The Federal Tax Ombudsman (FTO) has ruled that Appellate Tribunals'' judgements are binding on Collectorate of Customs unless their operation is stayed by the competent courts. The FTO gave this ruling on a complaint of the Adam Sugar Mills Ltd, Bahawalnagar.
The complainant was served with a show-cause notice dated 31.01.2006 alleging therein that during audit for the period 07/05, 09/05 and 10/05 the computerised tax profiles and sales tax returns of the complainant were scrutinised, which revealed that the complainant made late payment of sales tax for the aforesaid months and contravened the provision of law and was liable to deposit default surcharge under section 34(1) and face penalty under section 33(5) of the Sales Tax Act, 1990.
The complainant submitted reply to the show-cause notice explaining the circumstances compelling it to make late payment of principal amounts of the sales tax. Without considering its submission the Assistant Collector passed Order-in-Original No 38/RYK/06 dated 26.04.06 directing the complainant to deposit default surcharge of Rs 282,509 and a penalty equal to 5 percent of the principal amount under section 33(5) of the Act.
Aggrieved by the order, the complainant filed an appeal before the Collector of Customs, Sales Tax and Federal Excise (Appeals), which was dismissed.
Dissatisfied with the 0-I-A, the complainant filed appeal before the Customs, Sales Tax, and Federal Excise Appellate Tribunal, which accepted its appeal and set aside the 0-I-A vide judgement dated 31.12.06.
The Tribunal had accepted appeal of the complainant on the ground that it was beyond the control of the complainant to pay tax by due date as the clearance of sugar was stopped by the District and Sessions Judge, the Lahore High Court as well as the Sindh High Court.
As soon as the case was decided by the court in favour of the complainant, the principal amount of the sales tax was deposited before issuance of original show-cause notice.
The Appellate Tribunal had held in some other cases that even if some time non-payment had taken place penal action could not be taken unless it was established that the same was wilful and deliberate and not the result of some procedural lapse.
The Collector did not accept Tribunal''s judgement and directed to make recovery of the amounts adjudged against the complainant. In reply, the Collector of Sales Tax, Multan, submitted that there were some clerical and arithmetical errors in show-cause notice, therefore, a fresh show-cause notice was issued under provisions of section 57 of the Sales Tax Act.
After hearing the two parties, the FTO observed that since the late payment was due to sufficient cause as held by the Tribunal there was no point in issuing a new show-cause notice and deciding the case afresh vide 0-1-0 dated 14.04.07 for the same offence ie late payment of tax for the same period.
He said the collectorate should have realised the spirit of the Tribunal''s order and restrained from issuing fresh show-cause notice and re-deciding the case for the same offence and the same period, which had already been adjudicated upon.
He said the department''s action amounts to double jeopardy resulting in punishing the complainant for the same offence, which had already been adjudicated upon.
He recommended the following that the Revenue Division direct the competent authority to:
(i) Re-open show-cause notice dated 24.02.07 and the Order-in-Original dated 14.04.07 under section 45A of the Sales Tax Act, 1990, and quash them being illegal and void and direct the Collectorate to implement Appellate Tribunal''s order dated 23.12.06 unless the Collectorate has filed an appeal against the aforesaid order of the Tribunal and holds a stay order from the competent court against operation of Tribunal''s judgement.
(ii) Compliance be reported within 30 days of the receipt of this order.
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