2013 PLP (Trib (PTD)

SYED NADEEM SAQLAIN (CHAIRMAN).

Through the titled four appeals, the registered person has challenged the impugned order in appeals passed by the respondent Commissioner Inland Revenue Appeals, Gujranwala.

2. Brief facts relevant for the disposal of present appeals are that default surcharge and penalty orders have been passed against the appellant for late deposit of sales tax and Special Excise Duty (SED) for the tax periods May 2009 and June 2009. Aggrieved of the said orders, the appellant filed appeals under the relevant provisions of Federal Excise Act, 2005 and Sales Tax Act, 1990 before the Commissioner Inland Revenue, Appeals, Gujranwala. The grievance of the appellant has not been accepted by the appeal commissioner and appeals were dismissed through order in appeals, which have been assailed through the instant appeals.

3. At the very outset learned counsel for the appellant submits that whole of the amount of sales tax and SED has already been paid and it is only the default surcharge and penal amount which is subject matter of present appeals. It is strongly argued by the learned AR that the appellant is fully entitled to the benefits of amnesty granted by the Federal Board of Revenue vide S.R.O. 648(I)/2011 dated June 25th, 2011 whereby it exempted whole amount of penalty and default surcharge in case the overdue amount of sales tax and FED/SED was to be deposited on before June 20th, 2011. The S.R.O. reads as under:-- S.R.O.648(I)/2011.

In exercise of powers conferred by section 34A of the Sales Tax Act, 1990 and subsection (4) of section 16 of the Federal Excise Act, 2005, the Federal Government is pleased to exempt whole of the amount of default surcharge and penalties payable by a person against whom an amount of sales tax or federal excise duty is outstanding on account of any audit observation, audit report, show cause notice or any adjudication order, or who has failed to pay any amount of sales tax or federal excise duty or claimed inadmissible input tax credit, adjustment, refund, drawback or rebate due to any reason, subject to the condition that the outstanding principal amount of sales tax or federal excise duty is paid by 30th June, 2011.

2. Benefit of this notification shall be available in cases of fraudulent refunds or drawback and other tax frauds. [C. No. 4(21)/ITP/2011.]

4. These appeals are accordingly requested by the learned AR to be disposed of in terms of the amnesty extended to all registered persons who had paid outstanding principal amount of sales tax by 30th June, 2011 and eligible for claiming benefits of amnesty scheme announced vide S.R.O.

648. It is also added by the learned AR that the issue of claiming benefits for an amnesty scheme has also been settled by the higher appellate fora. Learned counsel for the respondent-revenue objects the maintainability of these appeals on the ground that appellant is not entitled to claim benefits of amnesty granted by the Federal Government and if the claim of the AR is accepted it means all additional tax and penalty recovered since 1990 shall be returned back to the registered person. The defects or default pointed out by him are mere argument against the lawful benefit available to a taxpayer. The payment of principal amount of the sale tax and SED however is not challenged by the DR, therefore, without going into the merits of the case we will allow the request of the appellant for disposal of the appeals in the light of the aforesaid amnesty order/S.R.O. No. 648 dated 25-6-2011.

5. It is pointed out by the learned AR that show cause notices in this case were issued by the respondent much after the deposit of sales tax and SED by the appellant at its own. The amount of Sales Tax and SED was deposited by the appellant voluntarily without any intimation and show cause notice from the respondent but department remained silent during the whole period. When the due amount has already been paid by the appellant the department comes into play and initiate default surcharge and penalty proceedings which is highly unjust.

6. At first stage of adjudication before the revenue authorities, the department did not accept the contention of the appellant and charge default surcharge and penalty for late payment of sales tax and SED. The appeal commissioner also upholds that the charges against the appellant stand established on account of its failure to pay the sales tax and SED due within prescribed time. The appeals of the taxpayer against these orders were dismissed by the Commissioner Inland Revenue Appeals, Gujranwala vide his orders herein impugned.

7. We have considered the submission of the parties made at the bar in the light of the available record. It is noticed that the respondent has not uttered even a single word on the questions raised by the appellant's AR regarding the competency of the order in original as well as the one impugned before us, specifically in light of amnesty granted by the Federal Government.

8. In appellant's grounds recorded above, the appellant states that the act of respondents not to follow the directions of superior appellate authorities is illegal. In case of matter under consideration, the issue has already been settled by honourable Lahore High Court and Appellate Tribunal, while enumerating the principles governing provisions of amnesty for payment of Penalty and Additional tax. The honourable appellate forums categorically discussed the issue in principle. Relevant portion of the judgment is hereby reproduced for ready reference:-- 2006 PTD 336 Delayed payment of sales tax

Additional tax and penalty --Payment by assessee before issuance of S.R.O. -- Denial of amnesty -- Show cause notice -- Discrimination -- Validity --Whether amnesty contemplated in S.R.O. was also available to cases of tax payers pending in appeals -- Whether person placed in similar factual situation cannot be discriminated against merely for reason that he has first to be continuous defaulter on particular date of grant of amnesty in order to avail same -- Held yes -- Whether petitioner having paid fixed tax due from him is entitled to amnesty as any other registered manufacturer who pays fixed tax amount after issuance of S.R.O. -- Held yes -- Whether additional tax as well as penalty imposed against appellant shall be remitted in toto --Held yes -- 2011 PTD 619

16. We have been informed that in the case reported in 2006 PTD 336 (Lahore H.C.) it has been observed as under:-- "Delayed payment of sales tax, additional tax and penalty. In this case it has been decided that the person placed in similar factual situation either before or after the issuance of the beneficial legislation, shall stand equally benefited from the amnesty provisions and under circumstances no additional tax and penalty could be imposed against the appellant".

9. It is vehemently argued by the learned AR that the decision of the authorities below is a mistake of fact and law both, as the facts of the case have neither been perused nor the legal aspects of the case allow to dispose of the matter in a way to disallow the fully admissible benefits of amnesty. The order is contrary to the directions of superior appellate authorities. In this respect AR relies on judgment of the honourable Sindh High Court reported as:-- 2003 PTD 593 Quote... "Relief available to a person in law should not be denied on account of technicalities

Tax Officer, duty of

Duty of Tax Officer is to act in accordance with law and keep principle of justice in view

Justice should not be crucified on the altar of technicalities

Assessee should not be required to perform impossibilities, which in itself amounts to negation of justice -"... Unquote

10. The appellant has sought support from the S.R.O. 648(I)/2011 dated June 25th, 2011 which provides amnesty to the taxpayers on fulfillment of certain conditions. According to the said S.R.O., which is issued under laws of subsection (4) of section 16 of the Federal Excise Act, 2005 and section 34(A) of the Sales Tax Act, 1990. The Federal Government is pleased to exempt the whole of amount of default surcharge and penalty payable in respect of the payable sales tax and FED (SED) subject to payment of taxes up to June 30th, 2011. While it is contented by the Department that the appellant taxpayer, in no case, falls within the amnesty granted by the above S.R.O. and therefore, does not apply to the present case period.

11. After hearing the learned counsel for the parties, we are not persuaded to agree that the amnesty S.R.O. 648(I)/2011 dated June 25, 2011 is not applicable to the case of the present appellant. It needs to be noted that the amnesty contemplated in that S.R.O. thereof was also available to cases of taxpayers who had already discharged their liability. If the interpretation of that S.R.O. as made by the Revenue authorities is accepted then it is likely to create an anomalous situation. It is that whereas the persons who had already paid the amount due will be deprived of the amnesty. While those who will pay that amount after the issuance of S.R.O. 648(I)/2011 on 25-6-2011 will be spared of the default surcharge and penalty. In other words a person who had already paid the due tax to the public exchequer will be burdened with default surcharge and penalty while the one who does so after issuance of that notification and having withheld the amount of the tax due from him in the meanwhile will be rewarded by allowing exemption from penalty and levy of default surcharge. This could never be the intention of any superior or subordinate legislation. A person placed in similar actual situation cannot be discriminated against merely for the reason that he has first to be a continuous defaulter on a particular date of grant of amnesty in order to avail the same.

12. The appellant having paid the amount of sales tax and SED before the issuance of the said S.R.O. but also much before the issuance of show-cause notices from the department, was clearly entitled to the benefit of the amnesty contemplated in the S.R.O. 648(I)/2011 on 25-6-2011. To hold otherwise, would be negation of justice, fair and equal, protection of law. It needs to be brought home that the amnesty granting legislation both superior as well as subordinate needs to be construed liberally so that it does not either trap an unwary taxpayer or else otherwise succeeds in taking away with the other hand while giving it by the one. The appellant having paid the sales tax and SED due from him is as much entitled to the amnesty contemplated in the S.R.O. 648(I)/2011 on 25-6-2011 as other taxpayer who pays the due taxes after issuance of the S.R.O. 648(I)/2011 on 25-6-2011. To hold otherwise would result in the situation as noted above.

13. Therefore, without any hesitation we will allow these appeals by setting aside the orders of Revenue authorities as well as the impugned order of the Commissioner Inland Revenue Appeals, Gujranwala. Resultantly the default surcharge as well as the penalty imposed against the appellant shall be remitted in toto. The appeals are disposed of accordingly. HBT/71/Tax(Trib.) Appeals allowed.