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LAHORE: The sales tax department has failed to establish suppression of supplies after its failure to issue fresh notice in the wake of raising fresh observations distinct from the allegations leveled in the earlier one, said sources.
According to details, an audit was conducted by the officials of the department, which was followed by the issuance of a show cause notice, alleging suppression of supplies. The allegation was based on comparison of the declared production and the units of electricity consumed by the company during the relevant period.
The company approached the Federal Tax Ombudsman against the notice, which recommended the Federal Board of Revenue (FBR) to look into the matter.
Meanwhile, the department passed sales tax order-in-original that was challenged by the company before the tribunal. The tribunal directed the department to constitute a committee to examine the records of the company. However, the FBR set aside the order in original before the committee could submit the report.
Accordingly, the adjudicating authority passed second order in original without issuing a fresh show-cause notice. It was held that the department has committed procedural impropriety and the principal of due process has been infringed by not issuing fresh show-cause notice.
According to the relevant authorities, the issuance of a show-cause notice is the most crucial in the context of a fair trial and due process. It enables a tax payer to precisely know what allegations are to be met, explained and answered to the satisfaction of adjudication officer. It is the duty of the department to ensure that a show-cause notice is issued after a proper inquiry and investigation.
It should be manifest from the contents that the show-cause notice was issued after ascertaining the facts and the allegations are not vague or ambiguous. The charges or allegations should be specific; otherwise the taxpayer would be prejudiced and denied the right of fair trial.
As a corollary, the adjudication authority has to confine the proceedings to the specific charges and allegations clearly mentioned in a show-cause notice and cannot adjudicate any charge or allegation beyond it. Adjudicating a charge or allegation not confronted in the show-cause notice would not be sustainable in law.
Copyright Business Recorder, 2024
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