DECISION/FINDINGS JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.-- The complaint has been filed against the order of the Assistant Collector of Sales Tax, Multan, for recovery of penalty and additional tax vide Order-in-Original No. 98 of 1999-2000, dated 22.12.1999. The complainant has termed the order as unlawful and illegal because the amount of sales tax payable Rs. 2,472,771 had already been paid and proof of payment furnished to the Department, It has been alleged that the issue of the order by the Assistant Collector amounts to "maladministration" as defined under Section 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000.
2. The complainant is a cotton Ginner and a 'registered person' with the Sales Tax Department. He stated that sales tax on supply of Cotton Seed was levied with effect from 1.7.1996 which was contested by the cotton ginners. The Assistant Collector, Sales Tax Recovery, Multan, vide letter dated 13.4.1999, called upon the complainant to deposit sales tax amounting to Rs. 2,472,771 in respect of supplies made during the year 1996-97. The complainant made the following payments:- Date Rs.
28.10.19982,01,587 22.4.1999 5,00,000 23.4.1999 10,00,000 24.4.1999 6,00,000 28.4.1999 1,71,184 Total 24,72,771
3. In the meanwhile C.B.R, issued S.R.O. 461 (l)/99, dated 9.4.1999 granting exemption from additional tax under Section 34 and penalties under Section 33 of the Sales Tax Act to, inter alia, the suppliers of taxable goods if the principal amount was paid on or before 31.5.1999. The complainant had paid the amount of sales tax on the above dates and became eligible to the amnesty allowed under the said S.R.O. However, the Assistant Collector passed the order dated 22.12.1999 for recovery of additional tax under Section 33(2)(cc) and penalty under Section 34 of the Sales Tax Act because the party did not provide proof of deposit of sales tax on account of Cotton Seeds Sales for 1996-97. The complainant tried his best to persuade the respondent to withdraw the illegal order but they were adamant to recover the amount illegally adjudged against him. He, therefore, requested that the order be declared illegal and without lawful authority.
4. The Collector, Sales Tax, submitted a short reply to the complaint stating that the Assistant Collector had passed an adjudication order and the complainant had the right to file an appeal.
Since he did not file the appeal, the complaint was not maintainable and be rejected. During the hearing of the complaint, the department did not dispute that the above payments had been made. The Department's Representative did not produce any calculations to support the alleged version of sales tax amounting to Rs. 496,587. The payment of Rs. 201,480 on 28.10.1998, before the issue of the amnesty notification (9.4.1999), had reduced the arrears of sales tax due on 9.4.1999 to Rs.2,271,184, which was paid off as detailed in paragraph 2 above.
5. The department's plea that proof of payment was not furnished is not only unacceptable but highly objectionable. The banks routinely send the Sales Tax Returns/Challans to the Sales Tax Authorities and it is the primary duty of sales tax officials to record the amounts in the revenue statistics as well in the accounts of the taxpayers. It is on record that the proof of payments was duly furnished and attention of the Authorities was drawn to the amnesty from additional tax and penalty on payments made by 31.5.1999.
6. The Order-in-Original dated 22.12.1999 was manifestly unjust and arbitrary as it failed to take into account the payments made and the consequent eligibility for amnesty from additional tax and penalty granted by the C.B.R. Clearly this is a case of maladministration on account of the illegal order passed by the Assistant Collector, It has also been observed that the Collector casually and curtly disposed of the complaint without looking into its merits and offering comments.
7. It is recommended that C.B.R:
(i) in exercise of powers under Section 45-A of the Sales Tax set aside the Order-in-Original dated 22.12.1999 passed by the Assistant Collector;
(ii) direct the Collector to ensure that the sales tax paid by the complainant is properly accounted for;
(iii) warn the Collector for sending an incomplete reply to the complaint; and
(iv) report compliance with him thirty days.