Superintendent of Sales Tax cannot issue notice for recovery as the law says no body below the rank of Assistant Collector can do so.
The Federal Tax Ombudsman, Justice Saleem Akhtar (Retd) has emphasised this point of law. He also noted that notice of recovery can be sent only after the expiry of one month of the decision, but the superintendent had sent the recovery notice just four days after the order.
The FTO regarded this an act of harassment and has asked the Collector Sales Tax to take action against the erring tax functionary.
The complaint was made by M/s Zam Zam Textile, Karachi, who submitted that the superintendent of recovery had transgressed his jurisdiction because under the Sales Tax Recovery rules, the recovery officer should not be below the rank of Assistant Collector.
Moreover, the refund claim had been rejected; hence the question of recovery of (unpaid) amount did not arise.
In response, the sales tax department took the plea that the FTO did not have the jurisdiction to examine the case and that the letter was not a recovery notice, but intimation to the party.
During hearing of the complaint, the authorised representative of the complainant pointed out that the recovery notice was issued just four days after the adjudication as against one month allowed by the rules.
The notice had been deliberately issued to by the superintendent without jurisdiction and illegally with a view to harassing the complainant.
The FTO's order states the complainants have submitted a copy of the notice dated 17. 1.2004, not been denied by the DR, although he contended that the notice was in fact issued on 27. 2.2004, but the copy was not shown. Clearly the notice was issued only four days after issue of the adjudication order. It pertained to recovery of Rs 4,883,005/- under section 36 for the erroneously refunded amount and of penalty under section 33(4).
The indecent haste, under which the notice was issued by the Superintendent without authority, clearly portrays ulterior motive with a view to harassing the complainants.
The order further states that the Deputy Collector's argument that the notice was only intimation about the demand raised in the adjudication order is too frivolous to deserve attention.
The action of the Superintendent is contrary to law, departure from established practice without valid reasons; it is perverse, unjust and arbitrary and amounts to exercise of coercive method for tax recovery with ulterior motives.
The complainants have approached this office on account of the manifest maladministration and this office takes a very serious notice of the harassment by the Department and unacceptable defence of the illegal action by the DR before this forum.
This office is the appropriate forum for hearing of such cases of maladministration with a view to taking corrective action and the argument regarding lack of jurisdiction is dismissed as unacceptable.
It is recommended that CBR:
i) Directs the Collector concerned to withdraw the recovery notice within fifteen days,
ii) Issues directive to the Collectors to ensure that such instances of premature and unauthorised notices are not repeated,
iii) Suitable action should be taken against the Superintendent and the senior officers, who authorised him to act illegally in this behalf,
iv) Compliance to be reported within thirty days.