2003 PLP 271 (PTD)
TAX BAR ASSOCIATION, FAISALABAD and another Versus SECRETARY, REVENUE DIVISION, ISLAMABAD
| Citation | 2003 PLP 271 (PTD) |
| Forum / Court | Federal Tax Ombudsman |
| Bench Members | Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman |
| Parties | TAX BAR ASSOCIATION, FAISALABAD and another Versus SECRETARY, REVENUE DIVISION, ISLAMABAD |
Q1: What are the key laws and sections cited in 2003 PLP 271 (PTD)?
This judgment primarily cites: statutory provisions as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2003 PLP 271 (PTD)?
The case was heard and decided by the Federal Tax Ombudsman bench comprising: Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2003 PLP 271 (PTD) (TAX BAR ASSOCIATION, FAISALABAD and another Versus SECRETARY, REVENUE DIVISION, ISLAMABAD). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Representation
- M. Abdul Rauf, C.I.T. Special Zones for Respondent.
- MUHAMMAD ASHRAF HASHMI, ADVOCATE, PRESIDENT ALL PAKISTAN
- The complainant in Complaint No. 188 of 2001 is the President of All Pakistan Tax Bar Association (APTBA). The association comprises of Advocates, Chartered Accountants as well as Income Tax Practitioners. All the major Tax Bar Associations of the country right from Peshawar to Karachi are duly enrolled with APTBA as members.
Headnotes / Summary
Income Tax Ordinance (XXXI of 1979)‑‑‑ ‑‑‑‑S. 5‑‑‑Establishment of Officer of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 10(4)‑‑‑Jurisdiction of Income‑tax Authorities‑‑‑Creation of Special Zone in Lahore and Karachi for assessment of cases of Textile and Cement Industries‑ Plea taken was that creation of Special Zones in Lahore and Karachi for the assessment of cases of Textile and Cement Industries was without any justification as it would badly affect the, members of the Bar as well as the taxpayers besides creating inconvenience and hardship in addition to increase in expense as well as wastage of time‑‑‑Further contention was that decision was meant to serve ulterior motives of senior officers either to remain posted at Lahore and Karachi instead of moving out to centers of the industry outside the two aforementioned cities or aspiring to be posted there because they have established their relations with the big business and their children had opportunities to have quality education in those cities‑‑‑Income of nine out of eleven cement units had been assessed by Special Zone, Lahore at net loss‑‑‑Specialists, Assessing Officer have failed to detect that the cement units were showing lower rate of sales to customers who were not registered under Sales Tax Act as compared to the rates at which cement was being sold to registered customers‑‑ Validity‑‑‑Allegation of ulterior motive of senior officers to stay at Lahore and Karachi hardly had any substance on the foregoing facts‑‑ Continuous stay for periods over three years in certain cases at multi‑zonal stations was not unusual particularly in cases of rankers and female officers/staff‑‑‑Besides, none of the allegations had any relevance to the Special Zones set up for the areas falling in Sindh and Balochistan Provinces based at Karachi because the total cases pertaining to mills/factories locate outside Karachi ate 22 only which included five cases of Directors‑‑‑Five companies out of 17 had their Head Officer at Karachi and one out of five Directors, lived in Karachi one having its factory located at Nooriabad‑‑‑Seven out of remaining 12 were located at Kotri and five were located at Hyderabad ‑‑‑Lapses in examination of accounts were not expected even normally‑‑‑Nevertheless, such instances were not enough to deny the benefits of adopting the policy of specialization‑‑‑Comparative improvement reflected by the figures of disposal and . collections submitted by the two zones supported the wisdom of the policy‑‑‑Wisdom of the choice of Lahore as the base of Special Zone for textile and cement industry of Punjab and N.‑W.F.P. was certainly questionable considering the locations of mills/factories and their head offices as reflected from the statement‑‑‑Allegation, on the facts and figures that the obvious choice for locating the base of such a specialized zone had been ignored denying the officials chosen for specialization, the benefit of first hand direct interface with the industry on the one hand and jeopardizing the professional interests of the members of tax bar belonging to the areas where textile and cement industry was located had substance‑‑‑Besides, the representatives of the industry were also not happy with the choice of Lahore as the base for specialized zone for obvious reasons‑‑‑Regarding the written submissions made on behalf of the Revenue Division, merit had been found in the policy of creating ‑specialized cadres to improve standard of audit and assessment based on better understanding of specialized officers handling such cases‑‑‑Decision to choose Lahore as the base of specialized zone for textile and cement industry in Punjab and N.‑W.F.P. were found arbitrary unreasonable, unjust, biased and discriminatory, falling under the definition of maladministration ‑‑‑Federal Tax Ombudsman recommended that Central Board of Revenue review the decision and shift the base to Faisalabad in order to give impetus to specialization policy. Muhammad Ashraf Hashmi for the Complainant.
Judgment & Decree
5 years
14. The CIT Special Zone, Lahore has submitted the following statement reflecting comparative improvement since establishment of the Zone: S. No. Head of payment During March 2002 Upto March, 2002 Upto March, 2001 % age increase
1. Budget 75.000 600.000 591.000 0.000
2. Collection upto the month 47.731 754.086 465.198 0.000
3. Percentage of 63.64 % 125.68 % 78.71 % ERR
5. Out of demand 18.408 196:416 86.278 127.65% (i) Arrears 5.172 86.566 63.740 50.91 % (i) Current 13.236 109.850 22.538 219.01 %
6. With Returns 7.058 525.684 193.485 177.89% (i) Under section 80D 0.431 4.901 15.811 ‑60.15% (ii) Under section (54) 0.638 434.465 43.854 888.4856 (iii) Under section 59D 0.000 0.000 83.658 ‑99.93% (iv) Under section 53 current year 5.989 86.318 50.162 95.04%
7. Deduction Total Under section 50 25.798 260.534 228.327 12.12 %
8. Miscellaneous 0.467 1.834 3.777 ‑60.68%
9. Total (Gross) 51.731 984.648 511.867 88.18%
10. Less (Refunds) 11.152 317.579 84.660 247.70%
11. Income Tax.(net) 40.579 666.889 427.207 56.57%
12. Wealth Tax (net) 0.722 12.255 2.679 152.44%
13. Workers Welfare Fund 6.252 73.358 17.515 162.19%
14. Corporate Assets Tax 0.179 5.434 3.468 65.97% Total Direct Taxes 47.732 754.087 465.198 56.92%
15. Mr. Ashraf Hashmi has added, as a rejoinder to the information submitted by the Commissioner of the Special Zones, that on a closer look, the performance of the specialists is not impressive. He referred to the admitted fact that income of nine out of eleven cement units has been assessed by Special Zone, Lahore at net loss. Mr. Hashmi has submitted that these specialists, however, have failed to detect that the cement units are showing lower rate of sales to customers who are not registered under Sales Tax Act as compared to the rates at which cement is being sold to registered customers. He has cited the example of sales recorded by Lucky Cement Factory vide Invoice No.20754, dated 15‑11‑2001 at Rs.3447.29 per ton to unregistered customer against sale vide Invoice No.20614 of the same date at Rs.3529.59 per ton to a registered customer. These manipulations are being done, according to Mr. Hashmi, to defect the objective of the amendment in law to encourage the purchasers to get themselves registered under Sales Tax Act by prescribing General Sales Tax @ 15% in the case of sales to registered persons and @ 18% in the cases of sale to unregistered persons. Mr. Hashmi has suggested that in this way, the cement units are not only depriving the State of Rs.14.82 per ton on account of Sales Tax and concealing income of Rs.82.30 per ton by such underhand deals but also reducing the incentive for registration.
16. The allegation of ulterior motive of senior officer to stay at Lahore and Karachi hardly has any substance on the foregoing facts. Continuous stay for periods over three years in certain cases at multi -zonal stations is not unusual particularly in cases of rankers and female officers/staff. Besides, none of the allegations has any relevance to the Special Zone set up for the areas falling in Sindh and Balochistan Provinces based at Karachi because the total cases pertaining to mills/factories located outside Karachi are 22 only. These include five cases of Directors. Five companies out of 17 have their head offices at Karachi and one out of five directors, lives in Karachi, one having its factory located at Nooriabad. Seven out of remaining 12 are located at Kotri and five are located at Hyderabad.
17. Lapses in examination of account such as the one pointed out by Mr. Muhammad Ashraf Hashmi are not expected even normally. Nevertheless, such instances are not enough to deny the benefits of adopting the policy of specialization. The comparative improvement reflected by the figures of disposal and collections submitted by the two zones supports the wisdom of the policy.
18. However, wisdom of the choice of Lahore as the base of Special Zone for textile and cement industry of Punjab and N.W.F.P. is certainly questionable considering the locations of mills/factories and their head offices as reflected from the statement (supra). It reflects that 385 units out of total of around 750 units including cement industry are located only at Faisalabad. Besides, following areas and zones as well, are closer to Faisalabad as compared to Lahore. (i) Peshawar Zone and whole N.‑W.F.P; (ii) Rawalpindi Zone; (iii) Sargodha Zone consisting of Mang, T.T. Singh, Bhakkar, Mianwali etc; (iv) Multan Zone consisting of Muzaffargarh, D. G. Khan etc; (v) Bahawalpur Zone consisting of Rahimyar Khan etc; and (vi) Sahiwal Zone. Only Gujranwala and Sialkot Zones having only 10% of the total units in the Special Zone, are comparatively closer to Lahore.
19. Thus there is substance in the allegation, on the fats and figures supra, that the obvious choice for locating the base of such a specialized zone has been ignored denying the officials chosen for specialization, the benefit of first hand direct interface with the industry on the one hand and jeopardizing the professional interests of the members of tax bar belonging to the area where textile and cement industry is located. Besides, the representatives of the industry as well are not happy with the choice of Lahore as the base for specialized zone for obvious reasons.
20. Regarding the written submissions made on behalf of the Revenue Division, merit has been found in the policy of creating specialized cadres to improve standard of audit and assessment based on better understanding of specialized officers handling such cases. However, the decision to choose Lahore as the base of specialized zone for textile and cement industry in Punjab and N.W.F.P. is found arbitrary unreasonable, unjust, biased and discriminatory, falling under the definition of maladministration.
20. It is recommended that Central Board of Revenue review the decision and shift the base to Faisalabad in order to give impetus to specialization policy.
21. Compliance may be reported in 120 days from date of this order. C. M. A./511/FTO Order accordingly.