Suspension of Sales Tax Registration

2017 PTD 2191 KARACHI-HIGH-COURT-SINDH Judicial Precedent

S. 21(2)Sales Tax Rules, 2006, R. 12(5)Suspension of sales tax registrationGeneral sales tax, collection ofScopeSales tax registration was suspended and extra general sales tax was collectedValidityPetitioner's sales tax registration was suspended on account of non-filing of sales tax returns of various tax yearsPetitioner subsequently filed sales tax returns of the defaulted period with penalty

Department upon receiving sales tax return of the defaulted period recommended the restoration of sales tax registration

Nothing was on record that petitioner challenged suspension of its sales tax registration being illegal before the tax authorities or any other legal forum or court of law

Petitioner had agitated the suspension of sales tax registration after restoration of the same and had demanded the refund of extra general sales tax for the period its sales tax registration remained suspended

Such suspension could not be presumed to be illegal in absence of any order from competent forum

Claim of petitioner was based on allegations of fraud and arbitrariness on the part of department which required scrutiny of controversial facts and examination of evidence

Such exercise could not be undertaken in exercise of constitutional jurisdiction of High Court

Constitutional petition had been filed while bypassing the relevant forum

Constitutional petition was dismissed in limine

Petitioner would be at liberty to seek redressal of its grievance if permissible in law before appropriate forum.

2013 PTD 2341 FEDERAL-TAX-OMBUDSMAN-PAKISTAN Judicial Precedent

Ss.47, 46 & 21Suspension of Sales Tax RegistrationAppellate Tribunal annulled the order of suspension, and directed to restore the registration

Appellate Tribunal also left it for the Department to proceed in accordance with law after issuing notice to the parties, if sufficient evidence was available that the taxpayer was involved in tax fraud and had adjusted input/output on fake invoices

Tax-payer applied for issuance of order for restoration of registration but to no avail

Revenue contended that Federal Tax Ombudsman had no jurisdiction to inquire into the mattes which were sub-judice before court of competent jurisdiction or Tribunal or Federal Board of Revenue or authority on the date of receipt of complaint; and as Department had filed a Reference before High Court, the implementation of order of Appellate Tribunal was to remain pending till decision by the High Court

Tax-payer contended that no stay, order or suspension order form High Court had been obtained by the Department; nor was there a provision in the Act granting automatic stay during the pendency of a case before a court of competent jurisdiction; and order of the Appellate Tribunal held the field, and the Department had no option other than restoring the registration

Validity

Federal Tax Ombudsman investigated acts of omission or commission of tax employees

Department misconceived that the Federal Tax Ombudsman had no jurisdiction to entertain the present complaint

Federal Tax Ombudsman could direct the Department to implement appellate orders, where no stay or suspension order was issued by a court of competent jurisdiction

Mere filing of appeal in a higher forum did not automatically suspend the judgment of a lower forum

Effect had to be given to the orders of the Appellate Tribunal in the absence of any order, staying the said order by the higher forums

Delay in implementing the order of Appellate Tribunal was tantamount to maladministration

Federal Tax Ombudsman recommended that Federal Board of Revenue to direct the Chief Commissioner to issue appeal effect order and restore the registration, as per law within 21 days.