2021 PLP (Trib (PTD)

DR. MUHAMMAD NAEEM (ACCOUNTANT MEMBER).

This appeal has been instituted by the registered person against the impugned appellate order dated 27.06.2019 recorded by the learned CIR(A) Faisalabad wherein the learned first appellate authority directed the Adjudication Officer to examine the claim and verify the stance of the registered person.

2. Summary of the facts, relevant to the disposal of present appeal, are that during analysis of sales tax returns and invoice summaries for the tax periods from April-2017 to February-2018, whereby certain discrepancies were pointed out that the appellant has failed to pay full amount of further tax @ 2% in respect of its supplies made to un-registered persons hence, has violated the provisions of sections 3, 3(1A), 6, 7, 22, 23 and 26 of the Act. Resultantly, the appellant was called upon to show-cause notice dated 06-06-2018 as to why further tax worth Rs.1,189,258/- may not be recovered under section 11(2) of the Act along with default surcharge and penalty under sections 34(1) and 33 ibid. In response to show-cause notice, appellant filed written reply on 25-06-2018 supported with documentary evidences but upon culmination of adjudication proceedings, learned ACIR has adjudged liability of sales tax vide Sales Tax Order-in-Original No. 164/2018 dated 25-09-2018. Being aggrieved by the said order, appellant filed the first appeal before learned CIR(A), Faisalabad whereby, the learned CIR(A) has come to the conclusion after detail discussion as well as evidence of record put forth has remanded the case back to the Assessing Officer for de novo consideration through its Order-in-Appeal No. 251/2019 dated 27-06-2019. The appellant being discontented and aggrieved by the said order has now filed the second appeal before this Appellate Tribunal.

3. Initiating the arguments, learned counsel vehemently argued that the learned CIR(A) has given no exhaustive judgment instead of retrieving to primitive assertions already taken in the adjudication order and neither discussed the grounds filed nor even a single question has been attended to and answered by the CIR(A) while handing down the impugned judgment. Learned counsel for the appellant has vehemently contended that the impugned order is erroneous in law and the same is based on misconceived facts. Learned counsel assailed that sales made to end-consumers were not subject to further tax under section 3(1A) of the Act read with S.R.O. No.648(I)/2013 dated 9th July-2013 wherein, supply of goods directly to the end-consumers have been excluded from the provisions of section 3(1A) of the Sales Tax Act, 1990. In this regard, learned AR has also placed reliance on the judgment of Appellate Tribunal Inland Revenue, Lahore (2016 PTD (Trib.) 2675). Conversely, when the learned DR confronted with the tax situation cited supra, in counter arguments, he has assailed the case on similar grounds and charges as levelled earlier in impugned show-cause notice as well as adjudged in consequent orders and nothing newel, except to reiterate earlier set of contentions, has been put forth by him and fully supported the orders passed by both the authorities below simply re-endorsing the basis evolved therein.

4. We have heard arguments of rival parties and also carefully examined the relevant provisions of law as well as case record and have found ourselves completely in agreement with contentions taken at instance and have nothing otherwise to differ from set of arguments put forth by the learned counsel of appellant. We have no hesitation in our mind to hold that the whole case has been made out due to certain inadvertence, error and bona fide mistake on the part of appellant, entailing no revenue loss or tax evasion, who while filing of sales tax returns for the periods in question has wrongly shown supplies of the alleged goods to himself instead of incorporating the sales made to end-consumers from his retail outlets. Upon acquainting with this bona fide mistake and error, the appellant has made an application to the learned CIR (Corporate Zone) seeking permission and necessary approval for revision of sales tax returns to rectify error made therein but request was declined due to time limitation Since, the appellant has already charged and paid sales tax @ 6% on its supplies made to End-Consumers in terms of S.R.O.1125(I)/2011 as amended vide S.R.O. 491(I)/2016 therefore, Inland Revenue Department has created undue sales tax liability on account of short payment of 'further tax' as adjudged in the impugned adjudication order.

5. There is nobody denying the fact that the appellant has supplied its products to the persons who were neither liable for registration nor were actually registered under the Act; as undoubtedly, all of them were "End-Consumers". The appellant is engaged in retail sales of its products to End-Consumers and no further tax is chargeable thereon under the first proviso to subsection (1A) of section 3 of the Act, wherein it is Federal Government who may by a notification in Official Gazette, specify taxable supplies in respect of which further tax shall not be charged, levied and paid. Accordingly, sales made to End-Consumers are excluded for purpose of levy of further tax in terms of S.R.O. 648(I)/2013 dated 9th July, 2013 under the first proviso to subsection (1A) of section 3 of the Act therefore; no further tax is payable thereon. The same issue has been thrashed out by the Tribunal in a case reported as 2016 PTD (Trib.) 2675 wherein it has been held that, if the goods are supplied to other than registered person i.e. to end-consumers, it would in no case injure the Government treasury because the tax is charged on the market price, i.e. price to be paid by ultimately consumer meaning thereby that the government treasury collects the ultimate tax (which it would have collected when supplied goods were actually sold in the market) well in advance at the time of sale of goods from the sale outlet or factory manufacturing premises of the appellant without any fear of returning it to any person in case of refunds because end-consumer cannot claim it as input tax under the law, therefore, charging of further tax is illegal and unlawful in the given circumstances. The facts are identical as that have already been discussed in the aforesaid judgment, therefore, the ratio settled is applicable on all fours of instant case. 7(sic) Based on what has been discussed hereinabove, the instant appeal is accepted and the impugned show-cause notice and consequent orders of both the authorities below, being devoid of legal substance are hereby set aside. SA/176/Tax (Trib.) Appeal accepted.