2025 PLP (Trib (PTD)

MIAN ABDUL BASIT (JUDICIAL MEMBER). This is an appeal filed by appellant/registered person against the Order-in-Appeal No. 207 dated 26 03 2018 passed by the learned Commissioner Inland Revenue (Appeals). Peshawar [CIR(A)], whereby the order dated 03.04.2017 made under section 11 of the Sales Tax Act, 1990 (the Act, 1990) by the assessing officer, was confirmed.

2. Brief facts leading to this appeal are that the appellant company made supplies of taxable goods to various government organizations. The concerned DDD being withholding agent deducted 1/5h amount of sales tax from the total amount of tax charged as per Rule 2(2) of Sales Tax Special Procedure (Withholding) Rules, 2007 notified vide SRO 660(I)/2007 dared 30.06.2007. But the appellant failed to deposit the rest of 4/5th amount of sales tax at Rs. 10,560,000/- as evident from the sales tax returns/profile during the tax period from April 2016 to June, 2016 in violation of section 3 of the Sales Tax Act, 1990. A show-cause notice was issued confronted the taxpayer about the said discrepancies, but appellant was failed to reply. Later the proceeding so initiated was culminated by passing the assessment order wherein the appellant was directed to deposit tax demand of Rs. 10,560,000/- as principal amount along with default surcharge and penalty. Being aggrieved, the Taxpayer filed appeal before learned CIR (A), who vide Order-in-Appeal No. 207 of 2018 dated 24.03.2018 confirmed the assessment order. Dissatisfied with the order of the learned CIR(A), the appellant / registered person has preferred the instant appeal before this forum, hence these proceedings. 3 Mr. Danish Ali Qazi Advocate attended the proceedings on behalf of the appellant/registered person whereas on the other hand Mr. Dost Muhammad DR appeared on behalf of the tax department.

4. Learned AR contends that the proper opportunity of being heard and to produce the evidence was not granted to the appellant during the original assessment proceedings. The learned AR submits that the original assessment proceeding was culminated in a hurry without following the instructions issued by FBR vide Circular No. 7(2) dt-14/94 dated 01.02.1994, whereby the Assessing officer was required to provide not less than three opportunities to the registered person for defending its case, learned AR further states that due tax on supplies to Secondary Education Department, Peshawar had been deposited by the appellant while filling the sales tax return but this factor was not considered by forums below. The whole order was passed without examining and inspecting the complete record of the appellant, hence the same was based on presumptions and assumptions. AR maintains Learned DR, to controvert the submission of learned AR, states that two notices were issued to the appellant for hearing i.e. on 20.01.2017 and on 27.02.2017, but the appellant opted not to appear before the assessing officer which persuaded the assessing officer in finalizing the proceedings as per information available with the assessing officer. Learned DR or further submits that the appellant did not even produce any documents evidence before the first appellate authority i.e. learned CIR(A). It is therefore evident that the appellant did not have any record or evidence regarding payment of tax determined by the assessing officer while passing the order-in-original. Learned DR backed up the order of authorities below and prayed for dismissed appeal.

5. We have heard the arguments of rival parties and gone through the fact of case available on record. The perusal of order-in-original reveals that the two hearing dates were fixed i.e 20.01.2017 and 27.02.2017 and as per record the appellant did not appear to defend and plead its case. The order also shows that the same was made on 03.04.2017 and admittedly no hearing date was fixed for the said date, and it has been settled in a judgment of the Hon'ble High Court reported as Commissioner of Income Tax v. Sakhi Contractor and Engineers, Multan (1981 PTD 210) that the order passed on the date for which no hearing date was fixed, is illegal. The other issue in the said appeal is that whether the proper opportunity of being heard was provided to the appellant during the original assessment proceedings. The perusal of the orders of tax authorities below depicts that the order-in-original was made on the back of the appellant and even the first appellate proceeding was also finalized without inspecting or examining the supply record of the appellant. The contention of learned AR that all the supplies made to Secondary Education Department, Peshawar were properly declared in the sales tax return and due tax amount as per the provision of section 3 read with section 7 of the Act, 1990, was paid in government exchequer, was not properly adjudicated by the forums below. The assertion of learned AR regarding declaration of supplies and payment of due tax in respect of such supplies needs proper scrutinization of record and sales tax returns of the appellant, which at this second appellate forum seems practically difficult, and assessing officer is the best and appropriate forum for inspecting the record of the appellant. The registered person should have been provided proper opportunity to produce evidence in its support to defend the case which, perhaps in this case, was not provided to the appellant at the initial stage of assessment. The perusal of the order of first appellate authority also depicts that the grounds taken by the appellant in respect of declaring the supplies and making payment of tax has not be adjudicated in a legally acceptable manner, which renders the order flawed. We, therefore, deem is appropriate, in order to give a one fair chance to the appellant to prove his contentions, to issue a direction for examination of record and documents of the appellant.

6. In view of the above circumstances and factual position of the case, it will be in the fitness of things to set aside the orders of authorities below and remand the case back to the assessing officer for making a fresh decision. The appellant is directed to appear before the assessing officer with complete record and explanation regarding the legal issues on the receipt a copy of this order. The assessing officer, on receipt of the record from the appellant shall confront the discrepancies short coming in the record, if any, in writing from the appellant before finalizing the proceedings. The appellant on receipt of any notice from the assessing officer requiring any additional evidence or record, shall provide the requisite, information or record to assessing officer and shall extend full corporation in finalizing the re-adjudicating proceedings. In pursuant to this, proper opportunity shall be granted to the appellant before finalizing re-adjudicating proceedings. It is however, clarified that he re-adjudication proceedings shall be completed within sixty (60) days from the receipt of certified copy of this order.

6. The appeal stands disposed of in above terms.

7. This order consists of four (04) pages, and I have affixed my signature on each page. MQ/37/TAX(TRIB) Order accordingly.