ISLAMABAD: The Federal Tax Ombudsman (FTO) has stopped the tax officials from demanding records or documents that are not voluntarily made available while conducting raids on business premises under section 38 of the Sales Tax Act.
FTO Abdur Rauf Chaudhry disposed off a complaint filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (the Ordinance) against raid by the officials of Directorate General of Intelligence and Investigation Inland Revenue (IR) on the business premises of M/s Sheikh Brothers Chemicals and taking into custody the records, statements and documents etc.
The FTO order explained in details about the powers of agency’s officials to obtain records from the business premises during raids. The order stated that the record and documents taken into custody must be against a receipt signed by the officer. The officers have no powers under Section 38 to compel the production of any record or document that is not in plain sight or that has not been voluntarily made available as above. Any record or document taken into custody under compulsion cannot be used for any purpose whatsoever by the department against the person from whose custody the record or document has been taken into possession by an officer.
During the hearing, the FTO observed that the complainant is contending that unit was closed since May 31, 2013 and tax officers raided it on June 09, 2016 by using force in the form of breaking lock etc without search warrants under Section 40 of the Act. It has also been alleged that officers even had no departmental authorisation from competent authority under Section 38 of the Act and the same was allegedly prepared after raid. The Directorate General of Intelligence and Investigation said that the unit was visited after proper authorisation by Director I&I Faisalabad vide letter No DIR/l&l-IR/FSD/3122 dated June 09, 2016. The directorate has also challenged that the unit was not closed as record resumed during the raid showed that it had received raw materials during 2014, 2015 and 2016.
The FTO disposed off the petition, maintaining that the complainant’s unit was operational after 2013 and the tax officers had raided the unit after valid authorisation from competent authority and no case of maladministration is made out against the department.
