ISLAMABAD, Nov 6: Federal Tax Ombudsman (FTO) Justice (Retd) Saleem Akhtar has directed the Central Board of Revenue (CBR) to implement the order of the law secretary by November 16, of refunding the dues to the complainant latest by December 15 next.
The FTO has sought compliance report by December 30, 2001, according to an announcement issued here on Tuesday.
The FTO observed that “it is very unfortunate to recall that the order of the secretary law, justice and human rights division has not been implemented despite a lapse of more than two years and the complainant has lost all avenues for redressal of his grievances not because of lethargy but because of the failure of the relevant authorities to act in the matter at the right time and in the right manner”.
Justice further observed that it was a matter of concern that decisions of the cabinet and the law secretary were being violated by not implementing the same and dragging the complainant in unnecessary litigation, which in fact the cabinet wanted to avoid.
These directives were given by the FTO while deciding a complaint lodged by Karachi Shipyard & Engineering Works Ltd. against the CBR regarding the abuse of powers, maladministration and retention of money of the complainant and also non-implementation of the order of the law secretary dated June 1, 1999.
The complainant was fully owned by the Ministry of Defence and was engaged in the manufacture of heavy plants and machinery since 1952. The complainant also under taken ship repairs, reconstruction and engineering services.
The FTO noted that the assessment for the year 1992-93 to 1995-96 was not sustainable in law and that the department did not issue refund for these years despite the clear finding of the law secretary.
It may be added that the income tax assessments of the complainant were being completed and finalized under normal income tax law under section 80(D) of Income Tax Ordinance 1979, and it was always treated as a manufacturer-cum-assembler but not as a contractor till the assessment year 1991-92.
However, for the assessment years 1992-93 to 1995-96, the income tax department took totally different view of the business activities of the complainant. Instead of treating the complaint as manufacturer, builder of ships, vessels and heavy engineering plants and machinery, the department treated the business activities of the complainant as that of a supplier and finalized the assessment under section 80(C) for the assessment year 1992-93 to 1995-96.
As a consequence, a huge demand to the tune of Rs77.5 million was created for the period.
Reacting to it, the complainant filed appeals/revision appeals but the case remained undecided till 1999.
While, in the meantime the CBR made a reference to the cabinet with regard to the disputes between the government organization and CBR.
But the cabinet in his decision directed that all organizations under ministries/divisions should withdraw all court cases against the CBR and any disputes should be resolved and settled either through Inter Ministerial Consultation or un- resolved matter should be referred to the Ministry of Law for a decision.
In pursuance of this decision the complainant proceeded before the law secretary, who ruled that the business of the complainant did not fall under the category of supplier or contractor but a manufacturer.