2007 PLP 1982 (PTD)

(x) The Complainants have not received any intimation about the inclusion of their names in the list of suspected units and this information had reached them from the Department's reply to the complaint. (xi) Supplies had been made in August and September, 2002 whereas the suppliers were blacklisted in 2003 (without any public notice or information). Complainants had no idea at the time of purchases that they were blacklisted, and, even subsequently, that the Department's action had rendered them ineligible for transaction. (xii) Sales tax authorities have objected to the valuation in their reply to the complaint but notice on this account was sent to them. (xiii) It was the prerogative of the Customs Department to examine the -value under section 25(15) of the Customs Act. The Customs Authorities did not raise objection to the duty drawback claims on the export of the same consignments and evidence has been produced to sales tax authorities that duty drawback was paid by the Customs. (xiv) Collector of Sales Tax's order in April, 2004 for blacklisting of the unit was not sent to it. It did not conform to the provisions of subsection (4) of section 21 of the Sales Tax Act, it had no effect on the refund claims filed in 2002, it was in itself mala fide and of no legal effect. (xv) Complainants were entitled to the refund of zero-rated supplies made more than two years ago which should be paid without any further delay along with compensation for the period the refund was withheld without any notice and any valid reasons whatsoever.

11. The Collector of Sales Tax replied to the complaint as follows:-- (i) The exporter's records for the period 1-7-2002 to 30-6-2003 were audited and it was revealed that the all purchases had been made from 8 suppliers who turned out to be suspected parties, including 4 suppliers relating to this case. This audit was carried out in March, 2004 and the Complainants were declared suspected in April, 2004. (ii) The 4 suppliers relevant to this complaint were declared suspect in September and October, 2003. (iii) It has been stated by the complainants that their-subsequent refund claims were sanctioned and paid. There was some reason due to which their subject claims were deferred although, at this .point in time, the Department was not in a position to give the reason. The present reasons for non-payment are two, namely, the suspect status of the suppliers (October, 2003) and suspect status of the Complainant's (April, 2004).

12. From the submissions made by both the sides it transpires that:-- (i) The purchases from registered units and the goods were exported in August and September, 2002 and the supplier's invoices were verified in November and December, 2002. (ii) Claims for refund of sales--tax on zero-rated supplies along with supportive documents were filed in October, 2002 but processing was deferred. (iii) According to the respondent the suppliers were blacklisted in September and October, 2003 and, because of the Complainants' transactions with suspected suppliers, they too were declared suspected in April, 2004. (iv) Even if the suspected status of the suppliers was notified in October, 2003, it would not influence the transactions which took place in August and September, 2002. (v) Complainants were not notified about their suspect status till receipt of the Respondent's reply to the complaint and the action taken by the Department was entirely arbitrary without observing the due process of law. (vi) Respondent has not given any evidence that the action to defer the refund claims filed in October, 2002 was valid.

13. It is established that the deferment of processing of refund claims filed in October, 2002 is contrary to law, departure from established practice without valid reasons, perverse, arbitrary, unjust, based on irrelevant grounds; it is a case of deliberate withholding of refund. The maladministration against the respondent is established.

14. It is recommended that C.B.R. (i) direct the Collector concerned to process and finalize the refund claims; (ii) pay compensation for the withheld amount under section 67 of the Sales Tax Act; (iii) action in respect of (i) and (ii) be taken without 15 days; and (iv) compliance be reported to this office within thirty days. C.M.A./59/FTO Order accordingly.