The Federal Tax Ombudsman, Justice Munir A. Sheikh, in a detailed judgement on the complaint of a cement company, against an order-in-original passed by the Additional Collector (Adjudication), Rawalpindi, has ruled that the tax officials are bound to pass orders, within the time limit, prescribed in the Sales Tax Act, 1990.
The company had filed a complaint that the Collectorate of Sales Tax and Central Excise, Rawalpindi, had issued the complainant a combined show-cause notice, pertaining to sales tax and excise duty for the period April 2000-June 2000.
It argued that, under the relevant Acts, the Collector was required to pass the order within 135 days and 45 days, respectively, of the issuance of show-cause notice, which he did not do, thereby creating sales tax, and central excise liability, along with additional tax and penalty, and also that, even this order was dispatched after expiry of six months.
As against this, the department is stated to have taken the plea that, in exercise of the powers vested under the law they could regulate the system of adjudication, including transfer of cases, and extension of time limit.
However, the FTO observed that the case had, actually, become time barred way back in December 2002 (as per time limitation prescribed under the Central Excise Act), and in second week of March 2003 (as per time limitation prescribed under the Sales Tax Act).
The FTO has also held that "an order passed on the file but not communicated to the affected party within the prescribed time limit or within the extended period of time cannot be treated as having been passed within the prescribed time limit".
Notably, in his judgement, the FTO referred to another complaint involving sales tax liability, in which he had held that "...show-cause notice was issued on 16.06.2002 and order-in-original was passed on 13.05.03 after about 11 months of the issuance of notice which is clearly hit by time limitation as provided in law; "maladministration is established", and therefore, the impugned order be cancelled. He also made a pointed reference to the representation the Central Board of Revenue had made against that decision before the President of Pakistan, who rejected it with the following observations: "The department contends that the time limit under section 36(3), 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 time, it is mandatory.
The FTO's decision must be sustained." Again, pointing out that the Presidential Order had laid down the principle that "where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory", the FTO observed that in the present complaint, the charges against the complainant were framed for infringement of the provisions of both the Sales Tax Act and Central Excise Act, much beyond the prescribed time limits. As such, in the combined order passed in this case, he held that the CBR functionaries had created liabilities both of sales tax, along with additional tax, and central excise duty and penalties, but had failed to pass the order within the prescribed time limits, the ruling in the judicial precedent would apply, not only to sales tax, but also to central excise.
He also observed that the impugned order, as a whole, is hit by time limitation as provided in law, and that the CBR's objection to FTO's jurisdiction to investigate the complaint was misconceived, and that "they have violated the provisions of law, 'maladministration' stands clearly established.
In view of the foregoing position, and FTO's decision in an earlier complaint, as sustained by the Presidential Order, he held that the impugned O-I-O was not sustainable.
It will be recalled that the then Federal Tax Ombudsman, former justice Saleem Akhtar, in his report for the year 2003 to the President, had also invited his attention to frequent representations the Central Board of Revenue kept filing against his orders. It goes without saying that protracted delays, thus caused in the enforcement of FTO orders, could be viewed as being tantamount to delaying justice, hence to its denial.
He had also pointed out that while implementation process remained severely curtailed, the Revenue Division felt free to proceed with the impugned action, thereby viewing the Revenue Board's approach in the matter as "unjust and inequitable." Again, since representations to the President invariably delay its order, the recommendation remains held in abeyance till his decision.
Pointing out that "compliance and monitoring" formed the backbone of the FTO, it revealed that, in respect of both it faced a lot of hurdles, often coming across situations prompting fears that the concerned authority could not be made easily to implement his decisions. Notable, in this regard, was his contention that every order, or finding, in any complaint, was necessitated by inefficiency, dishonesty and maladministration on the part of tax employees.
All in all, the need for removing the hurdles, wherever they may be, in the way of prompt enforcement of the FTO's orders, cannot be denied. It would be in the fitness of the things if the CBR Chairman would look into this matter to ensure that such victimisation and harassment of tax-payers is stopped forthwith and action is taken against officials responsible for loss of revenue because of delayed remedial action.
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