2002 PLP 1823 (PTD)

2. The complainant .stated that the Boat Basin Market, known as Night Food Market, dealt mainly in cooked food items, worked for five hours, and employed about 3000 persons. All these shopkeepers could not be termed as restaurant owners as they served food in the cars or on tables placed in the open. They provided better food at low profit. And if tax were levied on the food items, it would have to be borne by the shopkeepers themselves. Sales Tax at 2 % has been levied on turnover up to Rs.25 lakhs and 15% for turnover in‑excess of Rs.25 lakhs. This rate .was not justified. He added that the Sales Tax Department started issuing notices and Inspector Munir Shah and Deputy Superintendent Shahid Jafri made illegal demands under threats of adversely reporting against the shopkeepers.

3. The complainant requested that the small shopkeepers of Boat Basin be exempted from sales tax, spot checking be stopped, and till a decision was taken, stay should be ordered against the Sales Tax Department not to disturb the shopkeepers.

4. C.B.R. forwarded a copy of comments on the complaint furnished by the Collector of Sales Tax (East), Karachi. The Collector stated that the complaint involved a legally tangled issue and contained allegations against two officials of the Collectorate. The complaint related to a well‑known restaurant area of Karachi. Under section 3 of the Sales Tax Act, sales tax was leviable on supply of food items in accordance with the Special Procedure for Supply of Food Rules vide S.R.O. 1039(1)/99. The restaurants in the famous Boat Basin area were advised to get themselves registered with the Sales Tax Department. Shaikh Mansoor, owner of two units in the area, advised the area restaurants against registration. Under his influence a stalemate resulted that no one was willing for registration. Statutory notices were issued to the restaurants but nobody responded. The complainant himself did not file sales tax returns nor paid the tax. The Sales Tax Authorities wrote to the complainant that despite the commitment of the Association and persistent efforts of the Department for eight months the restaurants did not get registered and all efforts to 'implement law had been thwarted.

5. The department did start spot assessment under the documentation of economy drive but the Association refused to cooperate with the drive. Since the restaurants of the Boat Basin refused to get' registered with the department, the question of audit did not arise. The restaurants fell within the definition of manufacturers and exemption could not be granted to them. If the restaurants qualified under section 3A of the Sales Tax Act and the rules made thereunder, they should get enrolled and maintain sales tax record. ‑The Boat Basin Restaurants Welfare Group was constantly resorting to various tactics to gain time and instead of getting registered they were maligning the department.

6. Notices for hearing of the complaint were sent to the complainant, Shaikh Muhammad Mansoor, as well as Collector of Sales Tax (East), Karachi. Mr. Abdul Hameed Memon, Deputy Collector Sales Tax (East) attended the hearing on behalf of the Department but the complainant did not attend.

7. The problems enumerated in the complaint on behalf of the shopkeepers of Boat Basin, Karachi, primarily relate to the policies of the Federal Government to levy general sales tax and the documentation of the economy. In the complaint the President, Boat Basin Shopkeepers Welfare Group, has attacked the policy of the Government and its implementation by the Sales Tax Department which is causing harassment, it is recommended, that: (i) C.B.R. nominate senior officers to hold meeting with the office‑1 bearers of the Complainant's Association and its members to educate them and convince them of the legal obligations and duties. This exercise should be carried out to create awareness in the members of the Boat Basin Shopkeepers Welfare Group and other businessmen of the area. (ii) Survey Forms should be filled in a transparent manner without forcing any person to affix his signature on any document. It may be clarified that signature on Survey Form does not amount to agreement and the assessee is entitled to file objection. Survey team should associate the office‑bearers of the Group and if they do not cooperate endeavor should be made to associate other shopkeepers. (iii) C.B.R. to issue necessary direction to resolve the genuine grievances of the complainant. (iv) Compliance report be submitted within 30 days of the receipt of this decision. C.M.A./M.A.K./253/FTO Order accordingly.