2025 PLP (Trib (PTD)

MUHAMMAD HASHIM KHAN KAKAR, (CHAIRMAN).

The above titled Sales Tax Appeal has been filed by the appellant calling in question, the Order-in-Original No.Reg/51 dated 01.02.2024, passed by the learned Assistant Commissioner of the Balochistan Revenue Authority ('BRA') which has been upheld by the Commissioner (Appeals), BRA, Quetta in Order-in-Appeal No. BRA-CA/AO-07/2024 dated 03.05.2024.

2. In the impugned order-in-original the Assistant Commissioner has compulsorily registered the appellant under section 27(1) of the Balochistan Sales Tax on Services Act, 2015 ('Act') on the ground that the appellant having NTN 2861773-8 is carrying on business within the territorial jurisdiction of Balochistan and it was required to get itself registered with with BRA as a withholding agent under Rule 1(2) of the Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018 ('Rules') read with section 14 of the Act but the appellant failed to get itself registered/enrolled voluntarily with the BRA as a withholding agent as required under the Act. Thus the appellant was issued a notice on 20.09.2023 under section 48(2) of the Act, for imposition of penalty for failure to get itself registered with the Authority which was followed by multiple reminders. The appellant failed to make compliance, therefore, an order was passed under section 48(3) of the Act and a minimum penalty of Rs.50,000/- was imposed. The appellant again failed to discharge its legal obligation to get registered. Therefore, the appellant was issued another notice dated 11.12.2023 for compulsory registration under section 27(2) of the Act but the appellant failed to make compliance. Meanwhile, the representatives of the industries operating at Hub (Balochistan) held a meeting with the Chairman BRA and its team on 28-12-2023 at Hub and on 04-01-2024 at Karachi and requested for allowing time for getting registered by 31-01-2024 and the request was accepted but the appellant again failed to get itself registered with BRA within the given time. Thus the impugned order-in-original was issued and the appellant was compulsorily registered under section 27 of the Act. The appellant challenged the said order before the Commissioner Appeals BRA, who vide impugned order-in-appeal upheld the order of compulsory registration passed by the Assistant Commissioner. Being aggrieved with the impugned order-in-appeal the appellant has come up in appeal to this Tribunal.

3. The appellant has prayed for setting-aside both the impugned Order-in-original passed by the Assistant Commissioner and the order-in-appeal passed by the Commissioner Appeals and taken grounds as per memo. of appeal.

4. The relevant facts for disposal of instant appeal are that the appellant is a private limited company, engaged in the business of manufacturing/processing of meat. Business premises of the appellant are located at Hub, Balochistan and head office situated at Karachi. The Assistant Commissioner BRA observed that the appellant running business in Balochistan is liable to get registered as a withholding agent with the BRA. The learned Assistant Commissioner issued notices to the appellant under section 25 read with section 48 of the BSTS Act, 2015 for the registration but the appellant was not willing to get itself registered with BRA on the ground that it's activities are limited to Sindh and in Balochistan only manufacturing/processing of meat is done. Therefore, the appellant was not required to get registered with the BRA. The Assistant Commissioner did not agree with appellant's contention and to enforce registration imposed penalty and ultimately passed impugned Order-in-Original No.Reg/51 dated 01.02.2024 to compulsorily register the appellant with BRA under section 27 (1) of the BSTS Act, 2015. The said order has also been upheld by the learned Commissioner Appeals BRA vide Order-in-Appeal No. BRA-CA/AO-07/2024 dated 03.05.2024.

5. Mr. Musawer Kasi, learned counsel for the appellant contested that since appellant was neither availing any services nor require to withhold sales tax on services in Balochistan hence it was not required to get registered with the BRA and the learned Assistant Commissioner was not justified to compulsorily register the appellant under section 27 of the Act. Although the appellant's factory/business premises are located at Hub but only manufacturing/processing of meat is done at said factory and appellant has not availed any services from Balochistan hence appellant was not required to get registered.

6. On the contrary M/s Jam Saka Dashti and Sarmad Ahmed Khan, learned counsel appearing on behalf of respondents supported the order of the learned Commissioner Appeals upholding compulsory registration by the learned Assistant Commissioner and stated that the appellant having place of business in Balochistan was required to get registered with the BRA, withhold sales tax on services availed in Balochistan from the service providers and pay the amount withheld to the BRA.

7. We have gone through the impugned orders of the Assistant Commissioner and the learned Commissioner Appeals BRA. We have also examined the relevant provisions of law and relevant record, gone through the decisions of the officers below and considered arguments of both the parties. The crux of the issues involved in the instant appeal is whether the appellant was legally required to get registered with the BRA as service recipient/ withholding agent or not.

8. It is admitted fact that the appellant has business premises at Hub Balochistan where meat is processed. We are not convinced with the arguments of the appellant's counsel that no services were availed in Balochistan. If no other services are availed, then at least bringing raw meat into factory and transportation of processed meat outside factory involve services. The learned Assistant Commissioner BRA and the learned Commissioner Appeals on the basis of said admitted facts and definitions of "Place of Business in Balochistan" and "Resident" provided in the Act held that the appellant was required to get registered with the BRA. The learned Commissioner Appeals has given findings as follows: "

9. Keeping in view the above narrated facts and relevant provisions of law it has been established that the appellant has physical presence and place of business in Balochistan having a business unit at Hub, for which the appellant became "resident" and the appellant is carrying out economic activities in the jurisdiction of Balochistan. Thus the appellant is liable to be registered with BRA as a withholding agent under section 25 of the Act. When despite notices, the appellant has failed to get himself registered with BRA, the respondent has passed the impugned order for compulsory registration under section 27 of the Act and consequently the appellant has been registered with BRA as withholding agent. Mere registration does not create any liability on withholding agent to withhold and deposit sales tax but the registered person as withholding agent is liable to withhold BSTS, when he avails taxable services within the jurisdiction of Balochistan, as specified in the Act and the Rules. Thus, the instant appeal is dismissed and the impugned Order-in-Original No. Reg/51 dated 01-02-2024 passed by Assistant Commissioner, BRA, Hub is upheld."

9. Before proceeding ahead, we deem it appropriate to reproduce definitions of "Place of Business in Balochistan" and "Resident" as provided in sections 2(115) and 2(139) of the Act respectively, as follows: "2(115) "Place of Business in Balochistan" means that a person- (a) owns, rents, shares or in any other manner occupies a space in Balochistan from where it carries on an economic activity whether wholly or partially; or (b) carries on an economic activity through any other person such as an agent, associate, franchisee, branch, office, or otherwise in Balochistan or through virtual presence or a website or a web portal or through any other form of e-Commerce, by whatever name called or treated, but does not include a liaison office;" "2 (139) "Resident" means- (a) an individual who, in a financial year, has- (i) a place of business, whether whole or part thereof, in Balochistan in any mode, style or manner; or (ii) his permanent address, as listed in the individual's national identity card, in Balochistan; or (iii) a permanent representative to act on his behalf or to provide service on his behalf in Balochistan: (b) an association of persons or a company which, in a financial year, has- (i) its registered office is in Balochistan; or (ii) its place of business, whether whole or part thereof, in Balochistan in any mode, style or manner; or (iii) a permanent representative to act on its behalf or to provide service on its behalf in Balochistan; or (iv) the control or management of the association of persons or the company, whether whole or part thereof, situated in Balochistan at any time during the financial year;"

10. When read together the above definitions, a company is resident of Balochistan if it has place of business in Balochistan through which it carries on an economic activity. A company being resident of Balochistan is required under section 25 of the Act to get registered with BRA failing which the BRA may proceed to compulsorily register it under section 27 of the Act.

11. Considering the admitted facts and above provisions of the Act we are in agreement with the findings of the learned Commissioner Appeals that the appellant was required to get registered with the BRA. Since the appellant has failed to get voluntarily registered under section 25 hence the learned Assistant Commissioner has rightly registered the appellant compulsorily under section 27 of the Act. We find no infirmity in the impugned order-in-appeal on the responsibility of the appellant regarding registration with the BRA therefore we are not inclined to interfere and the appeal filed by the appellant on the issue of compulsory registration with the BRA is dismissed. MQ/159/Bal. Appeal dismissed.