FBR drops disciplinary proceedings against RTO commissioner

The Federal Board of Revenue (FBR) has dropped disciplinary proceedings against a Commissioner of Regional Tax Office (RTO) Karachi-II, as wrongly involved in issuance of sales tax refund case, allegedly tampering documents and misusing Sales Tax Automated Refund Repository Computer System' (STARR), a refund verification system.
Sources told Business Recorder that the FBR had issued an enquiry report in the disciplinary proceedings case against Commissioner Inland Revenue (Audit Division-II), Regional Tax Office. Karachi, based on evidence and record. The FBR remained unable to frame case against the official on allegations of committing irregularities.
A BS-20 officer of Inland Revenue Service, who is presently posted as Commissioner Inland Revenue, Regional Tax Officer-Il, Karachi seemed to be victimised by his senior official, accused official claimed in the inquiry report.
According to FBR report, the statement of allegations against the accused official showed that when he was posted as Commissioner (Enforcement and Collection Division-I) Regional Tax Office, Karachi, illegal sales tax refunds were sanctioned by him to an export company.
It was alleged that the refund was approved/sanctioned in favour of the unit which was non-existent on the given business address. The refund was approved/sanctioned without verifying whether the claimant has manufacturing facility to utilise the inputs used in the exported goods.
The refund was approved without proper processing and scrutinising the data given in sales tax returns which were showing abnormal value-addition, and values of actual purchases were not shown properly and only the amount on which refund was to be obtained was declared by the unit.
As the unit was involved in exporting other same state goods the verification of actual export proceeds realisation were not verified. The E-forms were found to be tampered. It was also alleged that refund was approved after over-ruling STARR objections like 'exceed declared output" without proper scrutiny of record of the supplier, whereas the inquiry showed that all supplies of the supplier were either back listed or non-existent. The refund was paid for the amount which was never deposited in the government exchequer.
It had also been alleged that the refund was processed on reconstructed files, without conducting discreet investigation as to why the original files were missing. Later, the original file for April 2009 was found in IP section, RTO, Karachi, on which auditor's remarks on the note sheet were not favouring the sanction of refund in respect to export unit.
The refund claimant submitted tampered/fake documents to ensure obtaining of illegal refund, which included submission of tampered Sales Tax Returns of its supplier. The refund was sanctioned to the export unit against export GDs carrying the name of exporter.
It had been further alleged that the official approved refund in lieu of exorbitant commission, as deposed by consultant of refund claimant before Chief Commissioner Regional Tax Office, Karachi. The "commission" was obtained causing loss to national exchequer, allegations against the official added.
In his written reply to the inquiry official, the concerned Commissioner refuted the allegations. He responded that the contents of the charge sheet and the statement of allegations were ab initio without any specification, vague without supportive facts, cogent documents or data and appeared to be based on certain conjectures and surmises with no intrinsic worth.
The charge sheet and statement of allegations were destitute of any role assigned to him for having violated any section of Sales Tax Act, 1990, Sales Tax Rules, 2006, any SRO/Notification or Circular and deviation from Software of the FBR for issuance of Sales Tax refunds known as STARR and the job description as notified by the Central Board of Revenue, (Now Federal Board of Revenue), in June, 2003.
He said that the inquiry waas entirely mala fide and based on personal bias and vendetta against him. The proceedings including the charge sheet and the statement of allegations issued to him in the case suffered from constitutional/legal /factual infirmities since inception.
The official further informed the inquiry committee that the refunds to the unit for April and May 2009, were sanctioned/approved vide quasi-judicial order passed under section 10 of the Sales Tax Act, 1990 read with Sales Tax Rules, 2006. No legal proceedings can be initiated against any public servant in respect of order passed in good faith under the Act as provided in section 51(2) read with section 72 of the Sales Tax Act, 1990. Under the relevant portions of the sections.
"51. Bar of suits, prosecution and other legal proceedings: (2) No suit, prosecution or other legal proceeding shall lie against the Federal Government or against any public servant in respect of any order passed in good faith under this Act."
"72. Officers of sales tax to follow Board's orders, etc: Provided that no such orders, instructions or directions shall be given so as to interfere with the discretion of officers of Inland Revenue in the exercise of their quasi-judicial functions.", Sales Tax Act said.
The official further said that the judicial and/or quasi judicial orders passed in exercise of powers under the Sales Tax Act, could not be re-opened or questioned by Federal Board of Revenue through disciplinary proceedings unless specific orders are passed to that effect by the appropriate judicial fora including the High Court and under the Sales Tax Act, 1990.
The official further explained that the exports in respect of which Sales Tax Refund for the month of April and May 2009 were being questioned had been cleared/examined by the Customs Department and also verified by PaCCS. On these exports the Customs Department had paid rebate. "May I also know, if any officer of Customs Department has been charge sheeted, if not, why so? If an officer of Customs Department, responsible for verifying the goods declared by concerned export unit for exports and giving rebate on the exports on which Sales Tax Refund has been allowed in April and May, 2009 more specifically in view of the charge/allegation that the E-Forms were found to be tampered, which are filed with the Customs Department under section 12(1) of the Foreign Exchange Regulation Act, 1947. This is read with Government Notifications No.1(6)-ECS/48 and No. 1(7)-ECS/48 both dated July 1, 1948, (the functional utility of the copies of Form 'E' is given at No. 15 of the Foreign Exchange Manual which has got nothing to do with the issuance of Sales Tax Refund) has not been proceeded against, this would again be clear case of discrimination and victimisation under the Articles of the Constitution of Islamic Republic of Pakistan, 1973 mentioned in para (d) supra and the present proceedings would be an exercise in futility", official responded.
Notwithstanding any provision in any Rule or Law for conducting not more than one fact finding inquiry, a series of fact finding inquiries kept on continuing, he said.
The official further contested that it was incorrect that while posted as Commissioner Inland Revenue, Enforcement Division-I, Regional Tax Office, Karachi approved/sanctioned illegal sale tax refunds to the export unit. The facts in the charge sheet and the statement of allegations are twisted and tainted and crucial facts are withheld/concealed mala fide. The charges of "Inefficiency", "Misconduct" and "Corruption" are denied to the hilt. The allegations and charges are not proved with any evidence. The real facts have been withheld / concealed.
The findings of the inquiry committee showed that as refund claims had been sanctioned in the case treating the claimant as manufacturer-cum-exporter (as was done in their previous refund claims) and after clearance of one claim by STARR and the other claim through over-ruling of the objection on the basis of valid down loaded returns of buyer and seller, the allegations in the charge sheet mostly relating to treatment of registered person in this case as commercial exporter were not relevant. In absence of any evidence about taking of commission by the officer, this allegation is also not proved. Allegations in the charge sheet are accordingly dropped, FBR's inquiry report added.