The Federal Tax Ombudsman, Justice Munir A Sheikh, has advised Revenue officials to issue proper, clear and precise show-cause notices to concerned persons/companies etc invoking relevant Sections of Sales Tax Act and get proper receipts of the served notices before taking any further action under the law.
The FTO gave these directions while disposing of a complaint by Ashfaq Traders, of New Anarkali, Lahore, supplier of textile goods to government hospitals/institutions, which was issued show-cause notice by the adjudication authority on 11.05.05 but the Order-in-Original was passed on 30.01.06 after a lapse of 265 days, in violation of law.
The complainant had argued that it did not receive the notice, said to have been issued by Director, Revenue Receipt Audit, dated 13.01.03, calling upon it to supply certain records for conducting audit. However, on receipt of another notice, in January 2004, the complainant submitted, the Revenue Division had already finalised the audit and therefore second audit for the same year could not be conducted.
The complainant replied to the show-cause notice and supplied certain records. The adjudicating authority had also inquired about records relating to financial year 2003-04, whereas the year under consideration was financial year 2002-03.
The complainant said that ignoring its arguments, the AC exercised powers under section 33 (6A) and passed order under section 11 (4) and 36(3) of the Act imposing a penalty of Rs 50,000 after a lapse of more than 180 days and limitation period of 90 days.
In reply, the Collector of Sales Tax, Lahore, submitted that the complainant did not comply with the provisions of Sales Tax law in that it did not provide records for audit for the year 2001-02, as required by a notice dated 13.01.03, followed by reminders dated 16.01.04, 09.02.04 and 20.07.04.
He argued that the complainant deliberately avoided submission of sales tax records for audit, and contravened the provisions of sections 22 (1) and 25(3) of the Act.
After considering arguments of the two sides and examining records of the case, the FTO observed that the Revenue officials could not produce postal receipt under which they claimed to have dispatched the first show-cause notice to the complainant under registered cover.
"The complainant, however, did acknowledge receipt of other three notices dated 16.01.04, 09.02.04 and 20.07.04, but a close scrutiny of the aforesaid notices indicated that none of those provided details of records, nor specified the period for which the records were required for audit." FTO said.
He further observed that the "so-called second notice dated 16.01.04 (reminder) was issued by the Sales Tax Department to the complainant after a period of one year of the issuance of the first notice dated 13.01.03, which was not received by the complainant.
The FTO said that failure to provide records, if requisitioned, attracted penal action under the provisions of section 33 of the Sales Tax Act, 1990, but the O-I-O passed in the case suffers from impropriety in as much as it imposed penalty on the complainant without realising that in the first place the notice dated 13.01.03 was never dispatched, nor received by the complainant, as the department did not possess any concrete evidence to establish that the same was served; and the other notices neither provided any details of records nor indicated the period for which those were required.
He said that the notices dated 16.01.04, 09.02.04 and 20.07.04 were vague and imprecise and the adjudicating officer imposed penalty of Rs 50,000 on the complainant on the basis of incomplete notices without invoking clause (c) of section 33 (6A).
The FTO instructed the Revenue Division to reopen impugned Order-in-Original and annul it. The authority may, however, if so permitted by law and the department policy, issue fresh audit notice giving details of records, specifying therein the time period for which the records are required, asking the complainant to produce the same for conducting audit.
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