SERVO MOTOR OIL (PVT.) LTD. VS SECRETARY REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2577 (2016)

Federal Excise Act (VIII of 2005)---

----Ss. 46 & 42B--- Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9 & 10---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Bar on jurisdiction of Federal Tax Ombudsman under S. 9 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Scope---Complaint against order of Commissioner Inland Revenue for audit of complainant under S. 46 of the Federal Excise Act, 2005---Contention of complainant, inter alia, was that its audit could not be ordered and selection for audit could not be initiated by the Commissioner without balloting carried out by the Department under S.42B of the Federal Excise Act, 2005---Validity---Federal Tax Ombudsman observed that the issue of legality of audit ordered by the Commissioner Inland Revenue without selection of audit by the Department through computer ballot involved interpretation of law, and therefore, bar on jurisdiction of Federal Tax Ombudsman under S. 9 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 was applicable---Complaint was rejected in circumstances.

President's Order issued vide No. 71/FTO/2015 dated 1-6-2016 and 2012 PTD 1815 rel.

Muhammad Daud Khan, Advisor for Dealing Officer.

Nemo for the Complainant.

Arslan Bukhari, DCIR for Departmental Representative.

FINDINGS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---The complaint is filed under section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (the Ordinance) against ordering of audit by Commissioner-IR (CIR) under Section 46 of the Federal Excises Act, 2005 (the Act) read with Chapter XIV of the Federal Excise Rules, 2005 (the Rules). The Complainant's plea is that audit could not be ordered by CIR in view of the provisions of section 42B of the Act whereunder only FBR is competent to select the case for audit.

2.The complaint was sent for comments to Secretary, Revenue Division, in terms of Section 10(4) of the Ordinance. In response, the FBR forwarded comments of RTO Multan vide letter dated 24.06.2016 wherein inter alia it has been contended that complaint of the registered person does not fall under the jurisdiction of the Federal Tax Ombudsman, in terms of section 9(2)(b) of the Federal Tax Ombudsman Ordinance, 2000. Reliance is placed upon President of Islamic Republic of Pakistan's order issued vide No.71/FTO/2015 dated 01.06.2016 in the case of M/s Pawar Paper Products, Multan. Moreover, the alleged audit has been selected under section 46(2) of the Federal Excise Act, 2005.

3.The AR has submitted a written note arguing that selection of case for audit purportedly under Section 46 of the Act is to be declared illegal, without lawful authority, and without jurisdiction. It is argued that audit of Complainant's company could not be initiated by the Commissioner under section 46 of the Act without balloting carried out by the FBR under section 42B of the ibid. Reference has been made to criteria laid down in decision of Chen One case reported as 2012 PTD 1815. The intention of legislature to select case for audit through computer ballot on random or parametric basis by FBR is very clear and there should be no discrimination or misuses of powers on this behalf by tax officials.

4.The DR on the other hand claimed that audit was needed to determine correct liability in respect of Complainant's products which are sold both in bulk packing and consumers size packing whereon rate of duty is different. Earlier the issue was raised in connection with the sales tax assessment but the Complainant did not properly comply or answer the queries raised. Therefore the case was selected for audit under section 46 of the Act. There was no maladministration. The matter also pertains to assessment of tax liability and therefore jurisdiction of FTO in the matter is ousted under section 9(2(b) of the Ordinance.

5.The view points of both the parties to the complaint have been examined along with relevant record. The precedent of President's Order issued vide No.71/FTO/2015 dated 01.06.2016 quoted by the deptt. appears applicable in the instant complaint to the extent of interpretation of law. As the issue of legality of audit ordered by CIR under section 46 of the Act in the instant complaint without selection of case by FBR through computer ballot under section 42-B of the Act involves interpretation of law, the bar on FTO's jurisdiction in terms of section 9(2)(b) of the Ordinance appears applicable.

6.The complaint is accordingly rejected on point jurisdiction and case file consigned to the record.

KMZ/94/FTOComplaint rejected.