H. SHEIKH NOOR-UD-DIN AND SONS (PVT.) LTD., LAHORE CANTT VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2009 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1227 (2005)

(a) Sales Tax Act (VII of 190)---

----Ss.25, 32A(2) & 45A---Sales Tax Refund Rules, 2002---Sales Tax General Order No.3 of 2004 dated 12-6-2004, paragraph. 39---Sales Tax General Order No.9 of 1999, dated 22-9-1999---S.R.O.388(I)/82, dated 22-4-1982---S.R.O.99(I)/95, dated 12-4-1995---S.R.O.579(I)/99, dated 17-5-1999---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Access to record, documents, etc.----Power of the Central Board of Revenue and Collector to call for records---Export refunds were sanctioned after due scrutiny and audit---Maladministration was alleged against department for conducting post refund audit unlawfully On the ground that Director-General could not undertake audit of registered persons except when authorized by the Central Board of Revenue--Directorate possessed information of evasion committed by a registered person which they were supposed to pass on to the concerned Collectorate of Sales Tax who could undertake the audit associating the staff of the Directorate---Validity---Once a case was decided by the Collector (Adjudication) on merit on the basis of independent special audit the aggrieved party could go in appeal if it so wished---Collector (Adjudication) should direct an auditor appointed under S.32A(1) of the Sales Tax Act, 1990 (Special Audit by Chartered Accountants and Cost Accountants) to audit all the records of the complainant, including record earlier obtained by the Director-General from the Collectorate of Sales Tax or any other record that may be considered necessary for an unbiased and purposeful audit and then adjudicate the case on merits in accordance with the provisions of law--Federal Tax Ombudsman recommended that Central Board of Revenue order the Collector (Adjudication) to direct, in terms of the provisions of subsection (2) of S.32A of the Sales Tax Act, 1990, an auditor (appointed by the Central Board of Revenue under S.3(1) of the Sales Tax Act, 1990) out of the approved list of Chartered Accountants notified by the Central Board of Revenue vide its Notification S.R.O.579(I)/99 dated 17-5-1999 to audit the entire record of the complainant for the relevant period, including the record previously obtained by the Directorate from the Collectorate of Sales Tax, and give their findings; entire cost of special audit would he borne by the complainant as undertaken in the complaint; to adjudicate depending on the findings/observations of the special audit, the case on merit, in accordance with the provisions of law, after confronting the parties to the dispute with observations of the special audit to enable them to defend their position in case of adverse audit observations and after providing them the opportunity of hearing and that Central Board of Revenue, meanwhile, direct the Director-General not to take any coercive action against the person of complainant's directors/management in terms of F.I.R. till finalization of findings by the special audit and then act/proceed only if so warranted by special audit observations and the law.

(b) Sales Tax Act (VII of 1990)---

----S.45A---Sales Tax General Order No.9 of 1999, dated 22-9-1999---Sales Tax General Order No.3 of 2004, dated 12-6-2004, paragraph 39---Establishment of Office of Federal 'fax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Power of Central Board of Revenue and Collector to call for records Complainant's contention that the Directorate could not undertake complainant's audit because if they had any information about evasion of tax they should have passed that on to the concerned Collectorate to undertake the audit, was not tenable in view of para. (iii) of Sales Tax General Order No. 9 of 1999 dated 22-9-1999 (superseded by Sales Tax General Order No.3 of 2004, dated 12-6-2004).

(c) Sales Tax Act (VII of 1990)---

----S.45A---Sales Tax General Order No.9 of 1999 dated 22-9-1999--Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Power of the Board and Collector to call for records---Director-General could undertake audit of a registered person on specific authorization by the Central Board of Revenue.

Imtiaz Rasheed Siddique, Mian Abdul Ghaffar along with Imtiaz Ali Shah, Advisor of the Company for the Complainant.

Ahmad Kamal, D.C., Customs, Sales Tax & Central Excise (Intelligence and Investigation) for Respondents.

FINDINGS/DECISION

JUSITCE (RETD.) MUNIR A. SHEIKIH (FEDERAL TAX OMBUDSMAN).---This complaint of maladministration is directed against the respondents for conducting complainant's post-refund audit unlawfully in violation of paragraph 39 of Sales Tax General Order No.3 of 2004, dated 12-6-2004 read with section 25 of the Sales Tax Act, 1990. It is alleged that the special authorization for audit by the C.B.R., the subsequent audit conducted by the Directorate-General of Intelligence and Investigation (Customs and Excise), the audit observations, dated 1-11-2004 and the initiation of criminal proceedings against the complainant were illegal, arbitrary and against the established practice. The Directorate-General was invested with limited powers under the Customs Act, 1969 and Sales Tax Act, 1990 vide Notifications S.R.O.388(I)/82, dated 22 4-1982 and S.R.O.299(I)/95 dated 12-4-1995. The C.B.R. with reference to Sales Tax Act, 1990 had streamlined the aforesaid powers vide its letter, dated 7-7-1996 and Sales Tax General Order (STGO) No.9/1999, dated 22-9-1999, superseded by STGO No.3/04, dated 12-6-2004. According to the aforesaid instructions the Directorate-General could not undertake audit of registered persons except when authorized by the C.B.R. In case the Directorate possessed information of evasion committed by a registered person they were supposed to pass on the information to the concerned Collectorate of Sales Tax who could undertake the audit associating the staff of the Directorate. The complainant was a reputable exporter. It was sanctioned export refunds during the period from 7/202 to 4/2002 in terms of Sales Tax Refund Rules, 2002 (notified vide S.R.O.575(I)/2002, dated 31-8-2002) after due scrutiny and audit. The Directorate's staff raided complainant's head office at Lahore and took away its entire corporate and sales tax record. They also seized complainant's export consignment at Karachi port without giving any notice. As a result, they also filed six unlawful F.I.Rs. against the complainant. As regards, the raid, search, seizure of records and detention of export consignments and the consequent initiation of criminal action, appropriate proceedings had been taken before the competent Court, hence these issues did not require any deliberation. The Directorate's staff unlawfully retrieved complainant's record and approached the C.B.R. vide its letter, dated 22-6-2004 for audit and scrutiny of the retrieved record. The C.B.R., vide its letter, dated 29-6-2004 granted unlawful sanction for audit and scrutiny of the said record allegedly under para 39 of Sales Tax General Order No.03/04. An ex parse audit was conducted leading to audit observations dated 1-11-2004. The Directorate clarified vide letter, dated 8-11-2004 that they have conducted audit of complainant's export refund files obtained from the Collectorate of Sales Tax, Lahore for the period of July, 2002 to April, 2004 which revealed that the complainant had fraudulently obtained refunds already sanctioned for which F.I.R. had been filed. The respondents created fictitious liabilities. Firstly, the permission allowed to the Directorate-General to conduct complainant's audit by the C.B.R. vide its letter on 29-6-2004 was violative of the notified instructions. Secondly, the Board had authorized the Directorate-General to audit only the records retrieved from the complainant by the Directorate. The Directorate-General, however, went beyond the retrieved records and unlawfully conducted audit of complainant's refund files obtained from the Collectorate of Sales Tax Post-refund audit could be conducted under the Sales Tax Refund Rules, 2002 only by functionaries invested with powers under the said Rules. The C.B.R's. permission to the Directorate-General to conduct complainant's audit was also violative of the post-audit provisions of the aforesaid Rules read with sections 25 and 45A of the Sales Tax Act, 1990. The Department could have reopened the refund cases under the provisions of section 45A of the Act, which they did not. Again the Sales Tax Refund Orders were appealable. As the respondents had not filed any appeals against the refund orders the same had assumed finality. Mere allegations in the absence of proper adjudication could not be made the basis for filing of F.I.R. The Directorate General could not lodge the F.I.R. Only the Collector could recommend lodging of the F.I.R. after proper scrutiny and analysis of record. C.B.R's. authorization of the Directorate for lodging of F.I.R. was mala fide and without jurisdiction. The F.T.O. may recommend/direct that a fresh audit be conducted of the sales tax refunds granted to the complainant by a reputable and independent chartered accountant and the findings thereof be made the basis for settlement of complainant's liability. The complainant would be ready and willing to bear all expenses in this regard and to discharge all lawful obligations. The respondents may also bb restrained from taking any adverse action/criminal action against the complainant.

2. In reply, the respondents have submitted that the complainant had filed a baseless complaint only to harass the Department and to prevent the law taking its normal course. It was hit by section 9(2) of the F.T.O. Ordinance, 2000. The Honourable F.T.O. had no jurisdiction to investigate or inquire into a matter which was sub judice' before the Court of competent jurisdiction or Tribunal or Board or Authority on the date of receipt of a complaint and if it related to assessment or determination of tax/duty, classification of goods,interpretation of law in respect of which legal remedies of appeal/review/revision were available under the relevant legislation. In the instant case the complaint was filed on 14-12-2004 whereas the Directorate General had submitted the contravention report to the Adjudication Authority on 8-12-2004 and show-cause notice was issued on 12-1-2005. The President of Pakistan had in a number of representations accepted appeals filed by the C.B.R. holding that in cases where legal remedies of appeal/review/revision were available under the relevant legislation and the matter related to determination of ability of duty and taxes the recommendation of the F.T.O. were hit by the provisions of section 9(2) of the F.T.O. Ordinance. By virtue of S.R.O. 299(I)/95, dated 12-4-1995 read with Board's authorization letter, dated 29--6-2004 further read with section 30 of the Sales Tax Act, 1990 and STGO No.9/99, dated 22-9-1999 the audit conducted by the Directorate-General and the subsequent proceedings were in accordance with law and rules. Having completed the audit, the audit observations were despatched to the complainant for explanation to which they did not respond. Departmental and criminal proceedings were, therefore, initiated. The audit was authorized by the C.B.R. The C.B.R. had also directed the Collector, Sales Tax, Lahore, for deputing auditors to assist the Directorate in conducting complainant's audit. Ordinarily, the Directorate would pass on information about evasion to the Collector of Sales Tax on the basis of which the Collector could undertake the audit of registered person. However, the Directorate-General could conduct an audit on the basis of a written authorization by the C.B.R. The complainant by misdeclaring description, actual weight of products and the values in export consignments had fraudulently obtained inadmissible sales tax refunds during the period from 7/2002 to 4/2004. The Directorate's staff visited complainant's head office and took relevant record into custody for making copies thereof after serving a proper legal notice. While it is admitted that the complainant's record was obtained from the Collectorate of Sales Tax, Lahore for purposes of audit the complainant was also asked to provide its record for the said purpose but it failed to comply. The allegations contained in the audit report were true and the F.I.R. was lodged against the complainant lawfully. The complainant had never offered for any independent audit. The Board was fully competent to authorize the Directorate-General under the provisions of Sales Tax General Order No. 9/1999 (superseded by STGO No. 3/2004, dated 12-6-2004) to undertake audit of any registered person. While granting permission to the Directorate to conduct the audit vide its letter, dated 29-6-2004 the C.B.R. did not restrict the scope of audit. Refund files of the Collectorate of Sales Tax also pertained to the complainant, hence the audit conducted by the Directorate in coordination with auditors of the Sales Tax Collectorate was in order. Show-cause notice had been issued to the complainant to explain its position. Initiation of prosecution proceedings in the wake of the F.I.R. were not related to the process of independent adjudication: The C. B. R. had vide its letter, dated 6-11-2004 granted the Directorate the permission to lodge F.I.R. against the complainant after satisfying and analyzing the merits and nature of the case, The Directorate was competent by virtue of S.R.O.299(I)/95, dated 12-4-1995 to file F.I.R. after obtaining permission from the C.B.R. As the Board was competent to grant permission for audit, the audit was validly conducted, the contravention report was duly sent to the adjudication authority for issuance of show-cause notice and the criminal proceedings were lawfully initiated the respondents had not committed any maladministration. The complaint may be dismissed as lacking merit.

3. During the hearing, the AR explained that complainant's export refunds were sanctioned on account of input tax paid on consumption. Refunds were finalized/processed and paid after pre-audit and scrutiny thereof as per the provisions of Sales 'Fax Refund Rules, 2002 (S.R.O.575(I)/2002, dated 31-8-2002). Re-fund orders were appealable by each of the two sides. As the respondents had not appealed against any of the refund orders the sanction had attained finality. The records resumed by the Directorate by raiding complainant's head office were not audited although the C.B.R. had authorized them to audit the records so retrieved. He added a perusal of Director, Intelligence and Investigation, Head-quarter's letter, dated 22 6 2001 addressed to his colleague at Lahore showed a bias/prejudice on the part of the Directorate inasmuch as Headquarter Director's letter advised the Director Intelligence and Investigation, Lahore to initiate proceedings in accordance with law relating to search and seizure whereas the respondents raided complainant's head office at Lahore on 19-6-2004 without waiting for Head-quarter's advice communicated on 22-6-2004 which showed that the Directorate was predetermined to harass the complainant. Drawing attention to Directorate's letter, dated 22-6-2004 addressed to Member Sales Tax, C.B.R., seeking permission to audit sales tax record of the complainant which they had resumed from complainant's head office in pursuance of information regarding evasion of sales tax the AR contended that the Directorate instead of seeking C.B.R's. permission to undertake audit should have supplied the information to the concerned Collectorate of Sales Tax in terms of the provisions of General Order No.9/1999 for undertaking that audit. He also submitted that vide its letter, dated 24-6-2004 addressed to the Member, Sales Tax, the Directorate had asked the C.B.R. to depute the auditors to coordinate with and assist them in the scrutiny of record retrieved from the head office of the said company and the C.B.R. had, vide its letter, dated 26-4-2004 directed the Collector, Sales Tax, Lahore, to depute auditors to assist the staff of the Directorate in the scrutiny of sales tax record of Messrs Noor-ud-Din and Sons, Lahore "retrieved from the office of the registered person". The AR added that even the C.B.R's. letter, dated 29-6-2001 addressed to the Directorate-General would show that the C.B.R. had authorized the Directorate to conduct the audit of record retrieved from the complainant. The respondents, on the other hand, did not audit the retrieved record, as per C.B.R's. authorization but got hold of complainant's refund files from the Collectorate of Sales Tax, Lahore, to conduct the so-called audit. The AR further submitted that the Directorate General had acted beyond C.B.R's. authorization. He also added that the fact that the Directorate did not conduct audit of the retrieved record was also evident from Directorate's admission in its letter, dated 1-11-2004. The D.R., however, submitted that in the course of audit the Directorate had asked the complainant to provide the requisite records to enable them to scrutinize the same but the complainant failed to comply. He further stated that audit observations were forwarded to the complainant vide Directorate's letter, dated 1-11-2004 asking it to submit its view point within 15 days of the receipt of the letter but they did not comply. The AR rebutted that the complainant was not in a position to respond to the audit observation because the management could neither concentrate nor could they visit respondents' offices to explain their position because the respondents had created an atmosphere of tear/intimidation, including threats of arrest. He Also argued that the Directorate was not competent to file F.I.R adding that the entire action against the complainant was conducted in a biased manner with indecent haste as was also evident from the fact that the Directorate had vide its letter, dated 6-11-2004 sought permission from the C.B.R. to lodge F.I.R against the complainant and the C.B.R. granted permission on the same day i.e. on 6-11-2004 without scrutinizing the nature of evidences and without considering legal, factual and moral justification before proceeding in the matter. The respondents had, according to the AR, predetermined to take adverse action against the complainant and acted prejudicially. The AR also elaborated that the Directorate was not competent to file the F.I.R because, according to law, they could only file a complaint before special Judge (Customs, Excise and Sales Tax). The AR argued that the Directorate was competent to file the F.I.R. adding that the Honourable Special Judge had already taken cognizance of it. He further submitted that the F.I.R was lodged on 30-11-2004 after issuance of audit findings, dated 1-11-2004 hence the complainant had sufficient time to contest the audit observations but it did not cooperate. The AR pointed out that the so-called audit was carried out by Grade-14 officers who were not professional auditors. He pleaded that under the circumstances it would be only fair if a special auditor was appointed under the provisions of section 32A of the Sales Tax Act, 1990 to undertake an independent audit of complainant's refunds. The complainant would have no objection to nomination of and audit by any of the Chartered Accountants/Auditors listed by the C. B. R. in its Notification S.R.O. 579(I)/99, dated 17-5-1999. He elaborated that according to section 32A of the Act both the C.B.R./Collector could order special audit and appoint an auditor for the purpose.

4. The D.R. submitted that the Directorate-General had undertaken complainant's audit after obtaining C.B.R's. permission. The C.B.R. had also deputed six auditors (who are either of Grade 14 or 16) to assist the Directorate in the scrutiny of sales tax record of the complainant. The departmental auditors are professionally competent. The complainant was allowed the opportunity vide Directorate-General's letter, dated 1-11-2004 to give their point of view on audit observations within 15 days but it failed to avail the opportunity for which they are themselves to blame. The F.I.R was filed on 30-11-2004 after the expiry of time-limit of 15 days on 16-11-2004. The respondents had not acted hastily or arbitrarily as alleged. He submitted that the complainant's contention that the management was apprehensive of arrests was not correct because no one was arrested. The AR rebutted by stating that their Export Manager at Karachi and Export and Accounts Manager at Lahore were detained/arrested and similarly a pre-arrest hail had to be arranged for a director. The DR submitted that the Directorate was empowered under the provisions of section 37A of Sales Tax Act, 1990 to arrest and prosecute. Although the Directorate was competent to file the F.I.R without prior permission from the C.B.R. it was only as a matter of abundant precaution that it had sought C.B.R's. permission to lodge it. He stated that the language of the subject Sales Tax General Order was quite clear. Ordinarily the Directorate-General would pass on the information about evasion to the concerned Collectorate to undertake audit but the Directorate could undertake audit when so authorized by the C.B.R. In the present case, he argued, the Collectorate was authorized by the C.B.R. to undertake the audit. He reiterated the F.T.O's. jurisdiction did not extend in the case as the matter was sub judice in that the Collector (Adjudication), Lahore had already issued a show-cause notice, dated 12-1-2005 framing charges against the complainant. The complainant would have the opportunity to defend its position before the adjudication authority. It should, therefore, argue the case before the competent adjudication authority. The AR pleaded that the respondents be restrained from adopting any coercive measures. The D.R. stated that no body could coerce the complainant for recovery of the duty/taxes allegedly evaded until it was so determined in adjudication. He undertook that the respondents would not coerce the complainant for recovery unless the liability was determined by adjudication. Asked whether the Collector (Adjudication) could appoint a special auditor/ Chartered Accountant in terns of the provisions of section 32A of the Sales Tax Act, 1990 the DR submitted that the Collector (Adjudication) possessed vast powers and was competent to decide the case on merit: he could either uphold the show-cause notice or set it aside after due examination and inquiries and could order special audit and appoint independent auditor before deciding the case.

5. The arguments of the parties to the dispute and the record of the case have been considered and examined. Complainant's contention that the Directorate could not undertake complainant's audit because if they had any information about evasion of tax they should have passed that on to the concerned Collectorate to undertake the audit is not enable in view of para.(iii) of Sales Tax General. Order No.9/99, dated 22-9-1999 (superseded by Sales Tax General Order No.3/2004, dated 12-6-2004) the first part of which reads:---

" the staff of Directorate-General of Intelligence and Investigation (Customs, Excise and Sales Tax)....will not undertake any audit of any registered person/unit except under specific written authorization by the C.B.R. in each such individual case ."

The Directorate-General could, therefore, undertake audit of a registered person on specific authorization by the C. B. R. In the instant case, in response to Directorate's letter, dated 22-6-2004 and 24-6-2004 addressed to Member, Sales fax, C.B.R., the C.B.R. vide its letter, dated 29-6-2004 and 26-6-2004 authorized the Directorate-General to conduct audit/scrutiny of the sales tax record of Messrs Sheikh Noor-ud-Din and Sons, Lahore and directed the Collectorate of Sales Tax to depute auditors to assist the Directorate's staff in scrutiny of "sales tax record of Messrs Sheikh Noor-ud-Din and Sons retrieved from the office of the registered person". However, in this connection the correspondence exchanged between the Directorate-General and the C.B.R. shows that the Directorate had, vide its letters, dated 22-6-2004 and 24-6-2004 requested the C.B.R. for authorization to audit the record retrieved from the head office of the complainant and direct the Collector, Sales Tax, to depute auditors for assisting the Directorate's staff in scrutiny of record retrieved from the head office of the said company. Although the C.B.R's. authorization, dated 29-6-2004 gives the impression as if the Board of Revenue had allowed the audit/scrutiny of all sales tax record of Messrs Sheikh Noor-ud-Din and Sons, the C.B.R. vide its letter, dated 29-6-2004 directed the Collector, Sales Tax, to depute auditors "to assist the staff of the Directorate-General of Intelligence and Investigation (Customs and Excise), Islamabad in the scrutiny of sales tax record of Messrs Noor-ud-Din and Sons retrieved from the office of the registered person". A discrepancy is, therefore, noted in that while the C.B.R. authorized the Directorate-General to audit the record retrieved front the head office of the complainant, as requested by the Directorate itself, the staff of the Directorate proceeded to auditing the record/refund files obtained by them from the Collectorate of Sales Tax. Para 2 of Directorate's letter, dated 1-11-2004 and para.3 of Additional Director's letter, dated 8-11-2004 addressed to the complainant further confirms the aforesaid position. This discrepancy raises the question about whether the Directorate General actually acted as per C.B.R's. authorization or went beyond it. The answer is obvious as explained above. It is further observed from the record that Director, Intelligence and Investigation, Lahore had written a letter, dated 19-6-2004 (contents not available) to the Director, Intelligence and Investigation, Islamabad, presumably seeking advice relating to `search and seizure' yet the Directorate's staff raided the head office of the complainant on the same day i.e. on 19 6-2004 without even so much as waiting for headquarters' advice conveyed vide its letter, dated 22-6-2004. It is also noted that the Directorate-General vide- its letter, dated 1-11-2004 had forwarded audit observations (based on examination of record received from the Collectorate of Sales Tax, Lahore) to the complainant for submitting its point of view within 15 days of the receipt of the letter. The complainant contends that as the respondents had created an atmosphere of fear/intimidation by resorting to pressure tactics, including threats of arrest (it was alleged by the AR that the Export Manager, Karachi and Business/Accounts Manager, Lahore, were detained/arrested and a bail before arrest had to be arranged for a director) it was not possible for it to respond to the Directorate's letter. The complainant's plea, therefore, that it was due to apprehension of arrests and respondents resort to coercive/intimidatory tactics that they were not in a position to file its response to the audit observations is understandable. It is also noted that the Directorate had, vide its letter, dated 6-11-2004 sought C.B.R's. permission to authorize them for lodging the F.I.R and, surprisingly, the permission was granted by the C.B.R. vide its letter of the same date i.e. on 6-11-2004 rather hurriedly despite the fact that in a complex case such as the one framed against the complainant a closer and detailed examination/scrutiny of the issues and evidences involved would have been in order and appropriate before giving `go head' signal. The above analysis and the overall circumstances surrounding the case show that the Directorate had failed to conduct a proper audit: they relied only on examination of record obtained from the Collectorate of Sales Tax rather than undertake audit of record resumed from the complainant's head office for which they authorized by the C.B.R. The audit so conducted, therefore, was biased as if it was all pre-scripted. The arguments that the respondents had at one point in time asked the complainant to provide more records but the complainant had not complied also needs to be viewed in the context of complainant's apprehension/fear of arrest because of which they could not communicate with the authorities to respond to/rebut audit observations. In view of the foregoing it would be only fair and just if an independent audit (special audit) of the entire record for the relevant period, including Collectorate's record is carried out to ascertain the truth. Section 32A of the Sales Tax Act, 1990 provides for appointment of special auditors by the C.B.R. and the Collector. Such auditors can be appointed from out of the C.B.R's. approved list of Chartered/Cost Accountants to audit the record of any registered person.

6. Respondents' objection to the jurisdiction of the F.T.O. under section 9(2)(a) of the F.T.O. Ordinance, 2000 is misconceived and misplaced. The case record shows that the show-cause notice in the case was issued on 12-1-2005 whereas the present complaint was filed before this forum on 14-12-2004 prior to the issuance of show-cause notice. The case cannot by any stretch of imagination be said to be `sub judice' before any Court of competent jurisdiction on the day the complaint was filed in F.T.O. Secretariat. Equally misplaced is respondents' objection to F.T.O.' jurisdiction in terms of section 9(2)(b) of the F.T.O. Ordinance because in the first place the case against the complainant is, strictly speaking not of assessment but one of intended recovery of previously sanctioned refunds allegedly obtained by the complainants fraudulently and secondly the tax liability still remains to be determined. Clause (b) of subsection (2) of section 9 relates only to decisions on matters enumerated therein "in respect of which remedy of appeal, review or revision are available in the relevant legislation" itself. On the other hand, no such remedy has been provided in respect of processes employed in the conduct of assessment and determination of liability. As it is, it is noted, that the methods and process employed by the respondents leading to complainant's audit and manner in which the audit observations were formulated were biased, arbitrary, oppressive and unjust inasmuch as the whole exercise conducted against the complainant was pre-scripted with a view to prejudging the allegations framed against the complainant---all of which falls within the definition of `maladministration' as defined in section 2(3) of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000. Before determining any liability it will, therefore, be essential in the first instance to ascertain true facts of the case through an independent audit. While this forum will not interfere with process of adjudication it strongly feels that it will serve the ends of justice if the adjudication authority, before deciding the case on its merit, ascertains in the first instance the correct picture/true facts involved in the case by ordering an independent special audit. Such special audit will not only help determine whether or not the complainant had fraudulently obtained refunds and evaded tax but would also redress complainant's grievance that the respondents' action/allegations against it were predetermined and prejudged. The complainant in its complaint has stated that appropriate proceedings in respect of unlawful raid, search and seizure of record, detention of complainant's export consignments as well as criminal action in relation thereto had been taken before the competent Court and these issues did not require deliberation. However, it is observed that the F.I.R. dated 30-11-2004 (Book No.7/2004) filed by the Directorate. General in consequence of audit carried out in terms of Board's authorization, dated 29-6-2004 is as dubious as the audit observations based on examination of records other than those for which the C.B.R. had authorized them. It will, therefore, be only fair and appropriate if the respondents do not take any coercive measures against the persons of directors/management till finalization of the findings of the, independent audit and then act if only so warranted by observations of the special audit and the law.

7. Once the case is decided by the Collector (Adjudication) on merit on the basis of independent, special audit the aggrieved party can go in appeal if it so wished. Accordingly the Collector (Adjudication) should direct an auditor appointed under subsection (1) of section 32A of the Sales Tax Act, 1990 (special audit by Chartered Accounts and Cost Accountants) to audit all the records of the complainant for the relevant period, including record earlier obtained by the Directorate-General from the Collectorate of Sales Tax or any other record that may be considered necessary for an un-biased and purposeful audit and then adjudicate the case on merit in accordance with the provisions of law. Considering the foregoing position and the overall circumstances of the case it is recommended that the C.B.R. order the Collector (Adjudication), Lahore to:--

(i) Direct, in terms of the provisions of subsection (2) of section 32A of the Sales Tax Act, 1990, an auditor (appointed by the C.B.R. under section 3(1) of the Act) from out of the approved list of Chartered Accountants notified by the C.B.R. vide its Notification S.R.O. 579(I)/99, dated 17-5-1999 to audit the entire record of the complainant for the relevant period, including the record previously obtained by the Directorate-General from the Collectorate Sales Tax, and give their findings. The entire cost of special audit would be borne by the complainant as undertaken in the complaint.

(ii) Adjudicate---depending on the findings/observations of the special audit---the case on merit in accordance with the provisions of law, after confronting the parties to the dispute with observations of the special audit to enable them to defend their position in case of adverse audit observations and after providing them the opportunity of hearing and

(iii) The C.B.R., meanwhile, direct the Directorate-General not to take any coercive action against the person of complainant's directors/management in terms of F.I.R., dated 30-11-2004 (Book No.7/2004) till finalization of findings by the special D audit and then act/proceed only if so warranted by special audit observations and the law.

(iv) Compliance he reported within 30 days.

C.M.A./404/F.T.O.Order accordingly.