2021 PLP 2098 (PTD)
MUHAMMAD AZHAR SIDDIQUE Versus The SECRETARY, REVENUE DIVISION, ISLAMABAD
| Citation | 2021 PLP 2098 (PTD) |
| Forum / Court | Federal Tax Ombudsman |
| Bench Members | Dr. Asif Mahmood Jah, Federal Tax Ombudsman |
| Parties | MUHAMMAD AZHAR SIDDIQUE Versus The SECRETARY, REVENUE DIVISION, ISLAMABAD |
| Primary Law | Sales Tax Act (VII of 1990) |
Q1: What are the key laws and sections cited in 2021 PLP 2098 (PTD)?
This judgment primarily cites: Sales Tax Act (VII of 1990) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2021 PLP 2098 (PTD)?
The case was heard and decided by the Federal Tax Ombudsman bench comprising: Dr. Asif Mahmood Jah, Federal Tax Ombudsman.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2021 PLP 2098 (PTD) (MUHAMMAD AZHAR SIDDIQUE Versus The SECRETARY, REVENUE DIVISION, ISLAMABAD). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- ----S.45A---Sales Tax Rules, 2006, R. 6(4) & proviso.---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.10, 9(1) & 2(3)---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Maladministration---Complaint against misuse of statutory powers to compulsorily registered taxpayer under Sales Tax Act, 1990 and for imposition of penalty for non-filing of sales tax returns---Validity---Federal Tax Ombudsman observed that Department in the present case, based its actions on declared turnover of complainant as being above threshold for compulsory registration, but failed to notice that complainant's tax profile mention that his principal activity as service provider / lawyer / advocate and no transaction was declared under column of opening stock, net purchases etc., which established that no activity with respect to sale or supply of goods was involved and therefore action of compulsory registration was not justified---Compulsory registration of a professional lawyer under Sales Tax Act, 1990 was based on wrong application of law and actions of the Department tantamount to "maladministration"---Federal Tax Ombudsman recommended Department to call for record of proceedings under S.45A of Sales Tax Act, 1990 and examine legality and propriety of order for compulsory registration and pass speaking order in terms of proviso to R.6(4) of Sales Tax Rules, 2006 with opportunity of hearing to complainant---Complaint was disposed of, accordingly.
- 2. Precisely, the Complainant alleged that his CNIC was misused by some culprits, with the active connivance of FBR/PRAL functionaries and was compulsorily registered by the Sales Tax Deptt; in the Year 2014, although he neither applied for sales tax registration nor filed any sales tax returns. Upon receipt of notice from the Deptt; to file sales tax returns, for the last six years, the Complainant vide letter dated 18.06.2021, approached the Chief Commissioner-IR, for cancellation of the Sales Tax Registration (STR) and lodging FIR against the real culprits for misuse of his CNIC, after proper investigation. The Deptt; vide letter dated 30.06.2021, intimated that the then Zonal Commissioner-IR, RTO, Lahore vide letter dated 08.09.2014, forwarded the details of various business entities/individuals, including that of the Complainant, who was found to be liable for registration under the law/rules to the Local Registration Office, which was termed by the Complainant as foul play on part of the Deptt; by treating a professional Advocate of the Supreme Court of Pakistan, as a Retailer and filed the instant complaint for directions to the Deptt to:-
- 5. It is observed that the Deptt. utilized the turnover of Rs.9.975 million, declared by the Complainant in his return of income for Tax Year 2013 but failed to notice that his tax profile mentioned his principal activity as "Service/Service Provider/ Lawyer/Advocate/Legal Services", whereas no transaction was declared under the column opening stock, net purchases and closing stock, which establishes that no activity with reference to sale/supply of goods was involved and, thus, action of compulsory registration was not justified and the contention of the Deptt; that the declared turnover is related to sale of goods is misconceived. Evidently, the compulsory registration of a professional lawyer under the Sales Tax Act, 1990 by the Deptt; was based on wrong application of law. Even otherwise, under Rule 175 of the Pakistan Legal Practitioners and Bar Councils Rules, 1976, a lawyer is not allowed to join or carry on any other profession, business, service or vocation. Although, allegation of misuse of CNIC could not be established, however, compulsory registration of the Complainant in the instant case, in view of the legal and factual position discussed supra, reflects a decision, which is contrary to law/rules based on irrelevant grounds, thus, maladministration of the Deptt; is evident.
Headnotes / Summary
S.45A
Sales Tax Rules, 2006, R. 6(4) & proviso.
Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.10, 9(1) & 2(3)
Jurisdiction, functions and powers of the Federal Tax Ombudsman
Complaint against misuse of statutory powers to compulsorily registered taxpayer under Sales Tax Act, 1990 and for imposition of penalty for non-filing of sales tax returns
Federal Tax Ombudsman observed that Department in the present case, based its actions on declared turnover of complainant as being above threshold for compulsory registration, but failed to notice that complainant's tax profile mention that his principal activity as service provider / lawyer / advocate and no transaction was declared under column of opening stock, net purchases etc., which established that no activity with respect to sale or supply of goods was involved and therefore action of compulsory registration was not justified
Compulsory registration of a professional lawyer under Sales Tax Act, 1990 was based on wrong application of law and actions of the Department tantamount to "maladministration"
Federal Tax Ombudsman recommended Department to call for record of proceedings under S.45A of Sales Tax Act, 1990 and examine legality and propriety of order for compulsory registration and pass speaking order in terms of proviso to R.6(4) of Sales Tax Rules, 2006 with opportunity of hearing to complainant
Complaint was disposed of, accordingly. Fazal Yazdani Khan, Advisor Dealing Officer Shahid Ahmad, Advisor Appraisal Officer. Waheed Shahzad Butt for Authorized Representative.
Judgment & Decree
DR. ASIF MAHMOOD JAH, FEDERAL TAX OMBUDSMAN.
The above-mentioned complaint was filed against FBR/PRAL functionaries in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) alleging illegal act, through misuse of powers available under fiscal statutes by registering the Complainant under the sales tax laws and demanding to file sales tax returns and payment of penalty on account of non-filing of returns, since the date of compulsory registration.
2. Precisely, the Complainant alleged that his CNIC was misused by some culprits, with the active connivance of FBR/PRAL functionaries and was compulsorily registered by the Sales Tax Deptt; in the Year 2014, although he neither applied for sales tax registration nor filed any sales tax returns. Upon receipt of notice from the Deptt; to file sales tax returns, for the last six years, the Complainant vide letter dated 18.06.2021, approached the Chief Commissioner-IR, for cancellation of the Sales Tax Registration (STR) and lodging FIR against the real culprits for misuse of his CNIC, after proper investigation. The Deptt; vide letter dated 30.06.2021, intimated that the then Zonal Commissioner-IR, RTO, Lahore vide letter dated 08.09.2014, forwarded the details of various business entities/individuals, including that of the Complainant, who was found to be liable for registration under the law/rules to the Local Registration Office, which was termed by the Complainant as foul play on part of the Deptt; by treating a professional Advocate of the Supreme Court of Pakistan, as a Retailer and filed the instant complaint for directions to the Deptt to:- i) immediately cancel the STR and declare the sales tax notices void ab initio; ii) lodge FIR against the real culprits after properly investigating the matter pertaining to Sales Tax Registration process of taxpayers of Pakistan; and iii) award departmental punishment to those found responsible for criminal negligence.
3. The complaint was referred to the Secretary, Revenue Division, for comments in terms of Section 10(4) of the FTO Ordinance, read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response thereto, the Chief Commissioner-IR, RTO, Lahore forwarded vide letter dated 23.07.2021, para-wise comments of the Commissioner-IR, Zone-IV, RTO, Lahore dated 15.07.2021. It was contended that the net sales of the Complainant declared in return of income for the Tax Year 2013, was above the threshold prescribed under the sales tax law, for registration of retailers, therefore, prescribed notice (STR-6) was issued, which was not complied with by the Complainant and accordingly, he was compulsorily registered. It was averred that the representation dated 18.06.2021, filed by the Complainant before the Chief Commissioner-IR, RTO, Lahore was duly responded to, by the Deptt; vide letter dated 30.06.2021. Further averred that as the Complainant was registered, enforcement measure as per law, was initiated due to non-filing of sales tax returns, while the various citations in the complaint had no nexus with the instant case. Thus, action was taken as per law and no maladministration was committed by the Deptt.
4. Arguments heard and record perused.
5. It is observed that the Deptt. utilized the turnover of Rs.9.975 million, declared by the Complainant in his return of income for Tax Year 2013 but failed to notice that his tax profile mentioned his principal activity as "Service/Service Provider/ Lawyer/Advocate/Legal Services", whereas no transaction was declared under the column opening stock, net purchases and closing stock, which establishes that no activity with reference to sale/supply of goods was involved and, thus, action of compulsory registration was not justified and the contention of the Deptt; that the declared turnover is related to sale of goods is misconceived. Evidently, the compulsory registration of a professional lawyer under the Sales Tax Act, 1990 by the Deptt; was based on wrong application of law. Even otherwise, under Rule 175 of the Pakistan Legal Practitioners and Bar Councils Rules, 1976, a lawyer is not allowed to join or carry on any other profession, business, service or vocation. Although, allegation of misuse of CNIC could not be established, however, compulsory registration of the Complainant in the instant case, in view of the legal and factual position discussed supra, reflects a decision, which is contrary to law/rules based on irrelevant grounds, thus, maladministration of the Deptt; is evident. FINDINGS:-
6. Administrative excesses, incompetence, ineptitude, inefficiency in discharge of duties by compulsory registration of the Complaint without scrutinizing the facts, tantamounts to maladministration, in terms of Section 2(3)(i)(a) and (ii) of the FTO Ordinance. RECOMMENDATIONS:-
7. FBR to direct: (i) the Commissioner-IR, Zone-IV, RTO, Lahore to call for record of proceedings in exercise of powers conferred under Section 45A of the Act and examine "legality and propriety of the order for compulsory registration" and pass a speaking order in terms of Proviso to the Rule 6(4) of the Sales Tax Rules, 2006, after providing opportunity of hearing to the Complainant, as per law; and (ii) report compliance within 45 days. KMZ/79/FTO Order accordingly.