FINDINGS/RECOMMENDATIONS 'ABDUR RAUF CHAUDHRY (FEDERAL TAX OMBUDSMAN).--This complaint was lodged under section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (the Ordinance) against the FBR and the CIR, Multan for suspension of Sales Tax Registration Number .(STRN) and NTN. It was contended that the FBR action for suspension of registration without any show-cause notice (SCN) and without communicating any reason to the complainant constituted maladministration as defined in section 2(3)(ii) of the Ordinance.
2. The complaint was referred for comments to the Secretary, Revenue Division, in terms of section 10(4) of the Ordinance. In response, the FBR vide letter No,1(1270)S(TO-II)/2014 dated 7-11-2014 forwarded the comments of the CCIR/CIR bearing No, 6264 dated 5-11-2014 and No,2658 dated 30- 10-2014 respectively. It was contended that the complainant failed to file sales tax returns in time under section 26 of the Sales Tax Act, 1990 (Act). Therefore, STRN was suspended as per STGO No,03/2004 dated 12-6-2004 amended vide STGO No,35/2012 dated 30-6-2012 read with Section 21(2) of the Act. The registration was suspended due to continuous non-filing of sales tax returns.
Further stated that in para-3 of the complaint the complainant had himself admitted late filing of returns. RTO Multan also informed that as per registration profile, the jurisdiction over, the case of complainant lied with the RTO-II, Karachi.
3. In counter comments, the complainant contended that as per Taxpayer Registration Certificate, the jurisdiction over the case lay with the RTO. Multan. All other facts were the same as narrated in the original complaint. However, the AR submitted copies of citations i,e, PTD 1189/2011 and S.T.A.
619/LB/2014 to strengthen his contention.
4. During hearing, the parties reiterated the averment of their written pleadings. The DR contended that registration was suspended taking into consideration that the complainant deviated from the provisions of Section 26 of the Act and filed sales tax returns late without explaining the cause of delay. No illegal action was taken against the complainant. Controverting this position, the AR stated that the registration was suspended unlawfully as no show-cause notice was issued by the Deptt. He requested that the action of the Dep't., being illegal, unlawful and contradictory to the facts of the case, the Deptt., be directed to restore the sales tax registration of the complainant.
5. The complaint has been examined in the, light of written and oral submissions of the parties and facts available on record. Perusal of the record showed that the Deptt., suspended the status of the registered person without passing written order and also failed to issue show-cause notice to the complainant within 7 days of suspension as required under Sales Tax General Order No,3/2004 read with Sales Tax General Order 35/2012. It was also admitted by the DR during hearing on 18-12- 2014 that no show cause notice, no order or opportunity of being heard was provided to the complainant. The proceedings required under the law were not initiated by the Deptt., hence, the suspension is without any legal authority. Perusal of the Original Taxpayers Registration Certificate issued by the FBR showed that jurisdiction over the case vested with the RTO, Multan. In the citations mentioned above, the Deptt., decisions were vacated by the higher apex courts due to lack of non-fulfillment of legal requirements.
FINDINGS
7. In the instant complaint department failed to issue show-cause notice within 7 days of suspension as required under Sales Tax General Order No,3/2004 read with Sales Tax General Order No,35/2012 which tantamount to maladministration in terms of Section 2(3)(i)(a) of the FTQ Ordinance.
RECOMMENDATION
8. FBR direct the Chief Commissioner to:--
(i) restore registration of the complainant within a week;
(ii) any further action, required to be taken against the complaint, may be taken after affording him proper opportunity of hearing; and
(iii) report compliance within two weeks.