DECISION /FINDINGS Maladministration is alleged in the instant joint complaint on the part of the Deputy Collector (Refund) and the Additional Collector (Refund), Collectorate of Sales Tax (East) Karachi for inattention to refund claim on account of 15% of bid money wrongly collected as Sales Tax on condemned/used vehicles auctioned as under:-- A: AUCTION: AUTHORITY: SERVICES AND GENERAL ADMINISTRATION, GOVERNMENT OF SINDH Description of VehicleModel Date of Auction Sales Tax (Rs,) Highest Bidder
(i) Toyota Crown GH 00091985 3-7-2002 56,250 S. Muhammad Saeed
(ii) Mazda Pickup GS 60531990 4-7-2002 30,150 Farkhanda Jaeen
(iii) Pajero 4 wheels CM 0021 (BD- 0007)1991 31-1-2003 75,750 S.Muhammad Saeed
(iv) Mazda pickup Ex 00151990 31-1-2003 34,950 .....do.....
(v) Suzuk High roof GS 02921990 31-10-2003 10,200 Abdul Lateef B: AUCTION AUTHORITY :P.I.A
(i) Suzuki Mehran U- 39641992 17-7- 200215,450 S. Muhammad Saeed
(ii) Suzuki Khyber S- 22451991 17-7- 200215,840 S. Muhammad Shakeel (iii)Toyota corona AAF 0711985 17-7- 200243,950Farkhanda Jabeen C :AUCTION AUTHORITY :PCSIR
(i) Datsun pickup GA 5004 1984 1-10-2002 24,150S, Muhammad Shakeel
2. Enclosures to the complaint indicate that the first joint application, dated 16-7-2003 for refund of Sales Tax supra was filed in the office of Deputy Commissioner, Sales Tax (Refund) on 28-7-2003 and since then it is alleged that over 100 reminders have been sent beside personal visits to their offices but none has been responded.
3. It is further alleged that GST aggregating Rs.185,790 was wrongly collected from them in spite of the fact that Sindh High Court had already held in Special Sales Tax Appeal No.62 of 2001 filed by the Collector Central Excise and Custom, Central Excise and Sales Tax Appellate Tribunal, Karachi
(West) v. Messrs Novartis Pakistan Limited, Karachi and Customs, Central Excise and Sales Appellate Tribunal, Karachi in the decision, dated 25-9-2001: "The questions of law which have been framed by the appellant in the present appeals are as follows:--
(a) Whether the fixed assets fall within the ambit/definition of goods as envisaged under section 2(12) of Sales Tax Act, 1990?
(b) Whether the disposal of fixed assets as sold by the respondent No.1 falls within the ambit/definition of "Taxable activity" as provided under section 2(35) of Sales Tax Act, 1990?
3. The complainants have averred that while the GST paid under protest in order to avoid forfeiture of bid money paid in advance was refunded by some auctioning authorities, the aforementioned Government and semi Government Department/Organizations demanded exemption certificate from the Sales Tax Department.
4. It is alleged in the complaint that persons having approach or better means are obliged and innocent citizens are ignored by the respondent Department. Complainants have prayed for recommendation to refund the wrongly collected GST.
5. Parawise comments on the complaint have been submitted by the respondent stating that all Government departments were collecting and depositing Sales Tax on the disposal of condemned/surplus vehicles and other stores through auction as per policy/instructions of Central Board of Revenue vide C. No. 4(47) STB/98(PT-I), dated 15-3-2002 prior to Budget Instructions 2003- 2004.
6. Respondent has further averred that new entry No.60 has been added in the sixth, schedule to grant exemption on supply of fixed assets against which the input tax adjustment is not available under a notification issued in terms of clause (b) of subsection (1) of section 8 of the Sales Tax Act, 1990.
7. The respondent has denied the allegation of inattention to refund application of the complainants because the Collectorate of Sales Tax and Central Excise (Enforcement) vide letter C.
No. 1/9/WHC/ Ref-IV/ 2004/3040, dated 29-4-2004, in the response to complainants' application, has already informed the complainants that Sales Tax charged and deposited by the Collecting agency to the Government exchequer is non-refundable in terms of section 3B of Sales Tax Act, 1990. Moreover, it is averred that the Board has already clarified vide its letter No.2(62)STB/97 (Pt-2), dated 17-4-1999 that input tax credit/adjustment is available only if the bidders/buyers are registered with Sales Tax Departipent.
8. Regarding the allegation of failure to follow the ratio of decision of the Sindh High Court ibid it is averred that in Civil Petitions Nos.928-K to 937-K of 2001, on appeal from the judgment, dated 25-9- 2001 of High Court of Sindh, Karachi passed in Special Sales Tax Appeals Nos.52 to 63 of 2001, have been filed by the Collector, Customs, Central Excise and Sales Tax, Hyderabad v. Messrs Sanghar Sugar Mills Limited and 9 others leave to appeal has been granted by Supreme Court on 11-12-2001 to consider the following:-- "(a) Whether with reference to the facts and circumstances of these matters, the definitions of "Goods", "Supply" and "Taxable Activity" as provided under section 2(2), (33) of the Sales interpreted and applied by High Court in these matters?
(b) Whether the fixed assets being movable property fall within the scope of ""Goods" as defined in the aforesaid Act and are taxable? (c) Whether the disposal of fixed assets/goods through sale, lease or through any other means . Of disposition carried out for consideration is taxable supply and is covered by definition of "Taxable Activity"?
9. The respondent has proved that the issue of chargeability of sales tax on goods under reference prior to 1-7-2003 is sub judice in Supreme Court of Pakistan the complainants have failed to cite any precedence where the respondent Department has issued refund in any identical case. The only document that the complainants have submitted is a letter, dated October 1, 2003 issued by Establishment Division of United Bank Limited to certain bidders signed by Head Transport Department, Head Office, Karachi. Relevant extract from the letter is reproduced hereunder: "Sub: REFUND OF GST AMOUNT - AUCTION OF VEHICLES 2000-2001 Dear Sir, This is with regards to the subject auction of vehicles in 2000-2001 in which along with the auctioned amount, 18% GST was also recovered from you. The Government of Pakistan has waived of the recovery of 18% GST amount on sale of old vehicles, hence in the light of decision of Government the Bank has decided to return the 18% GST recovered amount to you.
Please make it convenient to collect the pay slips made in your name of the recovered 18% GST amount after completion of legal formalities from the undersigned during office hours."
However, the complainants have failed to cite any precedence where the respondent Department has issued refund in any identical case.
10. While maladministration alleged on account of inattention to complainant's claims and inordinate delay in responding to application for refund filed on 28-7-2003 till sending a reply on 29-4-2004 is proved and appropriate recommendation is being made hereunder, the prayer on recommendation to issue the refund is found premature.
11 It is recommended:-
(a) that the Collector undertakes. Written counselling of the officer responsible for inattention and delay in responding to the claim filed by the complainants;
(b) that 'the Collector institutes an enquiry to find out the basis and validity of the letter of United Bank Limited quoted supra;
(c) copy of the counseling memo be furnished within 30 days.
(d) Findings of enquiry recommended at item (b) surpa be submitted within 45 days.