2008 PLP 1841 (PTD)

SAEED AKHTAR, (MEMBER TECHNICAL).

This appeal is directed against Order-in-Original. No. 269 of 2000 passed by the learned Additional Collector (Sales Tax), Multan issued vide C. No.83/99/Additional District Judge/ST/2978 dated 28-3-2000 whereunder the appellant was directed to pay additional tax amounting to Rs.16,804 for late payment of due amount of sales tax and penalty of Rs.80,000 for non-filing of sales tax return.

2. Brief facts of the case are that sales tax record of the appellant was audited by Messrs Yousaf Adil Saleem and Company Chartered Accountants for the period 1994-2000 and observed certain irregularities in the payment of leviable sales tax amounting to Rs.23,76,

740. The learned Additional Collector, Sales Tax, Multan issued show-cause notice based on the observation made by the auditors. After adjudication by the learned Additional Collector Order-in-Original No.269 of 2000 was issued whereunder the appellant was directed to pay additional tax amounting to Rs.16,804 for late payment of sales tax and penalty of Rs.80,000 for non-filing of sales tax returns.

3. The learned counsel for the appellant contended that the company received advances from customers but sales tax was paid on the actual delivery of goods. The additional tax on the differential period has been charged and worked out to Rs.16,

804. The learned counsel contended that the Honourable Lahore High Court, Lahore in case P.T.C.L. 2000 CL 95 (sic) has held that the sale shall be deemed to take place in the eyes of law on the date on which the property in goods passes to the buyer. The learned counsel further contended that additional tax is chargeable in cases of wilful default only as held by superior Courts in other cases.

4. The learned counsel contended that during the years 1999 and 2000 for sixteen months there was no taxable activity carried out by the registered person and no tax was payable which amounts to accepting that there was no evasion of tax. The learned counsel contended that no mala fide or offensive intention could be read into appellants omission of non-filing of required monthly returns during the said period. The failure may be taken as an innocent and inadvertent mistake. The learned counsel contended that superior Courts, have held that where there is no wilful evasion of duty/tax, imposition of penalty even if there appeared to be a violation of any rule, was illegal. The learned counsel contended that penalty in the circumstances is illegal as there is no evasion of tax.

5. The learned counsel further contended that the Federal Government vide Notification S.R.O. 463 (I)/2007 dated 9-6-2007 has allowed exemption of additional tax/default surcharge and penalties payable by a registered person subject to the condition that the outstanding principal amount of sales tax is paid by 30-6-2007. The learned counsel stated that as the principal amount of sales tax has been paid by the appellant, the additional tax may be remitted.

6. The respondents were represented by Mr. Irfan Ahmad, Senior Auditor who opposed the contentions of learned counsel for the appellant.

7. We have heard the contention of both the sides and perused the appeal file available before us. The appellant received advances and failed to pay sales tax at the time of receipt of advances and made payment of sales tax at the time of delivery of goods. Auditors made observation for delayed payment of sales tax in violation of section 2(44) of the Sales Tax Act, 1990 according to definition of time of supply, the supply made in, Pakistan shall be deemed to have taken place at the earlier of the time of delivery of goods or the time when any payment is received by the supplier in respect of that supply. The appellant was directed to pay additional tax amounting to Rs.16,

804. The learned counsel contended that the event of supply was not complete at the time of receipt of advances as the property in goods had not passed on to the buyer. The learned counsel further contended that Federal Government vide S.R.O. 463(I)/2007 dated 9-6-2007 has allowed exemption of additional tax/default surcharge and penalties payable by a person subject to the condition that the outstanding principal amount of sales tax is paid by the 30th of June, 2007. We have observed that the Federal Government further extended that scope of S.R.O. 463 (I)/2007 dated 9-6-2007 through amendment in S.R.O. 463(I)/2007 dated 9-6-2007 vide S.R.O. 999(I)/2007 dated 29-9-2007 allowing exemption of additional tax and penalties to the cases where principal amount of sales tax was paid even prior to 9-7-2007. In the instant case since principal amount has already been paid, there is no justification for demand for payment of additional tax after the issuance of Notification S.R.O. 463(I)/2007 dated 9-6-2007 as amended vide S.R.O. 999(I)/2007 dated 29-9-2007. The impugned order against the charge is set aside and appeal is accepted.

8. The learned counsel, for the charge of non-submission of monthly sales tax returns contended that during the tax period 1999-2000 there was no taxable activity carried out by the appellant for sixteen months and no sales tax was payable meaning thereby no evasion of tax has taken place. The learned counsel contended that filing of returns was a mechanical action and non-filing of return has not resulted any loss to the national Exchequer. The learned counsel was of the view that it was an innocent and inadvertent mistake. The learned counsel further contended that the superior Courts have held that however there is no wilful evasion of duty/tax, imposition of penalty is illegal even if there appeared to be violation of rules. The learned counsel prayed that penalty may be remitted as there was no evasion of sales tax. We after considering the contentions of parties, find force in the arguments of learned counsel for the appellant. The impugned order against the charge is set aside and appeal is accepted.

9. The appeal stands disposed of as above. C.M.A./76/Tax (Trib.) Appeal accepted.