Tax officer passes assessment order beyond show-cause notice

LAHORE: A tax officer passed an assessment order beyond the show-cause notice without confronting the same to the taxpayer, said sources.

According to details, one herbal seller received a show-cause notice alleging that his income shown in the income tax return renders him liable for sales tax registration and payment of sales tax on supplies made by him during the tax period mentioned in the notice. It was followed by passing an assessment order under the sales tax provisions by creating a tax demand.

However, the taxpayer challenged the order on the ground that the order has been passed beyond the show-cause notice as the tax has been created without confronting the same to him, therefore, the order is illegal. He further said that no demand could have been created without first confronting the same to him in the show-cause notice.

It is also worth noting that the show-cause notice was totally silent and had not mentioned any allegation as had been mentioned in the order under question. The Commissioner Appeal had also noticed the illegality and wrote a letter to seek opinion of the department; however, no one appeared on behalf of the department.

The Commissioner had noticed that no invoice or allegations as levied in the assessment order were confronted to the taxpayer. Instead, the department preferred to carry out compulsory registration proceedings against the taxpayer under the sales tax provisions and created a tax demand for recovery purposes along with default surcharge and penalty for violating the relevant provisions.

The taxpayer agitated that proceedings initiated on the basis of illegal notices and superstructure constructed thereon in the shape of amended order was null and void because it was passed beyond the show-cause notice and therefore not sustainable in the eye of law. Accordingly, the tribunal vacated the controversial order.

Sources said the tax officers generate unlawful demands to meet revenue targets, leading to controversies between the department and taxpayers, wasting precious resources and time of the relevant forums.

Copyright Business Recorder, 2024