FINDINGS /DECISION ' JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This is a complaint regarding notices received by the complainant for recovery of Rs,120,000 statedly payable by him on account of licence fee under the Central Excise Rules. The points contained in the complaint are as follows:- . (i) The complainant is a "C" class contractor with WAPDA, Tarbela Dam.
(ii) No contract was obtained by the complainant from 1986 to 2000 and he was not subject to any taxes during this period.
(iii) Licence fee (as per the Central Excise Rules) was also discontinued from the year 1996-97 and in any case, the fee was not payable by 'C' class contractors.
(iv) The complainant has received a notice from the Sales Tax and Central Excise Department regarding attachment of his property.
(v) The notice contains a wrong address and has been delivered to the complainant by an acquaintance.
(vi) The department's action is mala fide and in a similar case the Honourable Federal Tax Ombudsman has already decided the matter in favour of the complainant in that case.
' It has been prayed that the complainant be saved from the illegal actions of the department.
2. According to the respondent's reply, the officials of the Directorate General, Inspection and Internal Audit, Islamabad made out a case against the complainant regarding the recovery of licence fee amounting to Rs,70,000 plus penalty of Rs,50,000 for the period 1990-91 to 1999-2000 in terms of rules 174 and 176 of the Central Excise Rules. The action was statedly taken on the basis of information/list provided by the Income Tax Department. It is further stated that the matter was referred to the concerned adjudicating authority who after issuing proper show-cause notice decided the case vide Order-in-Original No,1 of 2001 dated 31-1-2001 and that the recovery action is based on the said order-in-original. It is stated that if the complainant was aggrieved by the said order-in-original he should have filed an appeal and that the present recovery action is quite in accordance with rule 11 of the Central Excise Rules. It has thus been prayed that the complaint may be rejected.
3. The representatives of the two sides have been heard and it was stated by the complainant that he never received any show-cause notice nor the so-called order-in--original. The representatives of the department could not furnish any evidence regarding the service of show-cause notice or of the order-in-original. In any case, the facts of the case are found to be virtually identical to those in Complaint No,696/2001 decided vide findings/decision dated 6-12-2001. It was admitted by the representative of the respondent that all these cases regarding recovery of licence fee were initiated at the same time and on the same basis. In fact the relevant ex parte order-in-original dated 31-1-2001 deals within no less than 94 cases of so-called licence fees. It is to be noted that the B findings/decision in C.No,696/2001 dealt with a similar situation. In this case it was held that in the light of S.R.O. 422(1)/97 dated 13-6-1997 the complainant was not required to obtain a license w,e,f, 1-7-1997 and thus the department's action for the period 1-7-1997 to 1999-2000 was illegal and without jurisdiction. With regard to the period prior to 1-7-1997 it was observed that the action was purportedly taken under rule 10 of the Central Excise Rules but it was clearly outside the scope of the sub-rules (1) and (2) of the said rule (because of the time limitation of one and three years in the sub-rules). It was further observed that at best the case could fall under sub-rule (3) of Rule 10 (which allows a notice to be issued within 10 years of the relevant date) but factually the said sub- rule was not applicable because this was not a case where any false documents or fraud etc were involved. It was thus found that the demand and action for recovery of licence fee for the period 1- 7-1997 to 30-6-2000 was illegal and without jurisdiction and it was, therefore, recommended that all the actions including notices issued for recovery of licence fee be cancelled.
4. On similar facts of the present case and in the light of the IC findings/decision in Complaint No,696/2001 it is recommended that:--
(i) All actions taken in the case of the complainant with regard to the levy of licence fee including the issue of recovery notices be cancelled and dropped.
(ii) Compliance be reported within 30 days.