2012 PLP (Trib (PTD)

Through this departmental appeal, commissioner legal RTO, Faisalabad has assailed the Orders No. 165 of 2010 dated 25-8-2010 passed by the learned CIR(Appeals) Faisalabad.

2. Brief facts of the case are that during scrutiny of sales tax records, the following registered person have been declared blacklisted/suspected by the concerned Collectorate/Authorities detailed below:-- Sr.No. Name of Registered person Registration Number Blacklisting Order issued vide

1. Messrs Adeel Packages 0803481900855 C.No.ST-Ext-Audit/49-2006/27603 dated 29-12-2007

3. Further, it has been reported that Messrs Umer Abdullah Textiles, having sales tax registration number 0890999131164 have received refund against the invoices issued by Messrs Adeel Packages amounting to Rs.2071275 detailed below:-- S.No. Seller Registration No. Seller Name Tax Period Paid 1 0803481900855 Messrs Adeel Packages 01/2004 258375 2 0803481900855 Messrs Adeel Packages 02/2004 213000 3 0803481900855 Messrs Adeel Packages 03/2004 93600 4 0803481900855 Messrs Adeel Packages 04/2004 90000 5 0803481900855 Messrs Adeel Packages 05/2004 101250 6 0803481900855 Messrs Adeel Packages 06/2004 70500 7 0803481900855 Messrs Adeel Packages 07/2004 80100 8 0803481900855 Messrs Adeel Packages 08/2004 108000 9 0803481900855 Messrs Adeel Packages 09/2003 99000 10 0803481900855 Messrs Adeel Packages 09/2004 135000 11 0803481900855 Messrs Adeel Packages 10/2003 162750 12 0803481900855 Messrs Adeel Packages 10/2004 112500 13 0803481900855 Messrs Adeel Packages 11/2003 171750 14 0803481900855 Messrs Adeel Packages 11/2004 107700 15 0803481900855 Messrs Adeel Packages 12/2003 267750 Total 2071275

4. Prima facie, this makes reasons to believe that Messrs Umar Abdullah Textiles are involved in tax fraud as defined under section 2(37) of the Sales Tax Act, 1990 and evasion of sales tax and have caused loss to the National Exchequer by means of refund received against fake invoices without physical transfer of goods as envisaged under section 2(14) of the Sales Tax Act, 1990 and without final payment of sales tax in National Exchequer.

5. Based on the above omissions/facts, Messrs Umar Abdullah Textiles, Tika Gali No. 1, Yarn Market Montogemery Bazar, Faisal-abad, were charged with the violation of sections 4, 7, 8, 8A, 10, 22, 26 and 73 of the Sales Tax Act, 1990 read with relevant Refund Rules and were called upon to show cause as to why input tax illegally received amounting to Rs.2071275 may not be recovered in terms of sections 11(2) and 36(1) of the Sales Tax Act, 1990 along with default surcharge under section 34 and penalty be imposed under section 33 of the Act ibid. The adjudication proceedings culminated in passing of Sales Tax Order-in-Original No.12 of 2010 dated 31-5-2010, wherein input tax of amount of Rs.2071275 was ordered to be recovered from the appellants along with default surcharge under section 34(1)(c) of the Sales Tax Act, 1990. A penalty equal to 100% of the revenue involved was also imposed upon the appellants under section 33(11)(C) of the act ibid. The taxpayer filed appeal against the above order, the learned CIR(A) accepted the appeal operative part of the judgment of CIR(A) is reproduced here under:-- "A detailed examination of the Order-in-Original and the case record reveals that the refund issued to the appellant was held to be recoverable on the ground that invoices were issued by Messrs Adeel Packages and the supplier was subsequently Blacklisted. I find that after the above referred judgment of the Learned Appellate Tribunal, Inland Revenue, Lahore, the Order for blacklisting ceases to have any legal effect and is no longer in the field and can not be pressed into service for disallowing the input on the invoices issued by the supplier. Hence the invoices issued by Messrs Adeel Packages on the basis of which refund was issued can not be assailed. The appellant has produced the relevant record and documentary evidence to establish that the refund claim was otherwise admissible and in order. This being the position, I find the plea of the appellant to be correct, which is accepted and the impugned order-in-original is set aside on this score only."

6. During hearing proceedings before us that the DR argued that once the supplier is blacklisted then all the invoices issued in the past are liable to be rejected and recoveries made thereon from the registered persons to whom such supplies had been made.

7. The learned counsel however contended that the status of Adeel Packages Faisalabad has already been restored by this Tribunal as active and blacklisting orders have been vacated vide this Tribunal order in S.T.A. 2292/LB/2009 dated 6-5-2010. He further produced a number of judgments of the Honourable Tribunal wherein similar order of CIR(A) were upheld following the ratio revealed in the aforesaid judgment. Learned AR also produced a copy of Audit report of RTO Faisalabad bearing CNO.STA-1/04/05/33 dated 2-12-2005 wherein name of Messrs Adeel Packages Faisalabad was recommended to be deleted your hit list of registered persons where taxpayer was found abnormal. Learned DR could not rebut any of the arguments of the learned AR.

8. Keeping in view the above we do not find any force in departmental appeal, therefore the case is discussed orders of learned CIR(A) are upheld. CMA/124/Tax(Trib.) Appeal dismissed.