2010 PLP (Trib (PTD)

MUHAMMAD IBRAHIM KHAN, MEMBER (JUDICIAL).

This appeal (ST-25/PB/2009) along with three other appeals (i.e., ST-26/ PB/2009).(ST-27/2009), and (ST-28/2009) have been filed against a consolidated Order-in-Appeal No. 547 of 2008 dated 4-11-2008 whereby the learned Collector Customs, Sales Tax and Federal Excise (Appeals), Peshawar rejected the (respective) appeals filed before the Collector of Customs, Sales Tax and Federal Excise (Appeals), Peshawar against a consolidated Order-in-Original No. 643-646 of 2008 dated 2-8-2008 assailing the same to be against law and facts rendering the same inoperative against the vested (vested legal) rights of the appellant. As all these appeals are the outcome of one and the same consolidated Order-in-Appeal No.547 of 2008, thus proposed to be disposed of through single judgment.

2. Facts giving rise to all these four appeals briefly stated are that the appellant filed his refund claim(s) under section 10 of the Sales Tax Act, 1990 on 3-4-2008, as per following details: (i) Sales Tax Appeal No.25/PB/2008 Refund claim for the amount of Rs.2,32,037 for the tax period of December, 2007; (ii) Sales Tax Appeal No. 26/PB/2008 Refund claim for the amount of Rs.79,957 for the tax period of October, 2007; (iii) Sales Tax Appeal No.27/PB/2008 Refund claim for the amount of Rs.1,36,156 for tax period of September, 2007; (iv) Sales Tax Appeal No.28/PB/2008 Refund claim for the amount of Rs.1,04,881 for the tax period of November. 2007-(ST-28/PB/2009).

3. Deputy Collector (Refunds), RTO (Sales Tax and Federal Excise Wing), Peshawar, however issued (respective) show-cause notices to the appellant-claimant to show cause as to why the refund claim, so filed should not be rejected under Rule 28 (Chapter-V) of the Sales Tax Rules, 2006 (S.R.O. No.555(I)/2006 dated 5.6-2006) being filed beyond the stipulated period of time, attracting provisions of section 10(4) read with rule 28 and rule 37 of S.R.O. 555(I)/2006 and section 11(2) of the Sales Tax Act, 1990.

4. The appellant pursuant to the show cause notice(s) submitted written reply stating thereby, that: (i) The concerned person in our office had gone abroad on long leave; (ii) The F.B.R. has totally changed the RCPS resulting into continuous fault with them (the appellant Unit); and (iii) The delay also was caused due late receipt of certain related documents. But the Deputy Collector (Refunds) did not feel agreed with the reply to the show-cause notice filed by the appellant and vide impugned Order-in-Original Nos. 643 to 646 of 2008 the said Adjudication Officer rejected all the four refund claims, relevant para. (6) of which is reproduced:

"(6) I have gone through the case record written reply, as well as verbal submission of the respondent in response to objection generated by STARR/CRASS, wherein Rs.136,156 claimed on the basis of invoices issued by alleged supplies. The respondent did not produce sufficient documentary evidence/ cogent reasons to negate the objection raised by the STARR. The same is hereby rejected accordingly."

5. Feeling aggrieved, the appellant filed Sales Tax Appeal No.390 of 2008, Appeal No.391 of 2008, Appeal No.392 of 2008 and Appeal No.393 of 2008, which were heard by the Collector, Customs, Sales Tax and Federal Excise (Appeals), Peshawar who vide consolidated Order-in-Appeal No.543 of 2008 rejected all the four appeals and maintained the impugned Order-in-Original Nos.643 to 646 of 2008, relevant paragraphs (9-10) of which are reproduced for convenience of perusal:-- "(9) Keeping in view, the above facts and over all circumstances of the case, I have come to the conclusion that the appellant has failed to furnish the claim within sixty days of filling of the return in terms of Rule 28 of Chapter V of the Sales Tax Refund Rules, 2006 issued vide S.R.O.555(I)/2006 dated 5-6-2006 and also failed to submit any plausible reason for filling the refund claim late, therefore the appeal is rejected and the Order-in-Original No.643-46/2008 dated 12-8-2008 is upheld. (10) This order shall also mutatis mutandis apply to the following three appeal cases filed by Mr. Isaac Ali Qazi, Advocate, Peshawar on behalf of Messrs Frontier Match Industries (Pvt.) Ltd. being identical in nature facts and point of law. S.No Appeal File No Show-cause Notice No. & Date Tax period Order-in-Original No. & Date Passed by (1) ST-391/08 ST/Ref/1442/8/22047 dated 16-4-2008 October, 2007 643-46/08 dated 12-8-08 Deputy Collector(Refund) ST & FE Peshawar (2) ST-392/08 ST/Ref/1442/8/22047 dated 16-4-2008 November, 2007 643-46/8 dated 12-8-08 -do- (3) ST-393/08 ST/Ref/1442/8/22047 dated16-4-2008 December, 2007 643-46/08 dated 12-8-08 -do-

6. Feeling aggrieved of the Order-in-Appeal, the appellant has filed these (four) appeals, inter alia (mainly) on the following grounds: (i) That impugned order is erred both in law and facts. (ii) That impugned order being based on misconception of law is not tenable. (iii) That impugned order of the learned Collector Appeals failed to attend the questions of law and facts raised before him, thus, not sustainable. (iv) That Refund claim is within limitation of time stipulated in section 66 as the refund claim dated 2-4-2008 has been filed well within one year. (v) That besides Appellant's case is also covered under S.R.O. 978(I)/2004 dated 10th December, 2004 vide which the C.B.R. has empowered the Collector to condone the time limit of adjustment/refund of input tax, beyond the prescribed period subject to certain conditions mentioned in the said S.R.O., which appellant fulfilled. (vi) That Rules 28 and 37 of the Sales Tax Rules 2006 have wrongly been applied to the appellant cause, as appellant's claims fall under the purview of section 66 of the Sales Tax Act, 1990, therefore, the subject refund claim if at all to be processed under S.R.O. 555(I)/2006 dated 5-6-2006 is liable to be treated under Rules 26(e). and 38(3) of the Sales Tax Rules, 2006. (vii) That treating the refund claims filed on 2-4-2008 under Rule 28 ibid by the respondent is highly misconceived. Attention is invited to application dated 2-4-2008 per se of the appeal book, wherein the appellant has filed refund claim plainly in accordance with law of pleading i.e. no reference is made either to section 66 of the Sales Tax Act, 1990 nor to rules 28 and 32 of the Sales Tax Rules, 2006, however, the respondent refund department, for mala fide reasons treated the claim under Rules 28 and 37 ibid, otherwise the timing of the application for filing of the refund claim obviously suggest that the refund claim should have been treated under section 66 ibid read with Rules 26(e) and 38(3) of the Sales Tax Rule, 2006. (viii) The alleged default attributed to the appellant as a cause for denial of refund claim i.e. failure to submit as per Rules 28 and 37 ibid the refund claim on the prescribed software (RCPS) along with supporting documents within 60 days ipso facto brought the cause of the appellant within the purview of "INADVERTENCE" in view of superior courts judgments reported as 1994 CLC 994 (Messrs Kohinoor Industries), therefore, the claim made within the limitation as stipulated under section 66 cannot be denied as it would be violative to the trite law that rights accrued under the statute per se cannot be denied by DELEGATED LEGISLATION as in the instant case, attempt has been made in the impugned order. (ix) That if the limitation under the rules and statutory provision of section 66 of the Sales Tax Act, 1990 puts into juxtaposition, right entertainable under the statutory provision should prevail, hence, under the circumstances, by no stretch of imagination, the refund claim can be denied to the appellant on the ground of limitation stipulated in rules, in view of the superior courts judgments reported as 1994 CLC 1612 (Ghulam Abbas v. Member Judicial, C.B.R.), PLD 1998 SC 64 (Messrs Pfizer), 2002 PTD (Trib.) 1525 (Messrs Cherat Electric). (x) That because fabricated cause for denial of the refund claim is hyper-technical in nature as an instrument to, deny the refund claim, which very attitude is ridiculed by the august Supreme Court of Pakistan in the judgment referred in the respective para. of the memo of appeal. (xi) That in spite of having a hard proof of payment of Sales Tax on its inputs, if not allowed to be refunded would create a cascading effect, which would be against the spirit and genesis of the value added based Sales Tax Act, 1990. (xii) That impugned is violative to the principle laid down by Supreme Court of Pakistan in Messrs Pfizer Lab. of Pakistan versus Federation of Pakistan wherein the august Court has held that: latest judicial trend is to deprecate and discourage withholding of citizen money by a public functionary on the plea of limitation or on any other technical plea if it was not legally payable by him." (xiii) That impugned order is perverse is not sustainable in the eyes of law. (xiv) That appellants however reserve the right to present further arguments verbally or in writing and to present evidence to prove their case etc.

7. I have heard Mr. Isaac Ali Qazi, Advocate for the appellant and Mr. Fazlur Rehman, Deputy Superintendent/DR assisted by Mr. Dost Muhammad, Senior Auditor and have gone through the record of the case.

8. Perusal of the record would reveal that the only ground on the basis of which the refund claim(s) have been rejected by the forums below is that all these claims have been filed beyond the prescribed period of time. Admittedly, all these four claims pertain to tax period of September, October, November and December, 2007 which were filed on 3rd April, 2008 and some of these appeals apparently were based on the refund claims of input tax beyond the prescribed period of time (within the approximate range of 3 to 4 months) whereas, on plain reading of section 66 the Sales Tax Act, 1990 read with Notification No.S.R.O. 1204(I)/2007 dated 11-12-2007 and Notification No S.R.O. 978(I)/2004 dated 10-12-2004 would reveal and reflect in clear words that the Collector was empowered to have condoned the time limit prescribed for adjustment/refund of input tax upto one year, on the fulfilment of certain conditions as per details of Notification No. S.R.O. 978(I)/2004. The Adjudication Officer has mainly based his findings on Rule 28 (Chapter-V) of the. Sales Tax Rules, 2006 which pertains to the prescription of a refund claim i.e., as to when a refund claim is to be filed, what supportive documents and what requisite date should be furnished, again with a scope of further extension of time by 30 days under sub-Rule (2) of Rule 28, declaring Rule 28 to be regulatory in nature whereas, Rule 26 (Chapter-V) mandatory in nature, pertains to the application of "Refunds" which reads as under: Rule-26 `Application" This Chapter shall apply to all refund claims filed by: (a) ................. (b) ................. (c) ................. (d) ................. (e) Persons claiming refund of sales tax under section 66 of the Act. (f) .." Whereas, section 66 of the Sales Tax Act, 1990 deals with the adjustment/refund of input tax with equal legal backing under section 7 and section 10 of the Act (ibid) which too deal with the adjustment and refund of the input taxes. As such, on the liberal interpretation of the said provision(s) of law, the Collector could have extended the time upto one year for filling of the said refund claim in the stated background having emerged under the compelling circumstances (as stated in reply to the show-cause notice(s) at initial stage of proceedings) rendering the appellant incapable of filing of refund claims within the stipulated period also in the light of section 74 of the Sales Tax Act, 1990 dealing with "Condonation of time limit" with further elaboration of the said section of law through Sales Tax General Order-8 of 2009 issued vide C. No.3(10)ST-L&P/09 Islamabad dated 20th February, 2009 whereby Federal Board of Revenue (Revenue Division) for mitigating the hardships of tax payers and ensuring transparency and fairness in deciding cases of condoning time delays or allowing extension in terms of powers conferred under section 74 of the Sales Tax Act, 1990 the Board has delegated certain powers to the respective Collectors of Sales Tax and Federal Excise Relevant para. (3) of which reads as under: (3) "If there are valid reasons, the Collector may condone delay upto one year beyond the limitation provided under the statutory provision of Sales Tax Act or rules made, thereunder." And that way, in the light of the application(s) of the appellant for condonation of delay, the Collector Sales Tax was bound to have condoned the delay, which he did not, despite clear law on the subject and recently issued Sales Tax General Order 8 of 2009 by the Federal Board of Revenue.

9. In view of the stated factual and legal position, extenuating and attending circumstances coupled with the fore-mentioned notified S.R.Os. issued by the Federal Board of Revenue, Islamabad, I am left with no option but to allow all these four appeals. As such, on the acceptance of all these appeals, I hereby set aside the impugned (Consolidated) Order-in-Appeal No.547 of 2008 dated 19-11-2008 and remit all these four cases back to the Adjudication Officer for trial de novo, in accordance with law on subject and facts on record. C.M.A./41/Tax (Trib.) Case remanded.