2020 PLP (Trib (PTD)

CH. SHAHID IQBAL DHILLON (JUDICIAL MEMBER).

This appeal filed by the registered person is against the Order-in-Appeal No.18/2019 dated 16-01-2019 passed by the learned CIR(A), Faisalabad whereby he while maintaining the Order-in-Original No. 04/2018 dated 20-02-2018, dismissed the appeal.

2. Briefly facts of the case as succinctly ascribed on record and also put forth during the course of hearing by the learned representatives are that audit of the appellant's refund for the tax period of October-2014 was conducted by audit officers of DRRA, Lahore. It was alleged that the appellant has shown consumption of 34,828 kgs, raw material i.e. yarn and fabric in exports but actual weight of goods exported were only 32,838 kgs as is evident from his commercial invoice and shipping bills meaning thereby, the appellant has shown excess consumption of 1,990 kgs and received excess refund of sales tax worth Rs. 190,926/-. Resultantly, a show-cause notice was issued by the learned DCIR asking the appellant as to why an amount of sales tax refunded worth Rs.190,926/- may not be recovered under section 11(3) of the Sales Tax Act, 1990 along with default surcharge and penalty under sections 34 and 33 ibid.

3. Upon culmination of adjudication proceedings, the DCIR adjudged liability of sales tax along with default surcharge and penalty vide order-in-original dated 20-02-2018. Being dissatisfied and aggrieved by the said order, appellant filed the first appeal before learned CIR(A), Faisalabad who dismissed the appeal vide order-in-appeal dated 16-01-2019. The appellant being discontented and aggrieved by the said order has now filed the second appeal before this Tribunal.

4. Initiating the arguments, learned counsel vehemently argued that the learned CIR(A) has given no exhaustive judgment instead of retrieving to primitive assertions already taken in the adjudication order and neither discussed the grounds filed nor even a single question has been attended to and answered by the CIR(A) while handing down the impugned judgment. Learned counsel for the appellant has vehemently contended that the impugned order is erroneous in law and the same is based on misconceived facts. Learned counsel assailed that DRRA cannot audit the record of private industrial unit registered under the Sales Tax Act, 1990 hence whole exercise conducted by it is illegal and without jurisdiction hence, coram-non-judice. Reliance in this regard was placed on the judgments reported as (2007 PTD (Trib.) 1600), (2008 PTD (Trib.) 261) and (2010 PTD 1355). He further submitted that no excess consumption (1,990 Kgs) as alleged in the show-cause notice as well as in the impugned orders has been found in the sales tax record maintained by the appellant and the whole exercise of creating liability of sales tax has been carried out on the basis of assumption and presumption. Conversely, when the learned DR confronted with the tax situation cited supra, in counter arguments, he has assailed the case on similar grounds and charges as levelled earlier in impugned show cause notice as well as adjudged in consequent orders and nothing newel, except to reiterate earlier set of contentions, has been put forth by him and fully supported the orders passed by both the authorities below simply re-endorsing the basis evolved therein.

5. We have heard arguments of rival parties and also carefully examined the relevant provisions of law as well as case record and have found ourselves completely in agreement with contentions taken at instance and have nothing otherwise to differ from set of arguments put forth by the learned counsel of appellant. We have no hesitation in our mind to hold that in the instant case, audit was conducted by the staff of Directorate General of Revenue Receipts Audit, Lahore which is a branch of Auditor General of Pakistan and its officers are neither sales tax officers under section 30 of the Act nor they are authorized under the Sales Tax Act, 1990 to have access to premises and accounts of any registered unit. They do not even fall in the category of officers mentioned in section 25 of the Act in execution of the aforesaid Act. Staff of DRRA is non-existent authority as far as private registered units are concerned and they cannot have access to their books of accounts and other record under the sales tax laws. The Officials of Department of Revenue Receipt Audit (DRRA) are not competent to conduct audit of records of a person registered under the Sales Tax Laws. It also becomes clear from the perusal of Notification No. S.R.O. 1195(I)/90 dated 17.12.1990 that the President of Pakistan has required the Auditor General of Pakistan to audit the receipt of Federal Government and not the record of the private enterprises/industrial units licensed/registered under the Sales Tax Laws. Thus, whole exercise conducted by the DRRA in this particular case is illegal and coram non judice. Reliance is placed on the judgments of Appellate Tribunal, Inland Revenue and Peshawar High Court reported as (2007 PTD (Trib.) 1600), (2008 PTD (Trib.) 261), (2012 PTD (Trib.) 759) and (2010 PTD 1355).

6. We have also observed that the charge of excess consumption is false and unfounded as the alleged wastage of fabrics (1,990 kgs) was sold in the local market and due tax was also charged and paid in the national exchequer but due to bona fide mistake and error, the same could not be accounted for in its documents filed at the time of filing of refund claim.

7. In view of what has been stated above and by respectfully following the judgments of this Appellate Tribunal and Peshawar High Court, referred supra, we hereby set aside the impugned show-cause notice and consequent orders of both the authorities below being illegal, unlawful and ab initio void. Resultantly, instant appeal filed by the registered person is accepted as prayed for and disposed off in the manner and to the extent as dilated supra. SA/159/Tax(Trib.) Appeal accepted