2013 PLP (Trib (PTD)

S.T.A. No.924/LB of 2012 ??????????? This appeal by registered person is against Order No.18/A-II of 2012 dated 19-7-2012 by Commissioner (Appeals). Adjustment of input tax against certain invoices issued by suppliers namely Messrs? Kamran Enterprises and Messrs? Orthodox Company for period March, 2009 to October, 2011 and October, 2007 to October, 2011 were called in question. It was confronted that tax against the invoices in question was not deposited in treasury, therefore, provision of section 8(1)(ca) were invoked. The appellant/registered person took defence that the material in question was imported and the tax was deposited at the import stage. However, during adjudication, appellant could not produce the documents of impact showing deposit of tax. 2.???????? Learned counsel for the appellant argues that appellant has complied with the provisions of section 73 and has provided all the documents available to them from the suppliers as well as the documents recoverable from the website etc. He argues that appellant has complied with all the provisions and fulfilled statutory and other obligations, therefore, the harsh provisions of section 8(1)(ca) could not be attracted. It is emphasized that department should have prosecuted the suppliers for any default or non-payment of tax. DR in reply has opposed the appeal and arguments of AR. He submits that appellant could not substantiate its assertion that the tax was paid at import stage. The DR was specifically asked whether non-payment of tax in form of any evidence was confronted to the registered person, he was unable to answer this question even after consulting the record including orders of both the authorities below. 3.???????? Heard both the parties record perused. We have perused record and carefully examined the provisions of section 8. Sections 8 starts with non-abstain subsection (1) and provides a list of eventualities upon which entitlement of the registered person to reclaim or deduct input tax was denied. Under clause (ca) the adjustment was denied simply for the reason that the supplier had not deposited the tax in government treasury in respect of any invoice issued for goods or services. We may observe here that under the canons of interpretation of taxation law, equity has no role to play. The letter of law is to be followed literally, even if the same is harsh in nature. We, therefore, hold that no exception can be drawn from? a? clear? and? unambiguous? provision? of? section 8(1)(ca),? if? the? tax? is not deposited in government treasury by respective suppliers. Section 8(1)(ca) is reproduced:-- ??????????? "8. Tax credit not allowed.

(1) Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct, input tax paid on

??????????? (ca) the goods or services in respect of which sales tax has not been deposited in the Government treasury by the respective supplier." 4.???????? Nevertheless, we are constrained to observe that department is required to confront the registered person with a cogent prima facie evidence to show that tax against the transaction/invoice in question was not deposited in national exchequer. Department cannot be given a free hand to presume that the tax was not deposited and shift the onus on registered person. In the case under discussion, prima facie evidence apparently was not confronted to the registered person. On the other hand, appellant could not substantiate his claim of payment of tax at import stage. 5.???????? In our opinion, the registered person should be provided another opportunity to place his defence before the taxation officer and the taxation officer is required to confront the registered person on the basis of a prima facie evidence that tax was not paid to rule out that the show cause notice was not issued on any presumption. Once the prima facie proof is confronted to the taxpayer the onus shall shift on the registered person who will have to prove it otherwise. If it is proved that tax was not deposited in the government treasury by respective suppliers we are afraid that no other interpretation of this clause can be made and the recipient registered person shall be caught in the mischief of the provisions of the section 8(1)(ca) and cannot be allowed adjustment. 6.???????? With these observations both the orders below are vacated and the case is remanded to taxation officer to re-adjudicate in accordance with instructions and guidelines given above. ??????????? M.A. Stay No.885/LB of 2012: 7.???????? Stay application was also fixed along with this appeal. Since the appeal is decided, the same becomes infructuous. CMA/162/Tax(Trib.)??????????????????????????????????????????????????????????????????????????? Order accordingly.