MUBASHAR IJAZ AWAN VS FEDERATION OF PAKISTAN
2019 P T D 1
[Lahore High Court]
Before Ayesha A. Malik, J
MUBASHAR IJAZ AWAN
Versus
FEDERATION OF PAKISTAN through President and 6 others
W.P. No.38145 of 2016, heard on 24/10/2018.
Sales Tax Act (VII of 1990)---
----Ss. 45B & 48---Arrears of sales tax, recovery of---Attachment of Bank accounts---Remedy of appeal under S. 45B of the Sales Tax Act, 1990---Association of Persons (AOP) setup as special administrative arrangements---Scope---Petitioner impugned attachment of his Bank account by the Department, in pursuance of recovery of tax liability of an Association of Persons (AOP) , where petitioner was shown as partner, under S. 48 of the Sales Tax Act, 1990---Contention of petitioner, inter alia, was that he was merely an employee of the AOP and was made member of the AOP for administrative reasons as the AOP was made in pursuance of a special department of the Provincial Government ---Contention of Department, inter alia, was that remedy of appeal was available to petitioner under S. 45B of the Sales Tax Act, 1990---Validity----Departmenthadnotdeniedthatthepetitionerwasin fact an employee of the AOP and the assessment order against said AOP had nothing to do with the petitioner---Remedy of appeal under S. 45B of the Sales Tax Act, 1990 was neither effective nor efficacious for the petitioner, and the matter was also argued before the Federal Tax Ombudsman where case of maladministration against Department was made out---High Court directed that Department refund amounts recovered from petitioner's Bank account within a period of twoweeks---Constitutional petition was allowed, accordingly.
Waheed Shahzad Butt for Petitioner.
Nasar Ahmad, DAG for Respondents.
Ms. Foziya Bukhsh for Respondents Nos. 3 and 4.
Mansoor Beg for Respondent No.5.
Date of hearing: 24th October, 2018.
JUDGMENT
AYESHA A. MALIK, J.---Through this petition, the Petitioner has impugned order dated 7.10.2016 passed by Respondent No. 1.
2.The Petitioner is a registered taxpayer with the Federal Board of Revenue ("FBR") is aggrieved by the actions of Respondent No.4 who attached the bank account of the Petitioner maintained at Soneri Bank Limited, Main Branch, Mall Road, Lahore. The money was withdrawn from the account of the Petitioner on the misconception that the Petitioner is the owner/partner of Idara-e-Kissan which is a special project of Punjab Livestock and Dairy Development Department. In terms of the impugned order, the Respondent Department admitted that the Petitioner was a paid employee of Idara-e-Kissan Project and was made a member of the Association of Partnership ("AOP") as a special administrative arrangement and that he was not actual partner for the benefitofthe AOP. Further that he only withdrew his salaryfromIdara-e-Kissan. Instead of recovering sales tax from Idara-e-Kissan, Respondent No.4 attached the bank account of the Petitioner under Section 48 of the Sales Tax Act, 1990 ("Act") without issuing any notice or following due process. The Petitioner challenged these actions before the Federal Tax Ombudsman ("FTO") who ordered in his favour. The Respondents challenged the order of the FTO before the President of Pakistan which is impugned in this Petition. The impugned order set aside the order of the FTO dated 25.3.2016 on the ground that remedy of appeal is available to the Petitioner.
3.Learned counsel for the Petitioner argued that remedy of appeal is not available to the Petitioner because he is neither the owner ofIdara-e-Kissan nor does he figure in the assessment of tax for Idara-e-Kissan. He further argued that Idara-e-Kissan was a joint venture, a special project of Punjab Livestock and Dairy Development Department and the Petitioner was merely an employee of this project and was shown as a partner of the AOP just for administrative reasons. The Respondents without issuing any notice to the Petitioner attached his bank accounts and recovered Rs.403,066/-. Learned counsel argued that the FTO recommended that the amount be refunded to the Petitioner within 10 days' time. However against this/ order, the Respondents filed a representation before the President of Pakistan in terms of Section 32 of the Federal Tax Ombudsman Ordinance, 2000 ("FTO Ordinance"). The matter was heard at length and decided on the question of jurisdiction.
4.Report and parawise comments have been filed on behalf of Respondents Nos.1, 4 and 5. As per the record, the Petitioner was an employee of Idara-e-Kissan earning a salary of Rs.23,000/-. He resigned from Idara-e-Kissan on 15.12.2010. On 1.10.2015 Respondent No.4 issued a letter to Respondent No.5 for attachment of bank account of the Petitioner which is the personal account of the Petitioner. The reason for attachment is an assessment order passed on 27.5.2015 in which Idara-e-Kissan was held liable in the amount of Rs.2,015,323/-. In terms of the report and parawise comments filed, the Respondents have not denied the allegation that no notice was served to the Petitioner. They also not denied the allegation that the Petitioner was in fact an employee ofIdara-e-Kissan who resigned from his post in 2010. These factual contentions have been deliberated upon by the FTO and the President where clear finding on the facts in favour of the Petitioner have been given. Learned counsel for Respondents Nos.3 and 4 argued that in terms of Taxpayer Registration Profile, he has been shown as owner of Idara-e-Kissan. She further submitted that the impugned order is in accordance with law and the remedy of appeal is available to the Petitioner.
5.The question before this Court is whether the Petitioner has remedy available to him under the Act to recover amounts illegally extracted from his personal account. In terms of the Act, against an assessment order, remedy of appeal is available to the taxpayer under Section 45-B of the Act within 30 days. In this case the assessment order is that of Idara-e-Kissan and has nothing to do with the Petitioner. Therefore the remedy under Section 45-B of the Act in the form of an appeal is neither effective nor efficacious for the Petitioner. On the other hand Section 9(1) of the FTO provides for the jurisdiction, functions and powers of the FTO. As per the Section, the FTO may on a complaint by any aggrieved person, or on a reference by the President, the Senate or the National Assembly, as the case may be, or on a motion of the Supreme Court or a High Court proceed on matters by way of investigation into any allegation of maladministration on the part of the Revenue Division or tax employee. Maladministration is defined in Section 2(3) of the FTO Ordinance to include a decision, process, recommendation, act of omission or commission which is contrary to law, rules or regulations or is a departure from established practice or procedure, unless it is bona fide and for valid reasons and includes coercive methods of tax recovery in cases where default in payment of tax or duty is not apparent from the record. The case of the Petitioner as argued is one of maladministration for which the FTO has jurisdiction.
6.In this case, there is admittedly no tax default on the part of the Petitioner and the recovery made against the account of the Petitioner was in fact recovery of amounts owed by Idara-e-Kissan based on the assessment order dated 27.5.2015. The FTO in its order dated 25.3.2016 made the following recommendations:
i)refund the amount recovered from bank account of the Complainant within 10 days; and
ii)report compliant within one week thereafter
The record shows that the Petitioner resigned from his position as Manager Accounts on 15.12.2010 and that he had nothing to do with the Idara-e-Kissan. The Department does not dispute these facts and admits that the Petitioner was never the owner or partner of Idara-eKissan and his name was only placed there for administrative reasons. Therefore the deduction made was against the law.
7.In view of the aforesaid, the instant petition is allowed and impugned order dated 7.10.2016 is set aside. The Respondents are directedtorefund the amounts of the Petitioner recovered fromhisbank account within two weeks time of receipt of certified copy of this order.
KMZ/M-162/LPetition allowe