UROOJ TEXTILES VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2012 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 445 (2011)

Sales Tax Act (VII of 1990)---

---S.45-A---Blacklisting of the company---Complaint against maladministration---Assistant Collector Sales Tax reported to the Collector Sales Tax that complainant had failed to produce Sales Tax record for audit, despite several reminders---Assuming that complainant was involved in issuing fake and flying invoices without physical transfer of goods to facilitate fraudulent refunds, a show-cause notice was issued directing the complainant to attend hearing---Complainant having failed to appear on fixed date and also on subsequent hearings fixed on various dates, he was blacklisted for his failure to attend hearing and produce record for audit---Representative of the complainant stated that manufacturing unit, was shifted to another premises by filing application for such change in the "particulars of registration" on prescribed format and said change of premises was duly allowed by Central Board of Revenue---According to the complainant he being physically available at the new address allowed by the Federal Board of Revenue his blacklisting was unfair and unjust---Show-cause notice and hearing notice were sent to the wrong address---Complainant had no knowledge of the notices issued by the department and he could not avail the right to explain his position---Action taken for blacklisting of the complainant could not be sustained---Complainant had been condemned unheard, and that too because of the fault of the department---Said action was tantamount to maladministration in terms of S.2(3) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue was recommended to re-examine the blacklisting order under S.45-A of the Sales Tax Act, 1990 and decide the case afresh in accordance with law; to pass appropriate orders to enable the complainant to start normal business activities; to take adequate remedial measures to ensure that approved changes in addresses of the complainant were duly reflected in their record and the complainant was not unnecessarily harassedduetotheinefficiencyofthefunctionariesof Revenue Division and to report complainant within 30 days.

Haji Ahmad and Saeed Akhtar, Advisor Dealing Officers.

Hafeez Ahmad, Authorized Representative.

Muhammad Arshad, DCIR Departmental Representative.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---This complaint has been filed alleging maladministration for passing arbitrary and illegal blacklisting order as well as inattention to letters of the complainant.

2.Briefly stated, Assistant Collector Sales Tax reported to the Collector Sales Tax, RTO, Faisalabad, that the registered person had failed to produce sales tax record for audit, despite several reminders. Assuming that the complainant was involved in issuing fake and flying invoices without physical transfer of goods to facilitate fraudulent refunds, a show-cause noticevideC.No.ST.BLC 18508/29159dated8-2-2008 was issued directing thecomplainanttoattendhearingon16-2-2008. The complainant failed to appear on 16-2-2008 and also on subsequenthearingsfixedfor4-3-2008 and 18-3-2008.HewasthereforeblacklistedvideorderC. No. ST-BLC/18508/30204dated28-3-2006 for his failure to attend hearings and produce record foraudit.

3.Thereafter, the Additional Collector issued separate show cause notice for the recovery of alleged evaded amount of sales tax, and Order-in-Original No.10 of 2009 dated 15-8-2009 was also passed. Aggrieved with this treatment, the complainant filed appeal before the Commissioner (Appeals) who set aside the impugned order-in-original vide Order-in-Appeal No.186 of 2010 dated 9-9-2010. The Department filed appeal against the order-in-appeal which is pending before the Appellate Tribunal. As no stay was granted by the Tribunal, the order of Commissioner (Appeals) is still in the field.

4.The complaint was sent to the Revenue Division for comments in terms of section 10(4) of the Establishment of the Office of the FTO Ordinance, 2000. The Chief Commissioner, Regional Tax Office, Faisalabad, in his comments dated 30-7-2011 received through the Revenue Division stated that the complainant was blacklisted as he was not available at the declared premises. Subsequent to the order ofblacklistingdated 28-3-2008,order-in-originalwasalsopassedon15-8-2008. The complainant's appeal against order-in-original had been accepted vide Commissioner (Appeals) order-in-appeal dated 9-9-2010. However, no appeal was filed againsttheorderofblacklistingdated28-3-2008. Whereas the complainant was required to file appeal against that order also. The complainant's request to restore registration on the basis of order-in-appeal therefore cannot be acceded to till the complete record is produced and blacklisting is revoked by the competent authority.

5.According to the AR, the complainant, a manufacturer of fabrics, changed his manufacturing premises from Small Industrial Estate, Sargodha Road, Faisalabad, to 117/JB, Sajjad Industrial Estate, Millat Road, Faisalabad, and applied for change in the particulars of registration on prescribed format on 14-9-2005. The required change was allowed by the Central Board of Revenue vide Letter C.No.26(11)/GST/ CRO/2005 dated 7-12-2006.

6.According to the complainant, he was physically available at the new address allowed by the Federal Board of Revenue, and so the blacklisting was unfair and unjust. It was further contended that blacklisting order was arbitrary as all the notices sent to the wrong address were not served upon the complainant. And as a consequence, he was deprived of the opportunity of hearing.

7.The complainant requested the Department for withdrawal of illegalblacklistingordervidelettersdated 3-11-2010, 9-5-2011and21-6-2011 but to no avail.

8.Both the parties have been heard and record perused. It transpires that show cause and hearing notices were sent to the wrong address during the period from 8-2-2008 to 8-3-2008, whereas the complainant after change in the particulars of registration duly approved by F.B.R. had shifted to the new premises in 2006. The complainant had no knowledge of the notices issued by the Department, and as such could not avail the right to explain his position. Under the circumstances, the action taken for blacklisting cannot be sustained. The complainant had been condemned unheard, and that too because of the fault of the, Department.

Findings:--

9.Action taken for blacklisting of the complainant is tantamountto maladministration in terms of section 2(3) of the FTO Ordinance,2000.

Recommendations:

10.F.B.R. to-

(i)re examinetheblacklistingorderundersection 45AoftheSales Tax Act, 1990, and decide the case afresh, in accordance with law, after providing opportunity of hearing to the complainant;

(ii)pass appropriate orders to enable the complainant to start normal business activities;

(iii)take adequate remedial measures to ensure that approved changes in addresses of taxpayers are duly reflected in their recordsandtaxpayersarenotunnecessarilyharassedduetothe inefficiency of the functionaries of Revenue Division;and

(iv)report compliance within 30 days.

H.B.T./11/FTOOrder accordingly.