President General Pervez Musharraf has set aside a representation of the Central Board of Revenue (CBR) against the judgement of Federal Tax Ombudsman (FTO), confirming that the sales tax department is bound to finalise case against the taxpayer within 90 days of the issuance of show cause notice.
The President on Thursday issued an order in favour of M/s Chaudhry Enterprises (case no: 890/2005) against the CBR findings.
According to the order issued by the law, justice and human rights division, the collectorate of sale tax has conducted audit of tax records of the complainant for the period from July 1, 1998 to December 31, 1999. Auditors found certain irregularities during audit proceedings.
On the basis of audit, the relevant taxation officer issued a show cause notice on June 11, 2002 to the complainant, asking why evaded tax should not be recovered. The department had figured out the sales tax liability of Rs 761.482 along with additional tax/penalty on the taxpayer under the notice issued on June 9, 2005.
The taxpayer approached the FTO forum that the taxation officer could not pass the impugned order on June 9, 2005 on the basis of show cause notice of June 11, 2002.
The FTO observed the order was time barred and has recommended the concerned collector shall quash the impugned order under section 45A of the Sales Tax Act, 1990.
Against the order of the FTO, the CBR filed a representation with the President to turn down the judgement of the FTO, the President''s order maintained.
The FTO''s findings are based on the President''s decision on representation in complaint no. 805/2003.
The department concedes the order of June 9, 2005 was passed after expiry of statutory period but contends, in view of the President''s decision on representation in complaints No 335/2002, the order be quashed as recommended by the FTO.
It is regrettable to note the department is relying on the President''s decision (in complaint No 335/2002) which, in fact, does not support it. In the President''s decision on complaint No 805/2003, it has been clearly stated that where an action on the part of the public functionary within the prescribed time is likely to affect the right of a citizen, the prescription of time is deemed directory.
But where the public functionary is empowered to create liability against the citizen within the prescribed time, it is mandatory.
The President''s decision in complaint No 335/2002 pertained to the matter where an action on the part of the public functionary was likely to affect the right of a citizen and not where the public functionary was empowered to create liability. The FTO''s decision, thus, must be sustained. Accordingly, the President has rejected the department''s representation, the order added. On behalf of complainant, Faraz Fazal Sheikh of Bin Faraz Law Chamber pleaded the case, while the departmental representative represented the CBR.
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