2005 PLP (Trib (PTD)

6. Rival submissions examined. Case record seen. The appellant in this case claim refund of Rs.6,749.284.00 which was held inadmissible on account of being ultra vires of S.R.O. 696(I)/96, dated 22-8-1996. The issue therefore, before us is whether debit and credit note issued under section 9 of the Sales Tax Act, 1990 would have the legal validity only if it is in accordance with S.R.O. 696(I)/96. We reproduced section 9 of the Sales Tax Act, 1990. "(9) Debit and credit note.

Where a registered person has issued a tax invoice in respect of a supply made by him and as a result of cancellation of supply or return of goods or a change in the nature of supply or change in the value of the supply of some such events the amount shown in the tax invoice or the return needs to be modified, the registered person may, subject to such conditions and limitations as the Board may impose, issue a debit and credit note and make corresponding adjustment against output tax in the return."

7. The reading of the above section shows that the section envisages 5 different situations where the registered person can issue debit and credit note and make corresponding adjustment against output; tax, in the Return. These situations are:-- (a) Cancellation of supply. (b) Return of goods. (c) Change in the nature of supply. (d) Change in the value of supply. (e) Some such events. The section further stipulates that these changes are subject to such conditions and limitations as Board may impose. Subsequently the Board issued S.R.O. 696(I)/96, dated 22-8-1996 to regulate the issuance of credit and debit note. These rules are called Debit and Credit Note and Destruction of Goods Rules, 1996. While defining the scope of these references the sub-Rule (2) thus reads:-- "(2) these (rules) shall apply to a taxable supply where the goods are returned by buyer". The Rules thus confine themselves to only one of the situations envisaged by section

9. The view of the learned Deputy Collector as expressed' in Order-in-Original is that since these Rules cover only one situation i.e. return of goods, the debit and credit note can be issued only in case of return of goods and not in other situations as specified in section 9 Thus, according to the impugned order, (sic) is because of the fact that section 9 empowers the oar to impose such conditions and limitations as it may deem fit and hence section 9 would be operative under the limitations imposed by S.R.O.

696. Thus debit and credit notes issued in situations other than return of goods do not have the legal sanction and hence refund cannot be allowed.

8. We have examined this argument however we are not persuaded to accept it. The section clearly specifies 5 different situations and as such "change in value of supply" being one of the situations should be considered a valid ground for issuance of debit and credit note. The provision in the section "subject to such condition and limitation as the Board may impose" does not imply that the Board can restrict the scope of the statute. We are of the view that by this clause the Board is empowered to impose conditions and limitations only for the regulation of the statute. We are not inclined to accept the arguments that since the Rules issued concern themselves only with the return of goods, the other 4 situations mentioned in the statute would not form the basis of issuance of debit and credit note. The omission by the executive authority would not out the statute. On the contrary the other four situations mentioned in the section would be operative without any condition and limitation, as no rule have been framed by the Board in this regard. In this we are strengthened by the judgment of Supreme Court of Pakistan in case of M.U.A. Khan v. Rana M. Sultan and others, as reported in PLD 1974 SC

228. In the above mentioned judgment their Lordship have held as follows:-- "It is universally recognized that as regulatory statutes have to deal with a variety of situations and subjects, it is not possible for the Legislature itself to make detailed regulations concerning them, and, therefore, the Legislature delegates its power to specified of designated authorities to make such detailed regulations, consisted with the statute for carrying out the purposes of the parent legislation. The power so conferred is generally in the nature of an enabling provision, intended the same. As a consequence, the failure or omission of the designated authority to frame, the necessary rules and regulations, in exercise of the power conferred on it by the Legislature cannot be construed as having the effect of rendering the statute nugatory and unworkable. Such an eventuality could arise only if the Legislature indicates in intention to this effect in clear and unmistakable terms."

9. While respectfully following the above judgment we allow the appeal and set aside the impugned order. H. B.T/361/Taxt(Trib.) Appeal allowed.