NAZAR HUSSAIN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2016 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 830 (2016)

Sales Tax Act (VII of 1990)---

----Ss. 25, 33(9) 45-A & 72B---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Audit---Non-furnishing of record---Penalty---Opportunity of hearing for the taxpayer---Complainant was selected for audit under S. 72B of the Sales Tax Act, 1990 and per contention of Department after issuing of three notices to complainant, he failed to provide sales tax record for audit and thus violated previsions of S. 25 of the Sales Tax Act, 1990 and therefore, penalty under S. 33(9) of the Sales Tax Act, 1990 was imposed and thereafter assessment was made---Contention of complainant was that notice was issued on 18.03.2015 and assessment was completed on 26.03.2015 and that per Department's own Circular, at least 15 days were required for compliance of the same---Federal Tax Ombudsman observed that passing of assessment order without providing sufficient time to complainant, being against Department's own instructions, tantamount to maladministration under S. 2(3)(i)(a) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended that Department direct concerned Commissioner to revisit the impugned assessment order under S. 45-A of the Sales Tax Act, 1990 and pass fresh order after affording opportunity of hearing to the complainant and considering complainant's viewpoint---Complaint was disposed of, accordingly.

Muhammad Daud Khan, Advisor for Dealing Officer.

Riaz Ahmad Raja, ITP for Authorized Representative.

M. Qaswar Hussain, DCIR for Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, (FEDERAL TAX OMBUDSMAN).---The complaint has been filed under section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (the Ordinance) against imposition of harsh penalty for non-filing without providing sufficient time of hearing.

2.The complaint was sent for comments to Secretary, Revenue Division under Section 10(4) of the Ordinance. In response, the deptt. informed that the contention of the Complainant was not correct on the grounds that the case of Complainant was selected for audit for the tax year 2012-2013 by the Board under Section 72B of the Sales Tax Act, 1990 (the Act). In this regard, first notice was issued by the Commissioner Inland Revenue, Multan Zone, RTO, Multan under Section 25 of the Act vide No.CIR/MN-ZONE/2013-14/280/232 dated 24.10.2014 for production of sales tax record for the period 07/2012 to 06/2013. Second and third notices were issued by the unit in charge vide C.No. AUDIT-02/MN-ZONE/ST/72B-2013/14/2402 dated 24.01.2015 and C.No.2402 dated 17.02.2015. Therefore, three notices were properly issued to the Complainant but he failed to provide the sales tax record for audit, thus violated the provisions of Section 25 of the Act. In view of above, the penalty under Section 33(9) of the Act was imposed. Further that Show Cause notice (SCN) vide C.No.2402 dated 18.03.2015 was served upon the Complainant. The Complainant has not denied the service of the said SCN. It means that the SCN was properly received by the Complainant. In the said notice hearing of the case was fixed 26.03.2015. On due date of hearing, the Complainant neither appeared nor submitted any written reply to the SCN. Besides, no application was received from the Complainant to adjourn the case. Therefore, the case was decided ex-part on the basis of available record.

3.During hearing, the AR complained that the notice was issued on 18.03.2015 and assessment completed on 26.03.2015. He referred to Circular No.07 of 1994 whereby at least 15 clear days are required for compliance. Similarly, according to him penalty of Rs.65,000/- was illegally imposed. If at all it should have been of Rs.5000/- for default of one notice for one month. Extension upto 25.07.2013 for the month of June, 13 had been granted by FBR vide circular issued on 12.07.2013 and return was late by 3 days only. Penalty for 3 days amounted to Rs.300 but the deptt imposed penalty of Rs.1100 for 11 days under section 33(1) of the Act. The AR also filed copies of two orders of FTO wherein it was held that 15 clear days are must for hearing and completion of assessment for default.

4.The DR defended the treatment meted out. He produced copies of two show cause notices. Third notice belongs to CIR office.

Findings:

5.Passing Assessment Order without providing sufficient time to complainant being against FBR instructions tantamounts to maladministration under section 2(3)(i)(a) of the Ordinance.

Recommendations:

6.FBR to direct the concerned Commissioner to---

(i)re-visit the Assessment Order under section 45-A of the Act and pass fresh order

after affording hearing to the Complainant and considering his view point; and

(ii)Report compliance within 30 days.

KMZ/12/FTOOrder accordingly.