunded. Besides this aspect which points out to the ineptitude in performance of duty, a taxpayer is also expected to know the law particularly as it had engaged the services of a professional for dealing with the case. The complainant does not deny the consent given by its authorized agent. Nor it has been alleged that such agent was not authorized to give consent. However, refusal to reply or pass any order on complainants request to review the order dated 2-8-2001 amounts to maladministration.
10. It is, therefore, recommended that
(i) Complainants' application/request dated 13-8-2001 and subsequent reminders be decided by the relevant officer after hearing the complainant.
(ii) Compliance be reported within thirty days of the receipt of recommendation by the Revenue Division.
S.A.K./250/FTOOrder accordingly.