MUMTAZ GHANI TEXTILE (PVT.) LTD., FAISALABAD VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2014 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1340 (2014)

Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 9 & 10(3)---Complaint regarding delay by Appellate Tribunal in deciding refund claim after matter was remanded for fresh adjudication, despite directive of Appellate Tribunal---Contention of Department was that complaint was not within the period of limitation provided under S. 10(3) of Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Validity---Department appeared to have slept over the case for over three and half years till the time the present complaint was filed---Department issued first ever notice to complainant three years after case was remanded for fresh adjudication, which constituted maladministration of a serious nature---Such neglect became even more serious in view of the fact that the complainant had furnished complete record two years ago---Departments' contention that the complaint was time barred as per limitation provided under S. 10(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 was misconceived as the complainant had been pursuing the Tribunal's' directive through repeated reminders and reckoned form the date of last reminder sent by complainant, the complaint was well within time----Federal Tax Ombudsman recommended to the Federal Board of Revenue to direct the adjudicating officer to decide the matter within 21 days and issue refund due, as per law, if established after adjudication, within 15 days thereafter, and report compliance within 15 days thereafter.

Umar Farooq, Advisor Dealing Officer.

Khubaib Ahmad, Authorized Representative.

Iftikhar Masood Khan, DCIR Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---The complaint was filed alleging excessive delay in deciding refund claim in violation of the directive of the Appellate Tribunal, Lahore Bench dated 26 May, 2010.

2.The complaint was referred for comments to the Secretary, Revenue Division, in terms of section 10(4) of the FTO Ordinance, 2000 (the Ordinance). In response, the Deptt furnished parawise comments raising a preliminary objection of time limitation in terms of section 10(3) of the Ordinance. Besides, delay in deciding the case was attributed to failure of the Complainant to furnish requisite record.

3.During hearing, the AR stated that the complainant had claimed refund of input tax in connection with zero-rated supplies for the period February 2004. This claim was not accepted by the Deptt. and a show-cause notice was issued in 2007 against the import invoices of Messrs Jay Textile Mills (Pvt.) involving Sales Tax of Rs.581874. The refund claim was subsequently rejected vide Order-in-Original No.1773/2007 dated 4 June, 2007. The Collector Appeals vide Order-in-Appeal No.705/2008 dated 27 December, 2007 rejected first appeal of the complainant. The complainant filed second appeal before the Appellate Tribunal which, on 26 May, 2010 set aside the aforesaid Order-in-Original and Order-in-Appeal with the directions to the original adjudicating authority to pass a fresh order in accordance with law after affording reasonable opportunity of hearing to the assessee, and allow the refund claim of the assessee, or give specific reasons for not allowing the same. However, the concerned adjudicating authority had neither provided the complainant opportunity of hearing nor decided the case despite a lapse of over three and a half years and numerous reminders.

4.Responding to the averments of the AR, the DR stated that the case was pending adjudication for non submission of relevant record. The RTO, vide letter dated 12 December, 2013, asked the complainant to provide the relevant record for disposal of the case which was not done by the complainant. In absence of the requisite record, adjudication process could not be initiated. Besides, the complainant had claimed refund on the invoices of Messrs Jay Textile Mills (Pvt.) Peshawar, which was blacklisted on 29 April, 2008. Moreover, the case was sub-judice at the time when complaint was filed. Therefore, the complaint was inadmissible in terms of section 9(2)(a) of the Ordinance.

5.The complaint has been examined in the light of written and oral submissions of the parties. There is no dispute that the Appellate Tribunal, Lahore Bench had vacated the Order-in-Appeal and set aside the Order-in-Appeal and remanded the case on 26 May, 2010 with the direction to pass fresh order in accordance with law after affording reasonable opportunity of being heard to the assessee and to allow the refund of the assessee or to give specific reasons for not allowing the same. The Deptt. appears to have slept over this case for over three and a half years till the time the complaint was filed on 10 December, 2013. It is disturbing to note that the Deptt. issued first ever notice to the complainant on 27 December, 2013 in a case remanded for fresh adjudication in May, 2010. Inaction of the Deptt. for over three and a half years constitutes maladministration of a serious nature. The neglect involved in this case became more serious in view of the fact that the complainant had furnished complete record in 2011 and the requisite record was again deposited by the complainant in response to the Deptt's notice dated 27 December, 2013. Whereas, the DR could not deny furnishing of record in 2011, he admitted that the requisite record had been received on 31 December, 2013.

6.These facts confirm that the Deptt. had neglected the Tribunal's directive since May, 2010 despite numerous reminders by the complainant. The contention of the Deptt. that the matter was pending for supply of requisite record by the complainant is not maintainable as the Deptt. had never asked the complainant to furnish the same during three and a half year period intervening the date of the Tribunal's judgment and the date of filing the instant complaint.

7.The Deptt's preliminary objection regarding expiry of time limitation under section 10(3) of the FTO Ordinance has been considered and found to be misconceived. The complainant had been pursuing implementation of the Tribunal's directive through repeated reminders. The complaint was filed before the FTO when reminders were ignored. Reckoned from the date of the last reminder sent to the Deptt. on 5 December, 2013, the complaint filed before the FTO on 10 December, 2013, was, therefore, well within time.

8.As regards the objection that the matter was sub-judice before the adjudicating officer after remand by the Tribunal and hence it fell outside the FTO jurisdiction as per provisions of section 9(2)(a) of the FTO Ordinance. This contention of the Deptt. is also misconceived. If a tax functionary is committing maladministration by neglecting the Tribunal's directive to re-adjudicate the case, not by days or weeks but by years altogether, complaint of maladministration as defined by section 2(3)(ii) of the FTO Ordinance, 2013 against such delays is competent.

9.As for the complainant's claim for compensation, it would arise if the adjudication authority decides the claim in favour of the complainant. As such a decision is still pending, the compensation claim is premature.

Findings:

10.Neglect and delay involved in implementing the Tribunal's directive since 26 May, 2010, constitutes maladministration in terms of section 2(3)(ii) of the Ordinance. Besides, failure of the Deptt. to acknowledge receipt of the complainant's reminders constitutes violation of the FBRs' Standing Order No.6(23)Coord/2011 dated 3 March, 2011 urging acknowledgment of public correspondence.

Recommendations:--

11.The FBR to direct:--

(i)the adjudicating officer to decide the case within 21 days;

(ii)to issue refund due, as per law, if established after adjudication, within 15 days thereafter; and

(iii)report compliance within 15 days thereafter.

KMZ/56/FTOOrder accordingly.