2011 PLP 1553 (PTD)

5. The RTO Karachi was also invited to the hearing to represent their position. They however sent a request for adjournment for one month vide their Letter No.CIR/EC-11/LTU/KHI/2010 dated March 16, 2010. As this letter was issued by them on the date of hearing when all other parties were already present for hearing in the FTO Secretariat, therefore, the request for adjournment could not be acceded to because it would have further delayed the already excessively delayed payment of refund.

6. The complaint has been examined in the light of the written and oral submissions of the parties. It has been observed that the refund claim is pending since 2007 for want of confirmation of non-payment of input adjustment by the Sales Tax authorities of RTO Karachi. Although this confirmation was required under the rules to be issued by the Sales Tax authorities within a month, yet it has taken months upon months and still the requisite confirmation is not forthcoming.

7. The Customs authorities at Airfreight Unit Karachi have also not appropriately pursued the matter with the Sales Tax authorities. The inefficiency and ineptness is clearly discernible from the fact that the first Letter No.52/138/2008-AFU seeking confirmation of input adjustment/refund from the Sales Tax authorities was written on 19-2-2009 i.e. over one year after the Appellate Tribunal's decision [dated 11-12-2007] in favour of the complainants and about eight months from the complainants' letter No.Gold/2k08 dated 7-6-2008. Not only was the time limit of thirty days for confirmation under the aforesaid STGO not heeded to, this matter was also not efficiently followed up by the Customs. Even the reply of Sales Tax received four months later on 11-6-2009 vide Sales Tax Letter No.01/08/Regd/Custom/NOC/05 only confirmed that refund had not been claimed from the Sales Tax authorities, but regarding input adjustment, it advised the Customs to refer the matter to the Assessment and Processing Division of Sales Tax of the RTO Karachi. As a result of this inefficient handling, the refund claim has been inordinately delayed for over two years, which tantamounts to deliberate non-payment of refund already determined by the competent authority i.e. the Appellate Tribunal, and thus constitutes maladministration as defined under clause (v) of the section 2(3) of the FTO Ordinance, 2000.

8. The height of inefficiency of both the Customs and the Sales Tax authorities can also be gauged from the fact that having received a copy of the complaint for comments in December, 2009, neither the Deputy Collector Customs of AFU Karachi responsible for payment of refund in this case showed any anxiety to expedite the settlement of this inordinately delayed refund claim nor the Sales Tax authorities expedited their confirmation in spite of the fact that sufficient time was available to them from the date of the complaint and the last date of hearing in FTO Secretariat. Instead of taking effective action, they have handled the matter in an inefficient and irresponsible manner and also in violation of the time limitation prescribed under the aforesaid SGTO which also constitutes maladministration as defined under section 2(3) of the FTO Ordinance, 2000.

9. In addition to the above, the AR stated that the DR had issued him three unlawful and unnecessary notices of hearing in his office in Karachi as under: (i) S2/138/2008-AFT dated 09-11-2009. (ii) S2/138/2008-AFU dated 16-11-2009. (iii) S2/1398/2008-AFU dated 19-11-2009. The Advocate could attend only once because it was too expensive to travel from Islamabad to Karachi. When asked why the Advocate was called by the DR to appear before him in Karachi, he had no plausible explanation or justification to offer. Findings

10. From the foregoing discussion, it is evident that the refund claim has been inordinately delayed just for want of confirmation of refund and input adjustment by Sales Tax authorities under RTO Karachi. This inordinate delay has also been caused by inefficient handling of the matter by the Customs. This case presents a glaring example of gross inefficiency on the part of the Customs and the Sales Tax authorities of RTO Karachi which constitutes maladministration as defined in section 2(3)(i),(ii) and (v) of the FTO Ordinance, 2000. Recommendations:

11. In view of the above, the following recommendations are made:-- (i) F.B.R. to direct RTO Karachi to verify within 7 days, whether or not the complainants have made any input adjustment in this case. (ii) The Customs at Airfreight Unit, Karachi to decide the case in the light of the of Appellate Tribunal's decision within 7 days from the date of receipt of Sales Tax response about the input adjustment. (iii) Responsibility of non-implementation of Appellate Tribunal's decision dated 11-12-2007 in respect of Sales Tax and violation of time limitation of 30 days prescribed under section STGO No.3 of 2004 dated 12-6-2004 causing inordinate delay in this case be fixed and the Customs and Sales Tax functionaries responsible for maladministration proceeded against under the relevant disciplinary rules; (iv) The Deputy Collector Customs, AFU, Karachi [Mr. Saqif Saeed] responsible for issuing unjustifiable call notices resulting in AR's uncalled for visit to Karachi is hereby called upon to show-cause within 15 days why the expenditure incurred by the AR on travelling, boarding and lodging may not be recovered from him under section 22 of the FTO Ordinance, 2000. He may also indicate if he wishes to be heard in person. (v) A list of similarly delayed cases be prepared and necessary steps put in place to dispose of all such cases within next three months. (vi) Regular and meaningful monitoring of delayed cases be done by Member (Legal) with monthly progress reports submitted to FTO Secretariat; (viii) This complaint be included as a case study in the training module of the Training Directorates under the Revenue Division/F.B.R.

12. Compliance of recommendations at (i) and (ii) above be reported within 21 days and compliance of recommendations at (iii), (v), (vi) and (viii) above be reported within 90 days. H.B.T./136/FTO Order accordingly.