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Petitioner: Messrs GHARIBWAL CEMENT LTD LAHORE and another VS Respondent: SECRETARY, REVENUE DIVISION, ISLAMABAD
Court Name: Federal Tax Ombudsman Judge(s): Saleem Akhtar Title:Messrs GHARIBWAL CEMENT LTD LAHORE and another vs SECRETARY,
REVENUE DIVISION, ISLAMABAD Case No.: Complaint No, 1438-L of 2002 Date of Judgment:2003-02-04 Reported As: 2003 PTD 2872 Result: Order accordingly Judgment DECISION /FINDINGS ' The complainants are engaged in manufacturing ordinary Portland Cement, which are under common ownership and common management. They were served with two notices alleging evasion of excise duty and sales tax amounting to Rs,409,632,511.00 against Messrs Gharibwal Cement Ltd. While Dandot Cement Company Ltd. Was served single notice, dated 21-7-2001 for evasion of central excise duty and sales tax amounting to Rs,89,076,345. The proceedings continued till 19th October, 2002 on which date it is alleged that the Collector Adjudication threatened the representatives of the complainants with the following remarks: "(a) that he is going to create history in the Central Excise Law by passing a land mark judgment in the titled cases. (b) That he is going to issue an order, comprising more than one hundred pages". 2. According to the complainants they were alarmed with these remarks and they appointed Mr. Viqar A. Khan in place of the earlier representatives. On 29-10-2002 he filed an application before the Chairman C.B.R. For transfer of the case. It has been alleged that on 31-10-2002 two representatives appeared and discussed the matter with Collector Adjudication for about half an hour but their attendance was not recorded in the order sheet. It is also alleged that request for inspection of files and certified copies were made in writing on 31-10-2002, which was refused with remarks "these are my files and why should I allow you to inspect them". 3. It has further been alleged that the two representatives Mr. Rizwan and Mr. Wajahat who had attended the office of Collector Adjudication on 31-10-2002 claim to have seen copy of the order in
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original of Gharibwal Cement Ltd. On the desk of the Personal Assistant to the Collector (Adjudication) before they were called in the hearing. The said representatives have filed their affidavit in support thereof. It is alleged in the complaint that the first page of the Order-in-Original mentioned the last date of hearing as 31-10-2002. It may be mentioned that they had appeared on 31-10-2002 in compliance with notice, dated 23-10-2002 which had been issued requiring particulars and for hearing. From these facts it has been concluded by the complainants that the Collector 'Adjudication' had made up his mind, the orders had been drafted before the date of hearing and the proceedings were merely eyewash. Thereafter the representatives of the complainants repeated the application for change of jurisdiction by letters, dated 1st November, 2002, 4th November, 2002 and 6th November, 2002. The C.B.R. By letter, dated 6-11-2002 rejected the request for transfer with the observation that:-- "The Board does not agree with the conclusion drawn by you from the observations made by the Adjudicating Officer during hearing of the cases on 19-10-2002. The remarks of Adjudicating Authority can neither be construed as threat to the aforesaid companies nor these can be attributed to mala fide intention of the Adjudicating Officer. Besides, under the law, the Board is supposed not to interfere in the quasi-judicial proceedings initiated in the subject cases. The Board, therefore, regrets its inability to accede to your request for transfer of the cases from Collector (Adjudication), Rawalpindi to some other Adjudicating Authority". 4. The complainants then filed this complaint on 26-11-2002. During the pendency of the complaint the Collector Adjudication passed Order-in-Original on 21-12-2002 against both the companies creating heavy demand and recovery notices were also issued on 31-12-2002. 5. The C.B.R. In its reply stated that the complainant's application for change of jurisdiction was considered in the Board. The relevant record alongwith the comments of the Collector were perused which revealed that the case was dealt with fairly, impartially and strictly in accordance with the law. It has been further stated that since the arguments had already taken place and the case was at judgment stage it was not in the interest of justice to change the jurisdiction. Personal hearing by C.B.R. Was not granted to the complainants as no injury was caused to them. It has further been pleaded that as the case was subjudice the jurisdiction of the Federal Tax Ombudsman is barred. It was denied that the Collector passed any such remarks as understood and alleged by the complainants nor any threat was administered. The minutes of the adjudication proceedings recorded by the Collector indicate that he was very pleased with he complainants due to their valuable assistance to him in the case. It has further been pleaded that when the present representatives of the complainants disclosed that they had been engaged in the place of Rana Manzoor Hussain Consultants to conduct the cases afresh the prosecution strongly objected thereto arguing that it would be highly objectionable and extremely unfair to conduct the case afresh at the stage when adjudication proceedings had almost completed. The inspection of the relevant files and supply of the certified copies was refused, as the representatives were strangers to the cases. The case record consisted of the documents by the complainants or contested by them. Nothing was new on the record. The entire original records of the cases could not be placed at their disposal of the fear of tampering with the evidences or material facts. The judgments in the cases were yet to be dictated therefore there was no justification for demanding certified copies of the documents. In both the cases judgments were issued on 23-12-2002. All other allegations made in the complaint have been denied. 6. Mr. Viqar A. Khan the learned representative for the complainant contended that the facts pointed out in the complaint prove bias and prejudice and also pre-determined mind of the Collector Adjudication and therefore he was not competent to hear and decide the cases. On the other hand Mr. Athar Minallah the learned representative for the department while raising objection to the jurisdiction contended that the facts and circumstances and the allegations made by the
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complainant do not justify bias, prejudice or pre-determined mind. The learned counsel for the department refereed to the statement of the two previous representatives of the complainants that the Collector Adjudication had stated that he is going to create history by passing a landmark judgment and that the judgment will be of 100 pages and without admitting then submitted that these two allegations by themselves do not lead to even indicate a biased mind. They seem to be boastful expression which though denied by the Collector (Adjudication) do not reflect that he has to decide the case against the complainants. Considering the amount involved in the case as reflected from show-cause notice and hearings which had continued for an extended period any officer could think of writing a comprehensive judgment and expressed bona fide, it may not amount to bias which may vitiate the proceedings. It is however, judicious for an officer not to make boastful expressions in self-praise or laudatory remarks about any party lest it may cause suspicion of bias in the mind of a party. 7. The learned representatives also referred to the conduct of the Collector (Adjudication) in refusing to grant inspection and certified copies of the documents applied for. It is to be noted that if such a request would have been made before the arguments were completed, considering the circumstances it could be said that refusal was not justified particularly because documents on record should be made available to the parties before concluding the arguments. The learned representative was insisting on inspection of record. However, the Collector (Adjudication) as stated in the reply was under the apprehension that after conclusion of arguments in the change of counsel was an attempt to ask for afresh hearing and all efforts were being made in that direction. This apprehension considering the nature and the time taken in hearing the case was bona fide and did not reflect any mala fide on his part, I have examined the Diary Sheet, dated 19- 1-2002 in which the proceedings have been recorded in detail, paying compliments to the representatives of the complainants and prosecution for rendering valuable assistance in the case. It is note worthy that the Collector (Adjudication) had called for certain information and fixed the case for hearing on 31-10-2002. It was before this date that a letter, dated 29-10-2002 was made by Mr. Viqar A. Khan making the allegations of bias and prejudice. It was alleged by the learned representative of the complainants that although the representatives had appeared on 31-10-2002 their presence was not recorded which reflected the mala fide intention of the Collector Adjudication. However, in the Order Sheet photocopy of which has been provided it has been mentioned that Mr. Muhammad Rizwan and Mr. Wajahat Ahmed had appeared and filed letter of authorization to defend the case. It was also noted that eight hearings had taken place and these representatives asserted that they would like to argue in depth, which was opposed by the departmental representatives. It was suggested by the Collector Adjudication that all evidence and relevant documents had been supplied to the previous representatives and they can be obtained from him and that. The case not be delayed by such intervention. It has been stated that when the Collector Adjudication refused to accede their request the representatives requested that proceedings be held in abeyance till the decision of the Chairman C.B.R. In respect of change of jurisdiction. As regards notice, dated 23-10-2002 requiring certain particulars and documents it was explained that the Collector Adjudication was dealing with similar other matter of cement manufacturers and a standard notice had been prepared which was issued to the complainant though it was not necessary and it was a mistake. According to the learned representatives for the complainants all the documents so required were available on record. This has not been disputed. 8. Bias is a state of mind which if exhibited by words, expression or body language or such expression, lead to a belief or suspicion in the mind of a party that he will not have a fair deal. But to determine whether particular alleged facts do constitute a bias does not depend on the perception, thinking, conviction or belief of the party. The test is whether a reasonable man apprised of full facts would conclude that there is likelihood of bias or reasonable suspicion of bias.
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The allegation of prejudgment has been pressed to demonstrate bias. It is based on the statement of. Rizwan and Wajahat that on 31-10-2002 they saw typed Order-in-Original lying on the table of the PA to the Collector Adjudication, which has been denied. The PA has also filed his affidavit to the same effect. In the complaint it is stated that the first page of the said Order-in-Original mentioned that last date of hearing as 31st October, 2002 but the representatives have stated in the affidavit that they saw a copy of the Order-in-Original on the desk of Collector's PA before they were called for hearing. Although denied it often happens that if there is lengthy and complicated case, to avoid delay the dealing officer dictates the facts and keeps it handy in record. Normally if any officer has predetermined the case and prepared a judgment before hand he would most likely to keep it secret rather than keep it open particularly on a date when parties are required to appear. This seems improbable. The facts alleged and relied up by the complainant do not come up to the test as stated above,. It may be mentioned that the officers performing judicial or quasi- judicial functions must understand 'the importance of proper, fair and courteous judicial behaviour particularly where parties are not legally represented'. They must 'listen patiently and carefully and to retain self-control at all times'. 9. The learned counsel for the department referred to section 9 of the Establishment of the Federal Tax Ombudsman Ordinance (hereinafter called the Ordinance) and submitted that in the matter the jurisdiction of the Federal Tax Ombudsman is ousted by these provisions. He referred to the preamble of the Ordinance, the definition of the term `maladministration' and the provisions of the section 9 of the Ordinance. According to the learned counsel in the matters, which are sub-judice, the Federal Tax Ombudsman has the jurisdiction to investigate and recommend where maladministration relates to the person and not the merits of the case. The learned counsel has made a distinction keeping in view the facts that the Ordinance is intended to provide remedy for injustice done and maladministration committed by the tax functionaries. When it was pointed out that definition of maladministration is wide and even a decision or process which is contrary to law falls within this category and therefore, unless the matter is probed on merits it cannot be ascertained whether it is contrary to law or not? The learned counsel responded that in such situation the Federal Tax Ombudsma n may pinpoint maladministration and the decision should be left to the Authority before which the case is sub-judice. In the matters which are sub-judice before any Court or Authority the Federal Tax Ombudsman has jurisdiction to investigate and pinpoint maladministration and give recommendation in respect of allegations of maladministration. Even if the argument of the learned counsel is accepted then such recommendation placed before the Authority seized with the matter will be bound to comply. This is so because the Adjudicating Authority .s under the relevant legislation except the Tribunal and the Courts all under the Revenue Division. There any recommendation made level in manner as suggested by the learned counsel for the respondent will be binding on C.B.R. And Authorities under its administrative control. So far clause (b) of subsection 2 of section 9 is concerned it is to be noted that if it is literally interpreted then hardly the Federal Tax Ombudsman would be able to intervene in any matter. 10. The learned counsel for the complainant has raised objection to the jurisdiction of the Federal Tax Ombudsman. In order to correctly appreciate the jurisdiction conferred by the Establishment of the Office of Federal Tax Ombudsman Ordinance 2000 (hereinafter referred as the Ordinance), it is necessary to understand the objects and the intention of the statute in creating this office. I do not feel it necessary to go in detailed background of the establishment of this institution, suffice to say that due to maladministration prevalent in tax administration against which serious complaints were made by the assessee, general public, Chamber of Commerce, Trade Bodies. Tax Bar Association and even the officials as well it was considered to be the need of the time to establish an institution independent of the tax departments to oversee their functioning and redress injustice done to the aggrieved parties. According to the preamble of the Ordinance, which indicates its
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intention object and purpose, it was thought expedient to provide for the appointment of the Federal Tax Ombudsman to diagnose, investigate, redress and rectify any injustice done to a person through maladministration by functionaries administrating tax laws. Each and every word of this preamble points out to the object and purpose mainly to redress and rectify any injustice done to a person through maladministration by the tax employees. With this object the term "maladministration" was defined in sub section 3 of section 2 of the Ordinance, which is wide in terms, inclusive in nature and covers most of the irregularities and illegalities in administering tax laws. According to term "maladministration" a decision, process, recommendation, act of omission or commission which is contrary to law, rules or regulations or is a departure from established practice or procedure, unless it is a bona fide and for valid reasons falls within the definition of maladministration. Further such decision, process or recommendation which is perverse, arbitrary or unreasonable, unjust, biased, oppressive, or discriminatory or is based on irrelevant ground or involves the exercise of power, or the failure or refusal to do so, for corrupt or improper motives is covered by the term maladministration. Therefore, a decision, process, recommendation can be challenged on the aforestated grounds. This is not the end of the definition, which further provides that where the tax employee commits neglect, inattention, delay, incompetence, inefficiency and ineptitude in the administration or discharge of duties and responsibilities it is hit by maladministration. Apart from this the act of maladministration includes issuance of repeated notices, unnecessary attendance or prolonged hearings while deciding cases involving assessm ent of income or wealth, determination of liability of tax or duty, classification or valuation of goods, settlement of claims of refunds, rebate or duty drawback or determination of fiscal and tax concession or exemptions. This is another category of maladministration, which is committed during the proceedings enumerated therein. It further classifies certain acts of maladministration in relation to refunds, which include wilful errors in the determining of refunds, rebates or duty drawbacks or deliberate withholding or non-payment of already determined refund. Coercive methods of tax recovery in cases where default in payment of tax or duty is not apparent from the record is also maladministration. Clause (vii) of subsection 3 of section 2 specifies that avoidance of disciplinary action against an officer or official whose order of assessment or valuation is held by a competent Appellate Authority to be vindictive, capricious, biased or patently illegal amounts -to maladministration. 11. These provisions are wide enough to cover the illegality- and misconduct in the overall working of the tax employees. If we read the object of the statute in the light of the definition of maladministration it will be clear that it was the intention of the legislature to authorize the Federal Tax Ombudsman and empower him to diagnose, investigate, redress and rectify any injustice done to a person through the maladministration elucidated herein above which can be extended to such acts which may be termed as maladministration in the generic sense. 12. Coming ,to the question of jurisdiction reference to be made to subsection (1) of section 9 of the Ordinance, which confers jurisdiction on the Federal Tax Ombudsman to investigate any allegation of maladministration on the part of- the Revenue Division or any tax employee subject to subsection (2). This clearly stipulates that the legislature has vested wide power to investigate where maladministration is alleged against the Revenue Division or any tax employee. Subsection 2(a) of section 9, provides that the Federal Tax Ombudsman shall not have jurisdiction to investigate or inquire into matters, which are sub-judice on the date of the receipt of a complaint, reference or motion. It therefore, contemplates that jurisdiction will be barred only if the complaint is filed during the pendency of any matter before any Court of competent jurisdiction or Tribunal or Board or authority. But where the complaint has been filed before the pendency of proceedings, jurisdiction will not be barred. Furthermore where the matter is sub-judice but the maladministration alleged is in depend of such matter the jurisdiction will not be barred.
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13. While challenging jurisdiction the emphasis is mostly on sub clause(b) of subsection 2 of section .9 of the Ordinance which states that jurisdiction will not be exercised in the matters which relate to assessm ent of income or wealth (b) determination of tax or duty (c) classification or valuation of goods (d) 'interpretation of law, rules and regulations relating to such assessment determination, classification or valuation in respect of which legal remedies of appeal, review or revision are available under, the law. The literal construction as pressed by the learned counsel seems to be that if legal remedies of appeal, review or revision are provided under the relevant law in respect of assessm ent, determination of liability of tax, classification or valuation, interpretation of law rules and regulations, the Federal Tax Ombudsman will not have jurisdiction. This interpretation negates the very object of the Ordinance and makes it completely paralyzed because hardly there will be any tax statute which does not provide for appeal, review or revision. At this stage it is necessary to understand the principles of interpretation. To begin with it cannot be denied that the Ordinance is a welfare, beneficial and remedial statute. It intends to provide relief to the aggrieved parties against acts of maladministration, excess, injustice and corruption. While interpreting' any provision, which is beneficial in nature the object and intention of the legislature can neither be ignored nor by passed. This should be the determining factor while interpreting the provisions of such legislation. The superior Courts in Pakistan and abroad, and jurists are of the opinion that a beneficial legislation should be interpreted in a manner to advance the remedy and suppress the mischief. The interpretation should be made fairly to make the remedy secure. The provisions of such statute must be construed with reference to their context and with due regard to the object to be achieved and mischief to be prevented otherwise the intention of the statute will be defeated. Any construction, which whittles down the object and produces absurd result, cannot be accepted. Ajmal Mian J. (as he then was) in Nawaz Sharif's case PLD 1993 SC 493 observed that interpretation should be dynamic and approach progressive. Such pronouncement approves that the purpose of a beneficial or remedial statute is to keep the system of jurisprudence up to date in harmony with new ideas, new concepts and the needs of the society. A construction, which promotes improvement and justice in the system and eradicates the defects and evils should be favoured over one, which perpetuates wrong. 14. In interpreting provision of a beneficial legislation the Court always favours interpretation which promotes the benefits of such statutes, (AIR 1960 SC 137, (1994) 1 SCC 243), Allover trend in U.K. U.S. Pakistan and India is to favour a beneficial and liberal construction to save the object of the legislation. "In his book "Discipline of Law" Lord Denning has stated that 'intention seeking' is preferred to 'strict construction' and that, the literal approach is in disuse'''. (Interpretation of Taxing Statute by Justice Markanday Katju). This purposive interpretation is now well accepted and well recognized in preference to the literal interpretation, which may bring conflict, absurdity and completely negate the object and purpose of legislation. The American view as expressed in Corpus Juris Secondum and Suthernland on Statutory Construction indicates that the rules of strict construction should be applied with due regard to the wishes of the legislature as expressed in the statute and not 'so strictly as to defeat the legislative purpose and produce unreasonable results.. Maxwell has observed as follows:-- "There are certain objects which the legislature is presumed not to intend, and a construction which would lead to any of them is therefore to be avoided. It is not infrequently necessary, therefore, to limit the effect of the words contained in an enactment (specially general words) and some times to depart not only from their primary and literal meaning but also from the rules of grammatical construction in cases where it seems highly improbable that the primary or grammatical meaning actually express the real intention of the Legislature. It is regarded as more reasonable to hold that Legislature expressed its intention in a slovenly manner than that a meaning should be given to them which could not have been intended".
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15. Although there are authorities which prefer a literal interpretation yet as discussed above these are considered waning ideas and concepts which are being replaced by principle of purposive interpretation. ' Cross on Statutory Construction has quoted Pinner v. Everett (1969) 3 AER…
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