Pakistan Case LawSyed TAHIR HAIDER Versus SECRETARY, REVENUE DIVISION, ISLAMABAD
This matter involves a complaint filed by a CNG station owner against the imposition of a penalty for non-filing of a monthly sales tax return, despite being a quarterly filer under the relevant rules. The core legal question was whether the imposition of a penalty and inclusion in the list of non-filers for a period when a return was not legally required on a monthly basis constituted maladministration. The Federal Tax Ombudsman held that penalizing a quarterly filer for failing to file a monthly return, compounded by the failure to serve a show-cause notice and conducting ex parte proceedings, constituted maladministration under the law. The Federal Tax Ombudsman recommended that the Federal Board of Revenue direct the Chief Commissioner to confirm the withdrawal of the penalty, issue a letter of apology to the complainant, and ensure the implementation of a foolproof mechanism by PRAL to prevent such systemic errors, reporting compliance within thirty days. The key principle laid down is that treating a quarterly filer as a default monthly filer without lawful basis and penalizing them without affording an opportunity of hearing amounts to maladministration.
- Whether penalizing a quarterly sales tax filer for not submitting a monthly return constitutes maladministration?
- Does the imposition of a penalty without serving a show-cause notice amount to maladministration under the FTO Ordinance 2000?
- Can the Federal Tax Ombudsman recommend remedial measures and compliance reporting for systemic errors in tax administration?
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.--- The Complainant is running a CNG station. Under the Sales Tax law, he was required to file Sales Tax Return on quarterly basis as per Para 2(d), Chapter V of the Special Procedure Rules, 2007, which he did regularly. Regardless of this, he was included in the list of non-filers and imposed a penalty of Rs.5,000 for non-filing of Sales Tax Return for the month of August, 2009. As he was not required by the law and procedure to file Sales Tax Return on monthly basis, his inclusion in the list of non-filers for August, 2009, and imposing penalty for non-filing was unjustified, illegal and based on mala fide. He accordingly prayed that imposition of penalty under section 33 of the Sales Tax Act, 1990, be declared as null and void. ????????
2.The complaint was referred for comments to the Revenue Division. In his reply, the Chief Commissioner, RTO, Islamabad, admitted the mistake of including the Complainant in the list of non-filers for August, 2009. He informed that he had directed the Commissioner (Enforcement) for re-opening of the case under section 45A of the Sales Tax Act, 1990, for withdrawal of the penalty mistakenly imposed on the Complainant.
3.Hearing of the parties was held in the FTO Secretariat. It transpired during the hearing that there being no mechanism in place to separate the quarterly filers from those required to file the Returns on monthly basis. The AR informed that previously also the Complainant had been included in the list of non-filers for the month of July, 2009. On receipt of show-cause notice the Sales Tax authorities were informed that being a quarterly filer, he was not required' to file Sales Tax Return for the month pf July, 2009 separately. Although the show-cause notice was withdrawn, he was again included in the list of non-filers for August, 2009. However, this time he did not receive any show-cause notice and thus the adjudication was conducted ex parte and the penalty was imposed without providing him any opportunity of heating.
4.The DR admitted that this was a systemic issue which needed to be corrected to save the quarterly filers from avoidable hassle and harassment. He promised that he would make sure that necessary steps were taken to forestall the chances of repetition of such mistakes in the future.
Findings
5.In view of the foregoing discussion, it is evident that there is no fool-proof mechanism to separate monthly non-filers from quarterly non-filers. Non-service of show-cause notice, for which the DR had no plausible explanation, and ex parte clamping of penalty reflect gross neglect, inefficiency, arbitrariness and injustice. These acts of omission and commission evidently tantamount to maladministration under section 2(3)(i) and (ii) of the FTO Ordinance, 2000.
Recommendations
6.F.B.R. to-- ??
H.B.T./115/FTO ????????????????????????????????????????????????????????????????????? ??????????? Order accordingly.
Judges on this bench
- Dr. Muhammad Shoaib Suddle179 judgments
- Federal Tax Ombudsman30 judgments