1983 PLP (Trib (PTD)

3. Having heard both the parties we agree with the contention of the learned Departmental Representative also find support from the decision of the Lahore High Court reported as (1977) 36 Taxation 74 and a number of Full Bench decisions of this Tribunal as in S. T. As. Nos. 143 to 146/KB of 1980‑81, dated 28‑8‑1982 and in S. T. As. Nos. 64 to 66/KB of 1979‑80 dated 28‑8‑1982 wherein the whole matter was considered afresh and a view was taken which was contrary to the one taken by a Division Bench of the Tribunal in the decision hearing I. T. A. No. 729/KB of 1977‑8 dated 19‑11‑1978 and relied upon by the Appellate Assistant Commissioner, In this decision it was held that according to the provisions of Sales Tax Act since the finished product i.e. vegetable ghee was exempt from sales tax, the refund of sales tax supposed to have been paid on purchases mentioned the learned Appellate Assistant Commissioner, could not be allowed. The order of the learned Appellate Assistant Commissioner, is accordingly vacated on this point and that of the Sales Tax Officer restored, wherein he disallowed the claim of refund for the reason that the applicant failed to prove the payment of sales tax with reference to the sale invoices. Than proposition has been discussed in detail in the paragraphs that follow, on, facts similar to those obtaining in the subsequent years appeal.

4. In the assessment year 1975‑76 the Sales Tax Officer disallowed the refund of sales tax purported to have been paid on purchases of raw‑material from local market amounting to Rs. 1,02,

569. The main reason for which the claim was disallowed being that the bills/vouchers produced by the assessee in respect of the claim did not show the amount of sales tax pa:(,' by the seller separately. The vouchers only indicated that the price charged was inclusive of sales tax. In appeal, the learned Appellate Assistant Commissioner however, observed that the vouchers obtained from the sellers showed that the sale price charged was inclusive of sates‑tax and hence there was no justification for disallowing the claim. The learned Appellate Assistant Commissioner also places reliance on a decision reported as (197C) 22 Taxation 12 and S. T. As. Nos. 53 and 57/KB of 1974‑75 dated 10‑2‑19 1

7. The Department's grievance is that since the vouchers did not show the amount of sales tax separately on the vouchers, the Sales Tax Officer was fully justified in disallowing the claim. The learned Departmental Representative submits that refund of sales tax could not be allowed unless definite and reliable proof of payment of sales tax was made available to the Sales tax Officer. He submits that mere mention of the fact that the price charges was inclusive of sales tax could not justify the allowance of refund. The learned counsel of the respondent, on the other baud, submits that In the bills and vouchers given by the sellers it was clearly mentioned that the price charged was inclusive of sales tax and hence the learned Appellate Assistant Commissioner was justified in allowing the amount of refund claimed. The learned counsel also produces before us the copies of vouchers‑‑sale memos etc. to prove that evidence regarding payment of sales tax being available, the learned Appellate Assistant Commissioner did not err in ordering refund of sales tax.

5. We have given our earnest consideration to the submissions made b9 the learned Departmental Representative and the learned counsel of the respondent. The claim for refund is to be made and the application has to be processed by the Sales Tax Officer in accordance with the Rule 31 of the sales Tax Rules. For the sake of convenience we reproduce hereunder rule 31 of the Sales Tax Rules "31 . . . . . A claim for refund of tax under subsection (1) or sub-section (2) of section 27 shall be made to the Sales Tax Officer in form S S. T.‑

10. The claim shall be supported by a statement showing the description, quantity and value of the goods and the tax paid in respect of them, together with the proof of payment of the tax."

6. It is evident from the rule that the applicant claiming refund has to prove actual amounts of sales tax paid. In the instant case the sale memos. produced before us simply mention the quantity, the items sold and the price together with an endorsement "including sales tax . This endorsement besides being vague does not specify the actual amount of sales tax included in the sale price. Further, as eras pointed out by the learned Departmental Representative also, we note, that the aforesaid endorsement appears to have been made later on. The learned counsel could not point out any specific sale memo. indicating the amount of sales tax. Further there are some certificates issued by the sellers showing that on its purchases made by the assessee during the year amount of sales tax was included in the sale price. We reproduce below such certificates 10 Certificate issued by H...P... dated 30‑5‑1976. "To whom it may Concern This is to certify that purchases made by Messrs. M. F. Corporation I...during 1973‑74 amounting to Rs. 11,24,271 (Rupees eleven thousand two hundred forty‑two and paisa seventy one) are inclusive of sales tax which has been paid at source." (ii) Certificate from A. F. A A .Co .dated 12‑4‑1976. "To whom It may Concern We hereby certify that purchases made by Messrs M. F. Co............ L...during 1973‑74 amounting to Rs. 3,119 (Rupees three thousand one hundred nineteen) are inclusive of sales tax which has been deposited at source at custom." It is clear from the aforementioned instances that the amount of actual sales tax paid is not ascertainable and it cannot also be proved from the salt invoices whether or not the sales tax allowed to have been collected by the sellers had in fact been paid to the Government treasury and if so, what was actual amount paid.

7. The alternative argument of the learned counsel of the respondent is that in the earlier years the Sales Tax Officer allowed claims on the basis of similar vouchers produced before the Sales Tax Officer. We have perused a couple of orders of the Sales Tax Officer allowing refund by adopting an estimated amount on the total value of purchases made. For example in the assessment year 1973‑74 and 1974‑75 locally purchased goods were shown at Rs. 1,43,409 and 3,25,337 respectively. The Sales Tax Officer estimated the amount of sales tax deemed to have been paid at the rate of 1/6th of aforesaid amounts which he refunded to the assessee. It appears that the Department has not disputed the refunds so allowed through administrative or appellate channels, but this fact alone cannot justify the claim of refund legally because according to the learned D, R. the Sales Tax Officer erred in allowing the refund on an estimated basis which was not in accordance with the law and as such the error should not be allowed to continue for all times to come. We have also looked into a decision of this Tribunal, a copy of which has been produced by the learned counsel in support of his claim in S. T. A. No. 79 of 1958‑59 dated 18‑11‑1960. We note this decision does not help the learned counsel's case because the Tribunal directed that the claim of the respondent may be verified by the Sales Tax Officer on the basis of data in his possession. It is thus clear that the Tribunal's decision could not be considered as on all fours with the facts obtaining in this case. In view of all those facts, we are of the opinion, that there being no clear an g categorical proof of payment of sales tax as provided under the rules, the learned Appellate Assistant Commissioner was not justified in allowing the refund. The order of the learned A. A. C. is accordingly vacated that of the Sales Tax Officer confirmed. Before parting with the issue it may also be stated that section 20 of the Sales‑tax Act also supports our finding inasmuch as the credibility of the invokes issued by the sellers is not free from doubts. For the sake of convenience we reproduce hereunder. the provisions contained in section 20 of the Sales Tax Act :‑ "

20. Invoices of goods sold.‑When goods are sold by an assessee the purchaser shall be furnished with a written invoice of the goods sold, with invoice shall state separately the amount of tax." It was obligatory on the part of the seller to have mentioned the amount of sales tax separately in the invoice/cash memo. It was in the interest of the assessee‑appellant to obtain invoices as prescribed by section 20 and he should have insisted in obtaining such invoices. The appellant admitted failed to do so and as such the material on which the claim of refund w based could not be relied upon for purposes of issue of refund.

8. In 1975‑76 the other ground of the department relates to the allowance of refund of sales‑tax on a chemical used as stabilizer, paid by the respondent at the time of import. The Sales Tax Officer did not dispute the payment of sales tax at the import stage but be doubted the consumption of this raw material and accordingly disallowed the refund amounting to Rs. 21,

370. Before the learned Appellate Assistant Commissioner it was argued that this chemical could only be used in the manufacture of ice cream and that the Sales Tax Officer had no justification for presuming that this chemical was not utilised. The learned Appellate Assistant Commissioner. Therefore, accepted the respondent's contention and allowed the refund. The Department's case before the Tribunal is that the Sales Tax Officer was justified in disallowing the claim because the consumption of this chemical could not be proved. The learned counsel of the respondent submits that in the Income‑tax Assessment for the period relevant for the year under consideration., the I. T. O. accepted the declared trading results wherein the value of the chemical (stabilizer was debited in the accounting year and hence in making the sales tax assessment there remains no justification for disbelieving the fact of consumption of the aforesaid chemical. On consideration of these facts it appears that the S. T. O. disallowed the claim in an arbitrary manner and in disregard of the fact that the consumption of this chemical was not disputed in the relevant income‑tax assessment. The disallowance of refund, therefore, seems to be without any basis and hen we uphold the order of the learned Appellate Assistant Commissioner of this issue. In the result, the three appeals are disposed of as indicated above. Appeals disposed of.