2008 PLP (Trib (PTD)

SAEED AKHTAR (MEMBER (TECHNICAL).

This appeal is directed against Order-in-Appeal No.458 of 2006 passed by the learned Collector Customs, Sales Tax and Federal Excise (Appeals), Multan issued vide C. No.242-App/MNT/ST/06/1986, dated 7-12-2006 where-under the appellant Messrs Arian Fibres Mills, D.G. Khan was directed to pay sales tax amounting to Rs.21,21,828 along with default surcharge/additional tax and penalty equal to 3% of the amount of sales tax involved under sections 36, 34 and 33(2)(ee) of the Sales Tax Act, 1990 as adjudged vide Order-in-Original No.291 of 2006. Penalty equivalent to 30% of the amount of tax involved relating to tax fraud was however, not found justified and was remitted.

2. Brief facts of the case are that during scrutiny of sales tax record of appellant for the period 2003-2004, it was observed by the auditors that the appellant had not paid sales tax amounting to Rs.2,23,82,209 on purchases of cotton lint from the ginners as required under Rule 6 of S.R.O. 1271(I)/96, dated 10-11-1996. Based on the above facts, a show-cause notice was issued and the appellant was charged with violations of provisions of sections 2(9), 3, 3(2), 3(A) of the Sales Tax Act, 1990 read with S.R.O. 1271(I)/96, dated 10-11-1996 and was called upon to show cause as to why sales tax along with additional tax/default surcharge should not be recovered and penal action under section 33(2)(ee) should not be taken against them. The adjudication proceedings culminated in passing of Order-in-Original No.291 of 2006, dated 19-5-2006. The case was decided against the appellant, directing them to deposit an amount of Rs.21,21,828 as sales tax along with default surcharge/additional tax. A penalty of 3% of the principal amount under section 33(2)(ee) and section 33(4)(e)(t) of the Sales Tax Act, 1990 were also imposed. Being aggrieved, the appellant filed appeal before the Collector Customs, Sales Tax and Federal Excise (Appeals), Multan whole after affording opportunity of hearing to the parties modified the Order-in-Original to the extent of remission of penalty equivalent to 30% of the amount of tax involved relating to tax fraud. The appellant being not satisfied with the Order-in-Original and Order-in-Appeal filed appeal before this Tribunal under section 46 of the Sales Tax Act, 1990.

3. The learned counsel for the .appellant in the memo. of appeal contended that the appellant has already deposited principal amount of sales tax and payment of sales tax clearly shows that there was no intention of tax evasion in the mind of appellant. The learned counsel contended that there is no justification for imposition of default surcharge and penalty. The learned D.R. however, opposed the contentions of the learned counsel for the appellant and stated that principal amount of sales tax was not deposited within due date and the appellant contravened the provisions of Sales Tax Act, 1990 which caused the imposition of additional tax/default surcharge and penalty. The learned D.R contended that there is no infirmity in the impugned orders and appeal may be dismissed.

4. The learned counsel for the appellant during the course of hearing contended that the Central Board of Revenue vide amnesty Notification S.R.O. No. 463(I)/2007, dated 9-6-2007 has allowed exemption of additional tax/default surcharge and penalties payable by a person subject to the condition that the outstanding principal amount of sales tax is paid by the 30th June, 2007. The learned counsel stated that the appellant has already paid the principal amount of sales tax much before the 30th June, 2007 and there is no justification for imposition of default surcharge and penalty on the appellant. The learned counsel produced letter C. No.4/2-STB/2007, dated 30-6-2007 of Central Board of Revenue whereunder the Board has clarified that the amnesty/waiver of default surcharge and penalties under S.R.O. 463(I)/2007, dated 9-6-2007 shall also apply to cases where principal amount of sales tax has been deposited by the registered persons prior to 9-6-2007. It was, however, observed that remission of tax/default surcharge/additional tax and penalty cannot be allowed by a letter/clarification of the Central Board of Revenue. The learned counsel was asked to produce a Notification of Federal Government for remission of additional tax/ surcharge and penalties. The learned counsel/appellant again approached the Central Board of Revenue and produced before this Tribunal a copy of Federal Government Notification S.R.O. 999(I)/2007, dated 29-9-2007 which amended Notification S.R.O. 463(I)/2007, dated 9-6-2007 for allowing remission/waiver of default surcharge and penalties to the registered persons who deposited principal amount of sales tax period to 9-6-2007.

5. We have considered the contentions of both the parties and examined the documents produced before us. The Federal Government vide S.R.O. 463(I)/07, dated 9-6-2007 allowed exemption of additional tax/default surcharge and penalties payable by a person subject to the condition that the outstanding principal amount of sales tax is paid by the 30th of June, 2007. We have observed that the Federal Government further extended the scope of exemption notification through amendment in S.R.O. 463(I)/07, dated 9-6-2007 vide S.R.O. 999(I)/2007, dated 29-9-2007 allowing exemption of additional tax, penalties to cases where principal amount of sales tax was paid even prior to 9-6-2007. The appeal is accepted subject to production of evidence of payment of principal amount of sales tax prior to 30-6-2007 before sales tax authorities.

6. The appeal stands disposed of as above. C.M.A./49/Tax (Trib.) Order accordingly.