E.M. INDUSTRIES (PVT.) LTD., SIALKOT Versus SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint Nos.651-655/LHR/CUST(35-39)1370-1374 of 2011, decided on 7th February, 2012.

Result: Order accordingly.

Summary

This matter involves five identical complaints filed before the Federal Tax Ombudsman against the withholding of duty draw-back claims by the tax department. The core legal question concerns whether the delay and withholding of undisputed duty draw-back claims and the dishonouring of issued cheques constitute maladministration. The Federal Tax Ombudsman held that the unexplained accumulation of claims and procedural delays amount to maladministration under the relevant statutory provisions. The complaints were disposed of as the complainant expressed satisfaction with the departmental assurances, while recommendations were issued directing the Federal Board of Revenue to ensure timely processing and payment of all pending claims, liquidate the backlog, submit monthly progress reports, and report compliance within thirty days. The court laid down the principle that the unjustified piling up and delay in processing rebate or duty draw-back claims constitutes maladministration under Section 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000.

Questions settled in this judgment

Whether the withholding of duty draw-back claims and delay in processing them amounts to maladministration?
Can the Federal Tax Ombudsman direct the Department to submit monthly progress reports regarding the disposal of rebate claims?

Laws & provisions referred

Section 2(3), Establishment of the Office of Federal Tax Ombudsman Ordinance 2000

duty draw-backrebate claimsmaladministrationFederal Tax Ombudsmantax refund

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).--- Five identical complaints represented by same AR and DR are joined for disposal.

2.The complainants have sought indulgence of the Hon'ble FTO against withholding of their duty draw-back claims. They have filed lists of their duty draw-back claims and prayed that the Department be advised to pay the amount due immediately and not to delay payments in future.

3.In response to the notices of complaints issued to the Secretary, Revenue Division, Islamabad, the Department has filed para wise comments pleading that duty draw-back claims are being paid regularly after thorough scrutiny, verification of documents and observing other legal formalities on first come first served basis. According to the report submitted by the Deptt about status of duty draw-back claims of the complainants, the claims which had come to the top of the queue were sanctioned and rest of the claims being in queue would be sanctioned in their turn.

4.The complainants were supplied copies of para wise comments but they did not opt to file a rejoinder. Parties were afforded opportunities of hearing. The AR at the very outset submitted that a few cheques were issued by the Department but the same had been dishonoured. According to the AR, the duty draw-back claims had been withheld without any justification.

5.The DR explained that due to transfer of Deputy Collector who issued the cheques the bank returned the cheques as the signatures differed. The DR assured that as soon as the dishonoured cheques were retuned, fresh cheques would be issued on the same day. The DR further submitted that it had been agreed between the Department and the Chamber of Commerce that each month about 5,000 duty draw-back claims in the queue would be sanctioned. The DR submitted that due to transfer of two Deputy Collectors some delay occurred in sanctioning of duty draw-back claims, and the pendency rose to about 14,000. However, in last 15 days about 3,000 claims had been sanctioned and all efforts were being made to clear the back-log at the earliest. The DR assured that all pending duty draw-back claims of the complainants would be processed in their turn.

6.The AR in view of submissions made by the DR expressed his satisfaction and did not press the complaints for further action.

Findings:--

7.Despite the Hon'ble FTO's repeated directions for processing and payment of rebate/duty draw-back claims without delay, a large number of claims keep piling up without any just cause, which is tantamount to maladministration as defined under section 2(3) of FTO Ordinance. To resolve the issue on a sustainable basis, the Hon'ble FTO has directed the Department to file monthly progress report about pendency/disposal of rebate/duty draw-back claims.

Recommendations:--

8.FBR to--

(i)direct Collector Customs to ensure timely processing and payment of all pending rebate/ duty draw-back claims:

(ii)submit a consolidated monthly report about pendency, and disposal of rebate/duty drawback claims on the format already circulated to all the Collectorates across Pakistan;

(iii)take adequate steps to liquidate pendency of duty draw back claims on a sustainable basis; and

(iv)report compliance within 30 days.

C.M.A./38/FTO Order accordingly.

Judges on this bench

Dr. Muhammad Shoaib Suddle179 judgments
Federal Tax Ombudsman30 judgments