2004 PLP 1296 (PTD)

1. Cheque No. 3162986 Rs. 6,497,191

2. Cheque No.3162087 Rs. 6,500,000 Total: Rs.12,997,191

1. Cheque No.3992501 Rs. 7,781,490

2. Cheque No.3992505 Rs. 5,870,167

3. Cheque No.3992511 Rs. 8,025,716

4. Cheque No.3992510 Rs. 8,000,000

5. Cheque No.3992509 Rs. 8,000,000 Total: Rs.37,677,373

10. However, the Deputy Collector, Refund, Sales Tax, Hub, while sanctioning the refund of sales tax for the tax period of March, 2002 and May, 2002 amounting to Rs.793,381 and Rs.1,526,329 respectively, proceeded to pass an order for adjustment of Rs.1,780,

650. The said amount was alleged to have been unduly refunded and the refund adjustment order, against the refunds sanctioned for the tax periods March and May, 2002, was passed without issuing the mandatory show cause notice.

11. It has, been pleaded that the complainant filed an appeal in terms of section 45(1) of the Sales Tax Act, 1990 with the Collector of Customs (Appeals), Quetta on 16-10-2002. The hearing was fixed for 3-4-2003. During the hearing it was contended that Refund Adjustment Order was passed contrary to law because the Deputy Collector had failed to provide the complainants the material on record and a reasonable opportunity of being heard by issuing the mandatory show cause notice prior to passing/issuing Refund Adjustment Order.

12. It has further been submitted that Collector of Customs (Appeals), instead of confirming, varying, altering, setting aside or annulling the impugned decision in terms of subsection (2) of section 45 of the Sales Tax Act, 1990 (prior to substitution by Finance Ordinance, 2001, proceeded to remand the order for fresh proceedings which is contrary to the provisions of subsection (2A) of section

45. The Collector (Appeals) was supposed to pass such speaking order as he thought fit, instead of remanding the issue to the Deputy Collector. Most of the grounds on which the order was impugned have not been considered in the order in appeal. According to the complainant the order in appeal, therefore, is contrary to law as well as suffers from mistakes apparent from record and warrants recall by the learned Collector for rectifying the mistakes of commission and omission that have inadvertently crept into the said order.

13. The respondent submitted in response to notice under section 10(4) of Ordinance XXXV of 2000 that prior to receiving the letter of Rawalpindi Collectorate the complainant had already obtained a refund claim of Rs.17,80,650 on submitting an undertaking vide his letter, dated 12-3-2002, wherein it was submitted "that in case if the invoices were not verified we (the complainant) undertake all liabilities that may be imposed on us". Accordingly, refund already sanctioned to the complainant for the tax period January, 2002 amounting to Rs.11,80,650 has been recovered from the refund claims filed by the unit for the tax periods March, 2002 and May, 2002 after receiving the intimation that the claim was based on allegedly fake/flying invoices issued by the supplier, Messrs Fatima Enterprises which has been blacklisted due to alleged involvement in issuance of flying invoices.

14. The complainant has contended that the Collector should have decided the appeal himself instead of remanding the case to the Deputy Collector. He has relied on section 45 (2-A). This section 45 was substituted by the Finance Ordinance 2000, which abolished the office of Collector (Appeals). Later by Finance Ordinance 2002 the Office of Collector of (Appeals) has been revived by inserting section 4513. At the time appeal was filed section 4513 was the operation therefore reliance cannot be placed on section 45 (2-A)) The complainant is under misapprehension that appeal was filed under section 45(1). It was filed under section 4513, which held the field. It is pertinent to point out that subsection (3) of section 4513 of the Said Tax Act provides that in deciding the appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration. The Collector has remanded tire case for fresh decision after giving proper opportunity of hearing to the complainant. This is not permissible under law. The order is contrary to law and amounts to mal-administration.

15. The Collector (Appeals) who was present conceded the point and undertook to recall his order to be passed after necessary enquiry in accordance with law.

16. It is recommended that:-- (i) The Collector Sales Tax (Appeals) Quetta to recall the impugned order and after making necessary enquiry and affording' opportunity of hearing to the complainant pass a speaking order in accordance with law. (ii) Compliance be reported within 45 days C.M.A./1035/FTO Order accordingly