NASEEM PLASTIC HOUSE VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2013 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2341 (2013)

Sales Tax Act (VII of 1990)---

----Ss.47, 46 & 21---Suspension of Sales Tax Registration---Appellate Tribunal annulled the order of suspension, and directed to restore the registration---Appellate Tribunal also left it for the Department to proceed in accordance with law after issuing notice to the parties, if sufficient evidence was available that the taxpayer was involved in tax fraud and had adjusted input/output on fake invoices---Tax-payer applied for issuance of order for restoration of registration but to no avail---Revenue contended that Federal Tax Ombudsman had no jurisdiction to inquire into the mattes which were sub-judice before court of competent jurisdiction or Tribunal or Federal Board of Revenue or authority on the date of receipt of complaint; and as Department had filed a Reference before High Court, the implementation of order of Appellate Tribunal was to remain pending till decision by the High Court---Tax-payer contended that no stay, order or suspension order form High Court had been obtained by the Department; nor was there a provision in the Act granting automatic stay during the pendency of a case before a court of competent jurisdiction; and order of the Appellate Tribunal held the field, and the Department had no option other than restoring the registration---Validity---Federal Tax Ombudsman investigated acts of omission or commission of tax employees---Department misconceived that the Federal Tax Ombudsman had no jurisdiction to entertain the present complaint---Federal Tax Ombudsman could direct the Department to implement appellate orders, where no stay or suspension order was issued by a court of competent jurisdiction---Mere filing of appeal in a higher forum did not automatically suspend the judgment of a lower forum---Effect had to be given to the orders of the Appellate Tribunal in the absence of any order, staying the said order by the higher forums---Delay in implementing the order of Appellate Tribunal was tantamount to maladministration---Federal Tax Ombudsman recommended that Federal Board of Revenue to direct the Chief Commissioner to issue appeal effect order and restore the registration, as per law within 21 days.

Order No.14/2007-Law(FTO) dated 31-1-2008 rel.

Haji Ahmad, Advisor Dealing Officer.

Khubaib Ahmad, Authorized Representative.

Dr. Rizwan Siddique, DCIR for Departmental Representative.

FINDINGS/RECOMMENDATIONS

This complaint is filed against delay in issuance of appeal effect order and restoration of registration.

2.Briefly stated, on the allegation that the complainant adjusted input/output tax of Rs.7,742,019 against purchase/sale of blacklisted, suspended and de-registered units, his sales tax registration was, suspended by the Commissioner vide Order No. 50 dated 14-9-2012. Aggrieved with this, the Complainant preferred an appeal. The Appellate Tribunal vide order No. S.T.A. 960/LB/2012 dated 11-12-2012 annulled the order of suspension, and directed the Deptt. to restore the registration. The Tribunal left it for the Deptt. to proceed in accordance with law after issuing notice to the parties, if sufficient evidence was available that the Complainant was involved in tax fraud and had adjusted input / output on fake invoices. After receiving the order of the Appellate Tribunal, the Complainant vide letter dated 22-10-2012 applied to the Commissioner to issue appeal effect order and restore the registration. Reminders dated 27-12-2012, 9-1-2013 and 14-3-2013 were also sent, but to no avail.

3.When confronted, the Deptt. raised preliminary objection that the Hon'ble FTO had no jurisdiction to inquire into the matters which were subjudice before the court of competent jurisdiction or tribunal or board or authority on the date of receipt of complaint. The Deptt. filed a reference before the High Court under section 47 of the Sales Tax Act, 1990 on 8-3-2013. The implementation of the order of the Tribunal was to remain pending till decision by the Lahore High Court.

4.The DR reiterated the written comments. According to him, there was no maladministration involved in the case.

5.According to the AR, no stay, or, order of suspension from the Lahore High Court had been obtained by the Deptt. Nor was there a provision in the Act granting automatic stay during the pendency of a case before a court of competent jurisdiction. The order of the Appellate Tribunal holds the field, and the Deptt. has no option other than giving appeal effect and restoring the registration.

6.Both parties have been heard and record perused. The Hon'ble FTO investigates acts of omission or commission of tax employees. As such, the contention of the Deptt. that the Hon'ble FTO has no jurisdiction to entertain the instant complaint is misconceived.

7.In various similar complaints, the Hon'ble FTO directed the Deptt. to implement appellate orders, where no stay or suspension order was issued by a Court of competent jurisdiction. It is an established legal position that mere filing of appeal in a higher forum does not automatically suspend the judgment of a lower forum. Appeal effect has to be given to the orders of the Appellate Tribunal in the absence of any order, staying the impugned order in the higher forums. The Hon'ble President of Pakistan confirmed this principle vide OrderNo. 14 of 2007-Law (FTO) dated 31-1-2008 in the following words:--

"It is trite rule that the appeal by itself does not have the effect or staying the operation of the order appealed against. Thus, the Customs' appeal before the High Court does not have the effect of staying the operation of the Additional Collector's Order-in-Original No. 194 of 2005 dated 16-5-2005. The FTO's recommendation is in accord with law. It has been decided by the President in numerous cases that the Customs must implement the order of the lower forum unless its operation is stayed by the higher forum. The Customs can delay implementation of such order only during the period prescribed for making the appeal. After the expiration of the limitation for making appeal they should implement the order or obtain stay. This is rule of law. We must respect it."

Findings:

8.The delay in giving appeal effect to the order of the Appellate Tribunal IR is tantamount to maladministration under section 2(3) of the FTO Ordinance.

Recommendations:

9.FBR to direct the Chief Commissioner to-

(i)issue appeal effect order and restore the registration, as per law within 21 days; and

(ii)report compliance within 07 days thereafter.

CMA/151/FTOOrder accordingly.