Endorsing a landmark order of Federal Tax Ombudsman (FTO), the President has made it mandatory for the adjudication authorities to decide cases within the given timeframe under Sales Tax Act, 1990. The Ministry of Law and Justice has further supported FTO's viewpoint that cases would be considered as null and void if not decided within the laid down timeframe by adjudication officers. While rejecting CBR's presentation in a case of Pace International Vs Sales Tax Department, the President observed that if a liability is created against the taxpayer, the public functionary has to decide the case within the prescribed time.
The sales tax department contended that the time limit under section 36(3) ibid of the Sales Tax Act, 1990 was merely directory and not mandatory. The contention does not seem to be valid. Where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory, but where a public functionary is empowered to create liability against a citizen, only within the prescribed timeframe, it becomes mandatory. The FTO's decision must be sustained, the President added.
Tax consultant Faraz Fazal Shaikh of Bin Faraz Law Chamber told Business Recorder on Wednesday that on FTO's order the adjudication authorities have to finalise the case within 45 days, or extended period of 90 days. The case has been declared as null and void because the extended time period of 90 days had expired.
On the basis of this judgement, aggrieved taxpayers can approach the FTO for redressal where adjudication department has not decided the case within the timeframe under section 36(3) ibid of the Sales Tax Act, 1990.
According to details, on June 10, 2002, the complainant received a notice from a sales tax officer, for an amount of Rs 264.687 to be recovered from him, along with additional tax and penalty, on account of wrong claim of import tax, suppressed sales and late filing of return. The officer made the order on May 13, 2003.
The FTO held that the order dated 13.05.2003 was time-barred (during the relevant time ie from 10.06.2002 to 13.05.2003).
SECTION 36(3) OF THE SALES TAX ACT 1990, READS AS FOLLOWS: "The officer of Sales Tax empowered in this behalf shall, after considering the objections of the person served with a notice to show cause under sub-section (1) or sub-section (2), determine the amount of tax or charge payable by him and such person shall pay the amount so determined; provided that order under this section shall be made within [forty five] days of issuance of show cause notice or within such extended period as [an officer of Sales Tax] may for reasons to be recorded in writing, fix, provided (further) that such extended period shall in no case exceed ninety days."
In its presentation to the President, the sales tax department contended that the time limit under section 36(3) ibid was merely directory and not mandatory. But, Ministry of Law and Justice has ordered that the FTO's decision must be sustained.
Accordingly, the President has been pleased to reject the representation of the department.
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