2003 PLP (Trib (PTD)

Abdul Rahim Bhatti for Appellant. Imran Tariq, D.R. for Respondent. Date of hearing: 24th January, 2002. MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑This judgment shall dispose of the appeal filed by Messrs Bahawalpur Engineering Limited, Bahawalpur against Order‑in‑Original No.2 of 2001, dated 7‑7‑2001 passed by the Deputy Collector Sales Tax (Refund), Multan. By this order the learned Adjudicating Officer has rejected the appellant's claim for refund of sales tax amounting to Rs.1,02,17,600 on the ground that the same was barred by time prescribed under section 66 of the Sales Tax Act, 1990.

2. The appellant's case is that during the period 1994‑95 to 1997‑98 they paid sales tax amounting to Rs.93,18,144 on imports and Rs.8,99,456 on local purchase of materials used in the manufacture of their taxable and products, i.e. auto harnest wire but inadvertently could not claim input tax adjustment in terms of section 7 ibid. The inadvertence came to surface during an audit of their record by the Sales Tax Department, after which they immediately filed refund claim in April, 2000. According to the appellants, "the tax over paid through inadvertence" and "refund on account of input adjustment not claimed" are two separate subjects in the law as is evident from the amendment made in section 66 in 1998 which provided for a period of one year to claim refund on account of input tax adjustment not claimed within the relevant tax period. Since no retrospective effect was given to this amendment, there was no time limit for claiming refund on account of input tax adjustment not claimed during the relevant tax period. Their claim for refund is, therefore, not hit by time limit prescribed under the amended section 66 referred to above. During the course of arguments. The learned counsel for the appellant also quoted Honourable Supreme Court's judgment in Civil Appeal No.48 of 1993 titled Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others whereby it has been held that denial of refund of the amount involved would be violation of Article 24(1) of the Constitution which lays down that no person shall be deprived of his property save in accordance with law. It has accordingly been prayed that the impugned order be set aside and refund allowed.

3. The learned D.R. opposed the appeal pleading that refund claim was barred by time and secondly the appellant by not claiming input tax adjustment in time had made the amount of sales tax paid as part of the price of the end‑product and passed on its incidence to the consumer which according to section 3‑B of the Sales Tax Act is not refundable.

4. We have examined the case records and considered the arguments put forth by the both sides. The Department does not dispute the fact that the appellant was entitled to input tax adjustment, had he made the adjustment during the relevant tax period or claimed refund in respect thereof in time i.e. within a period of one year from its payment as provided under section 66 of the Sales Tax Act. The only issue involved is whether the appellants are entitled to the refund of the amount claimed after the expiry of the limitation period provided under section 66 of the Sales Tax Act or not. Section 66 of the Act even as it existed during the relevant period, provided for a period of one year for claiming refund of tax paid or over paid through inadvertence, error of misconstruction. The scope of this section was admittedly broadened by including in it the "refund on account of input adjustment not claimed within the relevant tax period" vide Finance Act, 1998 but it does not imply in any way that before this amendment there was no limit for claiming refund of such amount. The appellant's argument to this effect is without any force. Even the judgment of Honourable Supreme Court quoted by the appellants in support of their contention does not support this view‑point as it also fixed a maximum period of three years for claiming refund whereas in the instant case the refund claim was filed after a period of 2 to 6 years. Secondly the aforesaid judgment of the Supreme Court is not relevant to the facts of the instant case. The appellants admittedly supplied the auto harnest wire produced by them to the manufacturers/assemblers of vehicles and by not claiming input tax adjustment, they had passed on the incidence of entire amount of output tax to their buyers who, in turn, were entitled to its adjustment against the output tax on their end, product. According to the provisions of section 3‑$ of the Sales Tax Act, the appellants are not entitled to claim refund of the tax, incidence of which had been passed on to the consumer.

5. For the aforesaid reasons, we do not find any merit in the appeal, which is rejected. C.M.A./726/Tax (Trib.) Appeal rejected.