2011 PLP (Trib (PTD)

SYED MUHAMMAD JAMIL RAZA ZAIDI (JUDICIAL MEMBER).

This appeal challenges the validity of order passed by the Commissioner Inland Revenue (Appeals-II) Karachi whereby he allowed the appeal of the respondent and directed the Department to allow the input tax claimed by the registered person on account of utility bills. The Department now challenges the validity of said order and it has been contended by the Department:-- "....2. That the learned Commissioner (Appeals) erred in law and allowed the input tax adjustment on the utility bills whereas the same is not covered by the Sales Tax Act, 1990 and rules made there under. Therefore the order passed by the appellate authority is unjust, illegal, void and is liable to be set aside. (3) The Commissioner (Appeals) erred in law and allowed the input tax on Electricity and Gas in spite of the fact that according to Sub-Rule (2) of Rule-7 of S.R.O. 124(1)/2000 dated 15-3-2000, (copy) attached the Registered Person shall be entitled to claim input tax adjustments against such invoices in the tax period to which the bill is paid and as per the provisions of section 7 and section 8 of the Sales Tax Act, 1990 the bills against which input tax is being claimed should certain following.-- (1) Sales Tax Registration No. (2) Add-backs declared before Collector of such consumer However, the respondent No.2 has not fulfilled any of the condition of said' S.R.O. Further, these bills,, were not in the name of the registered persons neither the name of registered person nor their registration number is mentioned on the said bills therefore, the' input tax is inadmissible in the light of the Electric Power Rules, 2000 read with the, provisions of the Sales Tax Act, 1990. Hence the order passed by the appellate authority is unlawful, illegal and is liable to be set aside."

2. The learned DR has been heard while the learned AR of the 'taxpayer/assessee did not appear despite properly noting the date of hearing for 24-5-2011 on 18-5-2011.

3. The learned DR argued that as the electricity bills were not in the name of the registered, person, therefore, the Adjudicating Officer rightly disallowed the claim of the adjustment input tax. In support of his contention the learned DR relied upon the case law reported as 2003 PTD (Trib.) 1215 CEST, Peshawar. He, therefore, pleaded that learned CIR(A) was not justified in ordering to allow the credit of input tax-on utility bills.

4. It is observed that the order passed by the learned Commissioner (Appeals) is very much within the framework of law and he directed the Department to allow the-input tax paid by the registered person on account of utility bills. It is now well settled principle of VAT type sales taxes that input tax paid at an earlier stage is deductable from the tax liability arising from the payment of output tax, and section 7 of the Sales Tax Act, 1990 supports this point of view. From the record, it is evident that the taxpayer had paid input tax irrespective of the fact whether the bills were in his name or not. The evidence establishes that the fact of payment of input tax and the same is refundable to the taxpayer from his output tax. In these circumstances, I do not find any illegality or irregularity in the impugned order, the appeal as such does not merits consideration and the same is accordingly rejected. C.M.A./220/Tax(Trib.)???????????????????????????????????????????????????????????? Appeal rejected.