FINDINGS/RECOMMENDATIONS ' DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).---This complaint is directed against the Order-in-Original No,41 of 2011 dated 31-5-2011 passed by Assistant Commissioner, Audit Div-II, Zone-II, RTO, Islamabad, alleging that the impugned order is arbitrary, oppressive and has been passed in utter disregard of law and procedure by ignoring reply to the show-cause notice. It has also been contended that the order-in-original has been passed to create a frivolous demand to meet the revenue targets assigned to the F.B.R.
2. The complaint was sent to Secretary, Revenue Division, on 25-6-2011. A reply dated 11-7-2011 signed by Commissioner Inland Revenue, Zone-II, was received through the Second Secretary (TO- II), F.B.R. On 14-7-2011. The complainant also submitted a rejoinder dated 22-7-2011 to the reply from the respondent.
3. During the hearing, the AR contended that the complainant was predominantly engaged in providing and rendering of consultancy and other services to customers, besides occasionally supplying taxable goods under consultancy contracts. The complainant regularly filed Sales Tax returns for each tax period. He also filed Income Tax return for the tax year 2010. The Assistant Commissioner, Inland Revenue, deliberately and wilfully issued a show-cause notice for levy of sales tax on the income derived from providing and rendering of consultancy services which were otherwise not falling in the ambit of the Sales Tax Act, 1990. The complainant submitted a detailed reply along with specimen of invoices for providing consultancy services, but the Assistant Commissioner, Inland Revenue, dismissed the reply without seeking any additional information or providing adequate opportunity of hearing just to create frivolous and arbitrary demand to meet the revenue targets of F.B.R. The AR produced the relevant records and requested that the DR may examine the records before advancing arguments.
4. After thorough examination of the record, the DR stated that the , Department was willing to rectify the order-in-original, in exercise of powers conferred under section 45A of the Sales Tax Act, 1990, provided the complainant supplied photocopies of invoices of consultancy services. The AR agreed to provide the requisite photocopies.
Findings:
5. In view of above stated facts, it is evident that the impugned order-in-original is arbitrary, oppressive, and passed without applying proper care and due diligence, which is tantamount to maladministration under section 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000.
Recommendations:
6. F.B.R. To-
(i) direct the Commissioner, Zone-II, RTO, Islamabad, to call for the record and rectify the impugned order-in-original under section 45A of the Sales Tax Act, 1990;
(ii) issue instructions through a Sales Tax General Order that declarations made in the Income Tax Returns shall not be made basis for assessment of Sales Tax unless the registered person is provided a reasonable opportunity of hearing and the advance income tax withheld duly shown in the Income Tax Return is accounted for; and
(iii) submit compliance report within 30 days.