ALI SHAN ENTERPRISES, LAHORE VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2013 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 433 (2012)

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

----S. 10(3)---Complainant---Condonation of delay---Special circum-stance---Theft of the pay order from; the custody of customs department; its encashment by another person; inaction by department; delay and negligence of the Department in circumstances, were certainly special circumstances justifying entertaining of the complaint in the interest of justice---Delay was condoned by the Federal Tax Ombudsman.

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

----S.9---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Objection about matter being sub-judice before the Special Judge was found to be without any substance as no matter about claim of the complainant for release/refund of pay order was sub-judice before any court, forum or authority---Objection was overruled by the Federal Tax Ombudsman.

(c) Customs Act (IV of 1969)---

----S.81---Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Provisional determination of liability---Goods were released provisionally on payment of duty and taxes on declared value---Differential amount was secured through pay order which was required to be released on final determination of value and payment of due amount of duty and taxes---Despite payment of duty and taxes as per final assessment the security/pay order was not released as it was allegedly stolen from the custody of the Department and encashed with the connivance of the officials of the Department---Pay order was in the name of Collector and it could have been credited only to the official/Government account---Registration of First Information Report against theft of the pay order and a departmental inquiry were not enough---Officials involved in the theft, after being suspended for a short term, had been re-instated---No action had been taken for the recovery of the amount of pay order illegally en-cashed---Complainant was entitled to the release of pay order, after payment of due duty and taxes---Department was under legal obligation to return the pay order or refund the amount---Complainant could not be deprived of his legitimate money for the fault of the Department---Inaction, delay, inefficiency and ineptitude in discharge of duties and responsibilities on the part of Department were apparent on the face of record and were tantamount to maladministration---Federal Tax Ombudsman recommended that Federal Board of Revenue direct the Collectorto (i)finalizethedepartmentalinquirywithoutfurtherdelay (ii) take steps, as per law, for the recovery of the defalcated amount and (iii) refund the amount of pay order to the complainant.

M. Nadir Khan, Advisor Dealing Officer.

Ahmed Danish, Authorized Representative.

Muhammad Qasim Khokar, DC and Ali Shah, AC Departmental Representatives.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).---The complainant imported a consignment of blast furnace (metallurgical) coke, 30 to 60 mm. The consignment was released provisionally under section 81 of the Customs Act, 1969 (the Act). Duty and taxes were paid on declared value. For the differential amount a pay order of Rs.2,373,392 was submitted. After theprovisionalassessmentwasfinalizedandthecomplainanthadpaiddue duty and taxes, he requested the Department for release of payorder of Rs.2,373,392. The complainant was informed that the payorder had been encashed through NBP by another agent, Mr. Haroon Ahmed.

2.According to the complainant the pay order was endorsed to the Collector of Customs as per procedure. The complainant pleaded that the Department was requested for refund of amount of security deposit / pay order but no response was received.

3.The Department responded to the notice of complaint issued to the Secretary, Revenue Division, and filed para-wise comments wherein preliminary objections about maintainability of the complaint were raised on the grounds that the matter was sub judice before Special Judge Customs and Taxation, that the complaint was time-barred under section 10(3) of the FTO Ordinance, and that the complainant had no locus standi to file the complaint as the subject pay order was issued on the application of Mr. Haroon Ahmed from his Account No. 111720 ABL, M.A Jinnah Road, Karachi.

4.On merits, the Department resisted the claim of the complainant repeating its objection about locus standi of the complainant to claim release/refund of the pay order issued from the account of Mr. Haroon Ahmed who vide his letter dated 22-12-2008 had categorically stated that he had no intention to claim the amount. The Department prayed that the complaint may be dismissed.

5.The complainant was supplied a copy of para-wise comments but he did not opt to file a rejoinder.

6.The parties were afforded opportunity of hearing on 4-12-2012.

7.During hearing, the AR, reiterating averments of the complaint, submitted that the Department was responsible for safe custody of the pay order. In case of wrongful encashment of pay order the Department was bound to compensate the complainant for loss.

8.The DR supporting the averment of para-wise comments submitted that the cheque was not encashed by the Department and the matter was sub judice in the Court of Special Judge.

9.On query the DR informed that departmental inquiry was conducted against LDC and Appraising Officer (Incharge of Security Section). They were suspended. However, subsequently they were reinstated. The inquiry had not yet been finalized. The DR submitted that no court of law had been approached for recovery of amount of the pay order illegally encashed.

10.The DR was confronted with letter dated 22-12-2008 issued by Mr. Haroon Ahmed to the I.O. with the undertaking that he did not intend to claim the amount from MessrsAli Shan Enterprises. However, he could not support the objection raised about locus standi of the complainant to claim the amount of pay order.

11.The AR on being confronted with the issue of limitation submitted that applications were repeatedly made to the Department, and when no response was received, the complaint was filed before the Hon'ble Federal Tax Ombudsman.

12.Submissions of the parties have been considered in the light of averments of their pleadings and documents available on record. Before going into the merits, the legal objections about maintainability of the complaint need to be addressed.

13.It is an admitted fact that the matter relates to the year 2008 and the complaint has been filed on 18-10-2012. Therefore its maintainability was subject to special circumstances which could be deemed proper in the interest of justice to entertain the complaint by condoning the delay under section 10(3) of the FTO Ordinance. The theft of the pay order from the custody of Customs; its encashment by another person; and inaction, delay and negligence of the Department are certainly special circumstances justifying entertaining of the complaint in the interest of justice. The delay is therefore condoned.

14.The Department's objection about matter being sub judice before the Special Judge on the face of it is found to be without any substance as no matter about claim of the complainant for release/refund of pay order is sub judice before any court, forum or authority, hence the objection is overruled.

15.The admitted feature of the case is that the subject pay order was submitted by the complainant and it was accepted by the Department without any objection. In such view of the matter, the issuance of the pay order on the request of Mr. Haroon Ahmed from his account had no relevance. The letter dated 22-12-2008 of Mr. Haroon Ahmed being relied upon by the Department does not demolish the locus standi of the complainant. Mr. Haroon Ahmed has made it crystal clear that all rights regarding the pay order were of the complainant. The Department has misquoted the letter. The DR on being confronted with the letter could not support the objection of the Department about locus standi of the complainant to claim release/refund of the pay order. The objection being without substance is rejected.

16.Adverting to the merits of the case, it is observed that thegoods of the complainant were released provisionally under section 81 of the Customs Act on payment of duty and taxes on declared value. The differential amount was secured through pay order of Rs.2,373,392 which was required to be released on final determination of value and payment of due amount of duty and taxes. Despite payment of duty and taxes as per final assessment, the security / pay order was not released as it was allegedly stolen from the custody of the Department and encashed with the connivance of the relevant officials of the Department. The pay order was in the name of Collector MCC and it could have beencredited only to the official/Government account. Registration of F.I.R. against theft of the pay order and a departmental inquiry were not enough. In any case, the officials alleged to be involved in the theft, after being suspended for a short term, have been reinstated. No action has been taken for the recovery of the amount of pay order illegally encashed.

17.The complainant was entitled to the release of pay order, after payment of due duty and taxes. The Department was under legal obligation to return the pay order or refund the amount. The complainant could not be deprived of his legitimate money for the fault of the Department. The inaction, delay, inefficiency and ineptitude in discharge of duties and responsibilities on the part of the Department are apparent on the face of record and are tantamount to maladministration under section 2(3) of the FTO Ordinance.

Findings:

18.Maladministration of the Department is established.

Recommendations:

19.FBR to direct the Collector MCC to-

(i)finalize the departmental inquiry without further delay;

(ii)take steps, as per law, for the recovery of the defalcated amount;

(iii)refund the amount of pay order to the complainant; and

(iv)report compliance within 30 days.

CMA/202/FTOOrder accordingly.