2004 PLP 1538 (PTD)

5. The complainant informed the Sales Tax officials that since they were not liable to be registered under the Sales Tax Act, 1990, no audit should be conducted. The position was also brought to the knowledge of the Assistant Collector Haripur Circle, through letter, dated 19‑7‑2002.

6. It is further stated that a Notice bearing No.2223, dated 3‑3 -2003 from the Assistant Collector (Adjudication) was received by the complainant on 29‑4‑2003 due to road blockage on account of heavy snowfall in the valley whereby he was required to appear before him on 12‑3‑2003. The complainant immediately responded vide his letter, dated 30‑4‑2003 addressed to Assistant Collector (Adjudication) Collectorate of Sales Tax and Central Excise, Peshawar stating therein that the complainant was not liable to pay sales tax as provided in section 14 of the Sales Tax Act, 1990. However, due to constant pressure from the Sales Tax Department the complainant offered to be registered for turnover tax at the rates of 2% as provided in C.B.R. Circular C. No. 4 (80) STR/98, dated 12‑10‑2002. It is stated that from the aforesaid letter, dated 3‑3‑2003 it was indicated that the complainant had been compulsorily registered by the Sales Tax Department under section 19 of the Act although no such intimation was ever received by them. It is contended that compulsory registration under section 19 of the Sales Tax Act, 1990 could be made if non‑compliance of the provisions of section 14 of the aforesaid Act was established.

7. The complainants have prayed for issuance of instructions to the department for cancellation of compulsory registration under section 19 of the Sales Tax Act, 1990. It is also prayed that the sales tax officials be directed not to visit necessarily the hotel of the complainant, as it hampers his seasonable business activities. It is further requested that the Sales Tax Department be asked to register him for turnover tax in accordance with the standing instructions of the C.B.R.

8. The respondents have stated that the notice, dated 25‑8‑2000 was issued in pursuance of the following instructions of C.B.R contained in a Fax message, dated 1st July, 2000: "(a) update the list of Central Excise Licensees in respect of these services and intimate them to file applications for registration under section 14 of the Sales Tax Act, 1990 so that they are registered w.e.f. 1‑7‑2000; (b) they should be advised to; (i) issue invoices with immediate effect for all the services provided by them under section 23 of the Act and charge sales tax @ 15 % of the value of supply as provided in section 2(46); (ii) maintain the records required under section 22 of the Act; and (iii) file Sales Tax Return under section 26 of the Act for each tax period commencing from 1‑7‑2000 periodically and as such their first returns will be due by 15th August, 2000. In all events you must ensure that the persons engaged in rendering taxable services are provided with ample guidance ‑on all matters including mode and manner of payment of tax and they should be apprised of their statutory responsibilities under various provisions of the Sales Tax Act, 1990. Respective associations of various services should also be contacted and each Collectorate should designate an officer not below the rank of an Assistant Collector exclusively for guiding and monitoring the service sector. For smooth transition from excise mode to sales tax mode, please ensure timely registration, swift redressal of problems faced by such persons and prompt response to the queries."

9. It is further stated that the complainant being private limited company was not entitled for enrolment under section 3A of the Act. It is pleaded that relevant rules and regulations were followed and the registration of the complainant under section 19 was in accordance with law. It is prayed that the complaint being devoid of any merit may be dismissed.

10. The case has been discussed with the above cited representatives of the complainant and the department. The records of the case produced by the DR have also been examined. The AR of the complainant has also filed rejoinder on the parawise comments of the respondents. It is stated by the complainant's AR that his letter, dated 30‑8‑2000 was sent through courier service and if the same was not placed on the relevant file, the complainant was not to be held responsible for that. He has produced photocopy of receipt issued by the courier service, dated 30‑8‑2000. The AR has argued that the department neither provided registration certificate nor ever explained the legality of such registration in response to complainant's letter, dated 30‑8‑2000. In such circumstances the audit by the sales tax official, was considered patently arbitrary and illegal. The complainants have, however, no objection to any process or audit by the Sales Tax Department if it is lawfully carried out. He has further pleaded that since the registration of the complainant was without any basis or lawful authority, the show‑cause notice issued for filing the return was also illegal. He has reiterated that compulsory registration under section 19 read with section 14 was made in clear violation of the relevant provision as the complainant did not fall within annual turnover prescribed under the law for this purpose. The complainant, however, never received any intimation from the department regarding illegal registration under section 19 of the Act.

11. The departmental representative pleaded that the complainant being a limited company could not avail the benefit of turnover tax under section 3A of the Sales Tax Act, 1990 and therefore, he was required to be registered under the standard sales tax regime. He has further argued that since the complainant refused to cooperate with the audit team, the factual position could not be ascertained. The complainant's AR controverted the aforesaid observation of the DR and stated that no audit team ever visited the business premises of the complainant before the compulsory registration under section

19. He however, conceded that his client was not entitled to avail the benefit of turnover tax, and therefore, he may be allowed to withdraw the request of the complainant in this regard.

12. The perusal of Central Board of Revenue letter, dated 1st July, 2000 supra clearly indicates that the field officers were required to up date the list of Central Excise Licensees and had to advise them to file application for registration under section 14 of the Sales Tax Act, 1990 so that they could be registered w.e.f 1‑7‑2000. In para. 3 of the said letter it was also made clear that the instructions were with reference to persons who were engaged in rendering taxable services. It is established that the C.B.R. never directed the field officers to compulsorily register all the Central Excise Licensees under section 19 of the Sales Tax Act, 1990. The Central Excise Licensees had to apply for registration under section 14 of the Sales Tax Act, 1990. The complainant in his letter, dated 30th August, 2000 had emphasized that he was not liable to be registered under section 14 as he did not fall in any of the category envisaged in the aforesaid section. The departmental representative has also failed to furnish a copy of the order whereby the complainant was compulsorily registered under section 19 of the Sales Tax Act, 1990. The complainant's allegation that no registration order has so far been received from the Sales Tax Department has also been established. It was imperative on the part of the sales tax officers to place evidence on record that the complainant was liable to be registered under section 14 before registering him under section 19 of the Sales Tax Act, 1990. The maladministration is established and it is therefore, recommended as under:‑‑ (i) The Collector to cancel the registration under the proviso of section 19 and direct the Assistant Collector to decide the case afresh after making proper enquiries and providing opportunity to the complainant to present his case. (ii) The compliance be made within 30 days of the receipt of this order and reported within a week thereafter. C.M.A./1026/FTO Order accordingly.