2025 PLP 842 (PTD)

MUHAMMAD HASHIM KHAN KAKAR, CHAIRMAN.

The above titled Sales Tax Appeal has been filed by the appellant calling in question, the Order-in-Original No.1513/2024-2025 and No.1514/2024-2025 both dated 12.07.2024 passed by the learned Assistant Commissioner of the Balochistan Revenue Authority ('BRA') which have been upheld by the Commissioner (Appeals), BRA, Quetta in Order-in-Appeal No. BRA-CA/AO-19/2024 dated 03.10.2024

2. In the impugned order-in-original the Assistant Commissioner has invoked section 52(6) of the Balochistan Sales Tax on Services Act, 2015 ('Act') for recovery of sales tax on services amounting to Rs.414,865/- and Rs.270,000/ for tax periods of 2018-2019 and 2019-2020 respectively which was withheld from service providers but not paid to the BRA. The learned Assistant Commissioner has also imposed penalty under section 48 of the Act. Show-cause notices issued to the appellant were followed by multiple reminders but the appellant failed to appear before the learned Assistant Commissioner hence impugned ex-parte orders were passed on 12.07.2024. The appellant challenged the said order before the Commissioner Appeals BRA who vide impugned order-in-appeal upheld the order passed by the Assistant Commissioner. Being aggrieved with the impugned order-in-appeal the appellant has come up in appeal to this Tribunal.

3. The appellant has prayed for setting-aside both the impugned orders-in-original passed by the Assistant Commissioner and the order-in-appeal passed by the Commissioner Appeals and taken grounds as per memo. of appeal.

4. The relevant facts for disposal of instant appeal are that the appellant is a manufacturer of wearing apparels. The appellant's registered office is situated at Karachi. The Assistant Commissioner BRA observed that the appellant has received taxable services in the territorial jurisdiction of Balochistan and also withheld sales tax on services but failed to pay the same to the BRA. The learned Assistant Commissioner issued notices to the appellant under section 52(6) read with section 48 of the BSTS Act, 2015 but the appellant failed to respond. Multiple reminders issued also remained non-complied with hence impugned orders in original were passed wherein said sales tax withheld on service was held recoverable. Being aggrieved with said orders an appeal was filed before the Commissioner Appeals where the appellant contended that sales tax on services was withheld by the head office hence the same was paid to the Sindh Revenue Board ('SRB). The learned Commissioner Appeals BRA did not agree with the contention of the appellant and upheld the order-in-original passed by the Assistant Commissioner.

5. On behalf of the appellant, arguments were led by Mr. Abdul Basit, Advocate, who contested the case mainly on two sets of arguments. Firstly, for tax period 2018-2019 the learned counsel for the appellant contended that since section 52(6) was inserted in the Act in 2019 hence the Assistant Commissioner was not justified to invoke the said provision for tax periods 2018-2019.

6. Secondly the learned counsel of the appellant argued that since the registered office of the appellant is located at Karachi hence the appellant is registered with the SRB. Further payments to service providers were made by the appellant's head office hence sales tax on services withheld from service providers/advertisements on billboards was therefore paid to the SRB. As sales tax has already been withheld and paid to SRB hence it cannot be again recovered by the BRA.

7. M/s Jam Saka Dashti and Sarmad Ahmed Khan, learned counsel appearing on behalf of respondent supported the order of the learned Commissioner upholding orders in original passed by the learned Assistant Commissioner and stated that the appellant having virtual place of business in terms of section 2(115)(b) of the Act was required to pay sales tax on services to the BRA which was withheld on the advertisement services availed in Balochistan. The learned counsel argued that in terms of section 4 of the Act the recipient of services in Balochistan is liable to pay sales tax on such services. The learned counsel further contended that once tax is withheld then under section 17 of the Act such amount has to be paid to the BRA. The learned counsel also contended that the appellant has failed to appear before the learned Assistant Commissioner while adjudicating the recovery proceedings. Further the appellant has been changing contention before the learned Commissioner Appeals and before this Tribunal.

8. We have gone through the impugned orders of the Assistant Commissioner and the learned Commissioner Appeals BRA. We have also examined the relevant provisions of law and relevant record, gone through the decisions of the officers below and considered arguments of both the parties. The crux of the issues involved in the instant appeal is whether the appellant was legally required pay tax withheld on advertisement services availed in the territorial jurisdiction of Balochistan to the BRA or not and whether tax withheld from the service providers/ advertisers was recoverable by the BRA from the appellant or not.

9. It is admitted fact that the appellant has received services from advertisers who displayed advertisements of the appellant on the billboards in Balochistan. It is also admitted that the appellant has made payments to such service providers/advertisers and also withheld sales tax on services form said service providers/advertisers. However, the appellant has paid such tax to the SRB on the grounds that the appellant is registered with the SRB and the appellant is not resident of Balochistan. The learned Assistant Commissioner BRA and the learned Commissioner Appeals on the basis of said admitted facts, definitions of "Place of Business in Balochistan" and "Resident" provided in the Act as well as Rules 1(3) and 3 of the Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, held that the appellant was required to pay tax withheld to the BRA. The learned commissioner Appeals has given findings as follows: "

9. Keeping in view the relevant provisions of law and admitted facts of the case, it has been established that the appellant has acquired services in "advertisement on billboards within Balochistan and is liable, as a withholding agent, to withhold and pay the BSTS amount to the Government of Balochistan, for which the respondent has rightly passed the impugned orders. The appellant in his grounds of appeal and as well as the learned council for the appellant during his arguments have admitted that the sales tax amount has been withheld from the service providers but paid to the SRB, due to non-registration with BRA at that time. The refund or adjustment of the said BSTS withheld amount, erroneously paid to the SRB can be claimed by the appellant from the SRB.

10. Thus, the appellant is liable to pay the unpaid withheld BSTS amount to the Government of Balochistan. The instant Appeals Nos. 19/2024 and 20/2024 are hereby dismissed and the orders-in-Original No. 1513/2024-25 and No. 1514/2024-25 both dated 12-07-2024 for the tax period 2018-19 and 2019-20 respectively, passed by Assistant Commissioner (Operations) BRA, stand upheld."

10. Before deciding the issue, we deem it appropriate to refer definitions of "Place of Business in Balochistan" and "Resident" as provided in sections 2(115) and 2(139) of the Act. When read together the said definitions, a company is resident of Balochistan if it has place of business in Balochistan including virtual presence through which it carries on an economic activity. The appellant being resident of Balochistan is required under section 25 of the Act to get registered with BRA, to withhold tax on services availed in Balochistan and pay the same to BRA. However, the appellant has paid tax withheld to the SRB on the grounds that payments to service providers were made by the appellant's head office located at Karachi. We have observed that the appellant has opted not to appear before the Assistant Commissioner during adjudication of order-in-original which resulted in passing of a non-speaking ex-parte order. The Assistant Commissioner on his part has also failed to discuss relevant provisions of law referred above by counsels of both the sides. Further the order-in-original is silent regarding service providers of the appellant, whether they are registered with the BRA and whether they have filed their returns under the Act or not because in both the scenarios implications will be different for the appellant.

11. In view of the above discussion we deem it appropriate to vacate both the orders-in-original and the order-in-appeal and remand back the matter to the Assistant Commissioner BRA to re-examine the case in the light of relevant provisions of law and observations supra and provisions of law referred before this Tribunal. The Assistant Commissioner BRA is also directed to provide proper opportunity of being heard to the appellant, examine all the facts and relevant provisions of law and then come up with a judicious but speaking order. The appellant is also directed to appear before the Assistant Commissioner within 15 days of this order, explain it's contention and assist him in coming up with a judicious but speaking order. MQ/160/Bal. Order accordingly.