2012 PLP (Trib (PTD)

This titled appeal has been filed by the Revenue to impugn order dated 10-6-2011 passed in Appeal No.272 by Commissioner of Inland Revenue (Appeals), Multan. Brief facts of the case are that Messrs Chicago Metal Works (Pvt.), Ltd. Multan was blocked by F.B.R., Islamabad. The registered person moved an application for de-blocking the same. The Revenue addressed a letter to the respondent that Sales Tax and additional tax of Rs.2,918,811 is recoverable from it against fake/flying invoices when it would deposit the said amount in the government exchequer recommendation would be forwarded to F.B.R., Islamabad for de-blocking the registered person. Under these circumstances, the respondent was forced to deposit the said tax under protest to de-block its NTN. Feeling 'aggrieved the registered person challenged this before the learned CIR(A) who accepted the appeal and allowed the refund of the aforementioned amount. Hence. this appeal by the Department.

2. The learned DR while arguing the appeal of the Revenue urged that notice to the respondent was issued under section 48 of the Sales Tax Act, 1990 for payment of the due amount recoverable against fake and flying invoices. He stated that the appeal under subsection (1) of section 45-B of Sales Tax Act, 1990 cannot be filed against the order passed under section 48 of Sales Tax Act, 1990. He stated that CIR(A) was not justified to give order for issuance of refund without considering the facts that input tax claimed/adjusted on the invoices issued by the blocked/black-listed suppliers. He also pointed out that the goods on which input tax was unlawfully adjusted by the respondent were imported for use in manufacturing whereas he stated that the respondent sold the same in the market and no input adjustment is admissible thereon.

3. The learned (ITP) opposed the contention of the Revenue and supported the order. He stated that the business of the registered person were closed due to blocking and they had no option except to pay the demanded amount under protest. He urged that they were forcefully asked to deposit the amount without issuing of show-cause notice and (without adjudication as per procedure prescribed under the law. He elaborated that notice under section 48 of Sales Tax Act, 1990 can only be issued for recovery of arrears of tax and the word "arrears" as defined in subsection (2A) of section 2 of Sales, Tax Act, 1990 reads as under: ((2A) "arrears", in relation to a person, means, on any day, the Sales Tax due and payable by the person under this Act before that day but which has not yet been paid;) He contended that even before the filing of appeal before this forum the departmental authority was of the view that the amount demanded by the Department was without any legal basis and Refund was sanctioned to them vide Refund order No.4 dated 22-8-2011. We have heard both sides and find that notice under section 48 of Sales Tax Act, 1990 was issued to the respondent without application of mind and without following the requirements of law as per scheme of Sales Tax Act, 1990. If the respondent unlawful adjusted the input tax, they should have been issued show-cause notice for violating the,, provision of law and the same should have been adjudicated upon by the I) appropriate officer. Notice under section 48 of Sales Tax Act, 1990 is issued for the recovery of the arrears as defined under subsection (2A) of section 2 of Sales Tax Act, 1990 whereas the amount under reference does not fall within the category of arrears. Further the Department did not bother to investigate whether the suppliers have paid the sales tax on the invoices issued to the respondent. No exercise was under-taken to verify the same. The respondent contended that the suppliers declared black-listed subsequently became active and there was no liability of such purchases made by the taxpayer. The action of the revenue being D contrary to the provision of Sales Tax Act, 1990 cannot be sustained. In view of this we find no reason to accept the appeal which is rejected being devoid of merits.

4. Order accordingly. C.M.A./81/Tax(Trib.)?????????????????????????????????????????????????????????????? Appeal rejected.