SITARA PEROXIDE LIMITED, FAISALABAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2011 P T D 1391
[Federal Tax Ombudsman]
Before Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman
Messrs SITARA PEROXIDE LIMITED, FAISALABAD
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.160/Khi/Customs(79)/690/2010, decided on 02/09/2010.
Customs Act (IV of 1969)---
----S. 33---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3), 9 & 10---Denial of refund claim---Demand notice issued by the department to the complainant for payment of customs duty and taxes, was challenged by the complainant in constitutional petition---High Court directed the complainant to deposit the amount which was invested in Special Saving Certificates, which certificates would not be released to the Customs till disposal of first appeal or 15th June, 2009, which was earlier---Appeal filed by the complainant was allowed by the Appellate Tribunal, whereby refund claim of the complainant was allowed---Complainant after decision of Appellate Tribunal approached Customs for refund of the amount, but to no avail---Complainant had prayed for issuance of direction to the Customs for releasing the held up Special Saving Certificates, and also for suitable action against the Customs for maladministration---Customs had contended that refund claim of the complainant could not be allowed and certificates could not be released to him as Customs had filed reference in the High Court---Reference application was filed by the Customs a day before filing complaint by the complainant---No order had been passed by the High Court about suspension or stay of order of Appellate Tribunal; Department itself had not filed any such application---Pendency of reference application would have no bearing on the investigation by Federal Tax Ombudsman on the complaint filed on the issues restricted to maladministration only---Order/judgment of Tribunal which had attained finality, was to be implemented, unless same was stayed or suspended---Withholding of amount in absence of any order to withhold refund of Special Saving Certificates, would constitutemaladministration---Refusalbythe Customstoimplementthe judgment of the Appellate Tribunal on sole ground of filing of Customs Reference before High Court, was unreasonable and invalid---Such act of the customs would tantamount to maladminsitration---Recommendations were made to Federal Board of Revenue to return the Special Saving Certificates to the complainant within the 15 days; to fix responsibility of maladministration in illegally withholding of said certificates and proceed against those found responsible under the relevantDisciplinaryRulesandtoreport compliance within 30 days.
2005 PTD 1825; 2007 CLC 304 and 2008 PTD 1921 ref.
Justice (Retd.) M. Nadir Khan, Advisor, Dealing Officer.
Malik Ehsan Mehmood, Authorized Representative.
Syed Fawad Ali Shah, Deputy Collector Customs, Departmental Representative.
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---The complainant has invoked the jurisdiction of this office for redressal of their grievance and action against the respondents/ officers of the department involved in maladministration.
2.It is alleged that the complainant imported machinery, raw materials, components and sub-components for installation of plant for manufacturing of Hydrogen Peroxide. He claimed benefit of S.R.O. 565(I)/2006 dated 6-5-2006, which was refused by the Customs on the ground that same was available only to those importers who were in the business of manufacturing and supplying chemical plants for the export sector and not to those engaged in setting up of such plants for local market. The Customs issued Demand Notice dated 26-11-2008 to the complainant for payment of customs duty and taxes amounting to Rs.1,88,09,059. The complainant challenged the Demand Notice by filing of Constitutional Petition (CP) No. D-2424/2008 before the Hon'bleHighCourtofSindhwhichwasdisposed of by order dated 30-1-2009 directing the complainant to deposit the amount which was invested in Special Saving Certificates (SSCs). The certificates were not to be released to the Customs till disposal of first appeal or 15th June, 2009, whichever was earlier. The complainant was also directed to file his objections before Customs who were required to passed a speaking order within one month but not later than 21-3-2009 and the complainant, without waiting for the period of limitation, was directedto file appeal as soon as possible and try to get it disposed of latest by 15-5-2009.
3.As per direction of the Hon'ble High Court, the Complainant filed objections before the Collector of Sales Tax, Faisalabad, which he dismissed vide order dated 21-3-2009. The complainant then filed Customs Appeal No.453/LB/09 before the Customs Appellate Tribunal Lahore (Appellate Tribunal). During pendency of the appeal, on the application of the Customs, the Hon'ble High Court of Sindh released the SSCs to Assistant Collector namely Shahid Jan with direction to retain the amount in the shape of Special Saving Certificates till final disposal of the Customs Appeal. The Appellate Tribunal allowed the appeal by a majority view vide order dated 6-8-2009.
4.According to the complainant, the judgment of the Appellate Tribunal was not challenged by the Department within the period specified by Law, and so the order of Appellate Tribunal attained finality. The complainant after the decision of Appellate Tribunal repeatedly approached the Customs for refund of the amount, but to no avail. He alleges that withholding release of scrutiny, after the judgment of the Appellate Tribunal was beyond jurisdiction, perverse, unreason-able, unjust, oppressive, biased, discriminator and amounting to maladministration. He has prayed for issuance of direction to the Customs for releasing the held up SSCs and also for suitable action against them for maladministration.
5.The Customs in response to the notice of the complaint, filed reply/parawise comments wherein it was pleaded that against the order of Appellate Tribunal, Reference Application No.48 of 2010 was filed in the Hon'ble High Court, Lahore. It was also contended that the FTO Office in view of section 9(2)(a) of the FTO Ordinance has no jurisdiction to investigate the matter.
6.The complainant on being confronted with the parawise comments, filed rejoinder contending that mere filing of Reference Application against the judgment of Appellate Tribunal could not operate as bar of jurisdiction to conduct investigation of a complaint involving issue of maladministration. The complainant raising objections on the Reference Application stated that no stay had been granted against the order of the Appellate Tribunal, and so withholding of the SSCs was illegal. In support of his contentions the complainant placed reliance on several Findings/Recommendations of the FTO office, judgments of Hon'ble High Courts and orders passed by the President on Representation filed against the FTO's Findings/Recommendations.
7.After filing of the rejoinder, the parties were afforded opportunity of hearing which was attended by Mr. Malik Ehsan Mehmood, Advocate [AR]. The Department was represented by Syed Fawad Ali Shah, Deputy Collector Customs [DR]. The parties during arguments repeated their earlier averments.
8.On due consideration of the pleadings and documents filed by the parties it is observed that the record is silent about any response made by the Department on the request made by the complainant for refund of the amount. However on filing of the complaint before the Hon'ble FTO, the Department came up with plea that the SSCs were not released as Reference Application was filed in the Hon'ble High Court Lahore.
9.It is observed that the copy of the Reference Application filed by the Department had no date, it only stated the month and year as ("_____May 2010"). Similarly, the certificate issued by the learned Counsel for the Department in the month of June, 2010 did not state the date of filing of the Reference Application. On his request, the DR was provided opportunity to provide documentary evidence about date of filing of the Reference Application which they failed to provide. Of late the Customs submitted a letter by their Advocate to the effect that he filed Customs Reference No.48 of 2010 in the Lahore High Court against the decision of Appellate Tribunal, on 12th May, 2010 i.e. the date on which the complaint was filed in the FTO Office. Meanwhile the worthy Registrar High Court was requested to provide the requisite information. The Registrar supplied copy of set of memo of Reference Application with copy of order dated 8-7-2010 and verbally informed that the Reference Application was filed on 11-5-2010, however the same was under office objection. The matter was placed before the Hon'ble Division Bench on 8-7-2010. The Hon'ble Bench was pleased to issue pre admission notice of the Reference Application to the other side (Complainant) for 14-7-2010 and notice of the application for condonation of delay was also issued.
10.The above narrated facts though reflect that the Reference Application was filed a day before this complaint was filed. However the Reference Application was taken up by the Division Bench on 8-7-2010 and pre admission notice was issued to the complainant. It would be not irrelevant to observe that no order has been passed by the Hon'ble High Court about suspension or stay of order of Appellate Tribunal so much so that the Department did not file application for stay/suspension of order of Appellate Tribunal dated 6-8-2009. Besides the Reference has been filed against the order of the Appellate Tribunal, wherein the issue ofapplicabilityofS.R.O. 565(I)/2006andvalidityoforderdated6-8-2009 passed by Appellate Tribunal are in question.
11.In this complaint the grievance of complainant is about maladministration of Department by withholding of the amount after the decision of Appellate Tribunal which has neither been stayed nor suspended by any competent court of law. Therefore, pendency of Reference Application would have no bearing on the investigation by FTO on the complaint filed on the issue restricted to maladministration only.
12.There can be no cavil to the legal position that order/judgment of competent court/tribunal or board or authority is to be implemented unless the same is stayed or suspended. In said regard reference can be made to series of judgments of Superior Courts as well as Findings/ Decision of this Office. For ready reference reliance can be placed on judgment of the Hon'ble High Court Lahore reported in 2005 PTD 1825, 2007 CLC 304 and Findings/Decision of this office reported in 2008 PTD 1921, wherein it was held that withholding of the amount in absence of any order to withhold refund or return of SSCs, would constitute maladministration. It would not be irrelevant to observe that the Appellate Tribunal passed the impugned order on 6-8-2009 and reference was filed by the Department after more than 9 months without seeking any order for suspension/stay of the order of Appellate Tribunal and the order of Appellate Tribunal is also not being complied. Such attitude on the part of Department being in defiance of the law set by the Superior Courts as well as FTO cannot be termed as just and proper.
Findings:
13.In view of the foregoing discussion, refusal by the Customs to implement the judgment of theAppellate Tribunal on sole ground of filing of Customs Reference before Hon'ble High Court Lahore is found to be unreasonable and invalid. The Departmental officials mis-exercising their powers and authority and in administrative excess have withheld the SSCs which acts tantamount to maladministration as defined in section 2(3) of the FTO Ordinance, 2000.
Recommendations:
14.F.B.R. to -
(i)return the Special Saving Certificates to the complainant within 15 days subject to any order by Hon'ble High Court, Lahore;
(ii)fix responsibility of maladministration in illegal withholding of Special Saving Certificates and proceed against those found responsible under the relevant disciplinary rules; and
(iii)report compliance within 30 days.
H.B.T./116/FTOOrder accordingly.