Law: Sales Tax Act, 1990

Section: 10

Law: Federal Tax Ombudsman Ordinance, 2000

Section: 2(3)

(a) Sales Tax Act (VII of 1990)---S. 10---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---C.B.R. Letter C. No. 2(7)­STP/99-Pt, dated 1-10-2002---Excess amount to be carried forward or refunded- --Suspicious unit---Refund claim of complainant was withheld by the Department without issuance of show-cause notice and complainant was declared as suspicious unit because only four purchases were made from the supplier, which was placed on the suspected list in spite of the fact that payment was made by crossed cheques through banking channels Validity---If one of the suppliers was fake, the buyer should not have been placed on the suspected list unless collusion was established and there was evidence to prove that the transactions were fake---Central Board of Revenue blocked the refund claims but no show-cause notice in this regard had been issued---If there was tangible evidence against the complainant, the same should have been disclosed to them, the charges framed in the form of show-cause notice and opportunity provided to them to rebut the same and represent their case-­Situation showed a one-sided action on the part of Department to condemn the complainant to the "suspected" category, deny the refund without due process, and harass them---In one of its directives, Central Board of Revenue, had issued instructions that refund claims should not be rejected for a few suspected invoices, and refund be disallowed only is to the extent of fake invoices, and the remaining amount sanctioned---This directive had been violated by the sales tax authorities --Entire process, action and proceedings suffered from maladministration as they were arbitrary, based on presumption and irrelevant grounds, unjust and oppressive---Administrative excess was proved which involved improper motive as defined in S. 2(3)(d) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended that Central Board of Revenue (i) direct the Collector concerned to (a) carry out investigation and verification on the lines mentioned in paragraph 15, re-examine the status of this unit and, should it be established that…

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