President's order set aside: LHC orders FBR to refund amount of Punjab government's ex-employee

Lahore High Court (LHC) has set aside the order passed by the President of Pakistan and defined the term 'maladministration' in terms of Section 2(3) of the Federal Tax Ombudsman Ordinance, 2000, to include a decision, process, recommendation, act of omission or commission which is contrary to law, rules or regulations. The respondents are directed to refund the amount of the petitioner recovered from his bank account within two weeks' time of receipt of certified copy of this order, the LHC ordered.
It is reliably learnt that a former employee of Government of Punjab filed a petition through tax lawyer Waheed Shahzad Butt challenging the FBR's action to recover the tax default amount of the Punjab government, from the bank account of the petitioner denying the relief granted by the FTO by filing representation before the President of Pakistan wherein the LHC held that case of the petitioner is maladministration for which the FTO has jurisdiction and as a result order passed by the President of Pakistan has been set aside with the directions to refund the amount within two weeks.
The LHC order states: "Through this petition, the petitioner has impugned order dated 7.10.2016 passed by Respondent No 1 (President of Pakistan). The petitioner is registered taxpayer with the FBR, is aggrieved by the actions of ACIR 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 The money was withdrawn from the account of the petitioner on the misconception that the petitioner is the owner/partner of Idara-e-Kissan which is a special project of Punjab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 as a special administrative arrangement and that he was not actual partner for the benefit of the AOP. Further that he only withdrew his salary from Idara-e- Kissan.
Instead of recovering sales tax from Idara-e-Kissan, ACIR attached the bank account of the petitioner under Section 48 of the Sales Tax Act, 1990 without issuing any notice or following due process. The petitioner challenged these actions before the 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."
The counsel for the petitioner argued that remedy of appeal is not available to petitioner because he is neither the owner of Idara-e-Kissan nor does he figure in the assessment of tax. 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 respondent without issuing any notice to the petitioner attached his bank accounts and recovered Rs 403,066.00. The counsel argued that the FTO recommended that the amount be refunded to the petitioner within 10 days. However against this order, the respondents filed a representation before the President of Pakistan in terms of Section 32 of the FTO Ordinance, 2000. The matter was heard at length and decided on the question of jurisdiction.
The ACIR issued a letter to bank manager 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 para-wise 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 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.
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 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, function 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 method 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.
In view of the aforesaid, the instant petition is allowed and impugned order dated 07.10.2016 is set aside. The respondents are directed to refund the amount of the petitioner recovered from his bank account within two weeks' time of receipt of certified copy of this order, the LHC ordered.