2021 PLP (Trib (PTD)

CH. SHAHID IQBAL DHILLON, JUDICIAL MEMBER.

The appeal is filed by the registered person calling in question Order-in-Original No.28/2018, dated 02-11-2018 passed by the Commissioner Inland Revenue, Zone-I, Gujranwala.

2. The epigrammatic facts of the case is that scrutiny of information retrieved from import data provided by data base administration sales tax, Gujranwala for the period July-2017 to May-2018, it is observed that the appellant has paid sales tax at the rate of Rs.5,600/- per metric ton against his imports of re-meltable iron and steel scrap falling under PCT heading 7204.3000, 7204.4100 and 7204.4990. The rate of Rs.5,600/- per metric ton is applicable only to the persons operating under Rule 58H of Special Procedures Rules, 2007 whereas; all other importers were liable to pay sales tax at the rate of Rs.8,400/- per metric ton. The appellant has opted to pay sales tax under Rule 58MA of Chapter-IX of Special Procedures Rules, 2007. The Rule 58H(2A) is very much clear that Rs.5,600/- per metric ton will only be levied and collected from those registered persons who are paying sales tax under fixed regime as ascribed in Rule 58H(1) of Chapter-XI of Special Procedure Rules, 2007 and Rs.8,400/- per metric ton from other importers.

3. Based on above, it is revealed that appellant making short payment of sales tax at import stage is therefore, called upon to show-cause notice dated 06-07-2018 as to why differential amount of sales tax worth Rs.5,295,251/- may not be recovered under section 11(2) of the Act along with default surcharge and penalty under sections 34(1)(a) and 33(5) ibid.

4. Learned Commissioner Inland Revenue, has adversely adjudged sales tax liability of Rs.5,295,251/- through his Sales Tax Order-in-Original No. 28/2018 dated 02-11-2018 hence, this appeal.

5. The appellant has vehemently contested impugned show-cause notice and consequent order passed by the Commissioner Inland Revenue, as he assailed during court proceeding that no sales tax can be assessed under section 11(2) of the Act for recovery of sales tax short-paid at import in respect of which the tax is charged and paid in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969. The collection, payment and enforcement of sales tax on imported goods is governed under the Customs Act, 1969 as envisaged in section 6 of the Act, 1990. As such, the cases of recovery of sales tax non-levied or short-levied at import should all the more be adjudicated in terms of provisions as contemplated in section 32 of the Customs Act, 1969 by an appropriate Officer of Customs under section 179 ibid instead of Officers of Inland Revenue having no powers to enforce its recovery under the Sales Tax Act, 1990. The appellant relied upon on the judgment of learned Customs, Excise and Sales Tax Appellate Tribunal, Peshawar Bench in case of Messrs Shahzad Gee Mills Ltd. v. Gadoon Amazai as reported at [2012 PTD (Trib.) 1697] wherein, it is specifically laid down, "The appropriate Customs Officer certainly possesses the power to recover any non/short levied tax, which he was required to collect, but has not been collected".

6. The appellant has further assailed that the Commissioner of Inland Revenue has no powers of Customs Officers under the Customs Act, 1969 whereas Officers of Customs have vested with powers to adjudicate upon cases of sales tax non-levied and short levied at import. It is a well-settled law, "when the order has been passed without jurisdiction it is coram non judice, it does not exist in the eye of law and every person and authority has to ignore it as if it does not exist" as held by Peshawar High Court, Peshawar in case of Messrs Frontier Ceramics v. Government of Pakistan and others [1999 PTD 4126]. It is again a settled law that where basic order is coram non judice whole superstructure built thereon by way of any show-cause notice or any order or even recovery notice shall also become invalid and inoperative. He relied on judgment of Supreme Court of Pakistan in a case reported at [2002 SCMR 122].

7. Beside, it is pertinent to place on record that no loss of revenue is occurred in the present case because appellant has paid input tax Rs.5,600/- at import stage and has accordingly adjusted the same conversely, if he would have paid Rs.8,400/- then it would constitute his input tax. In the instant case, appellant has already paid around Rs.10,625/- per ton (62,500 x 17%) as output tax on its taxable supplies. While calculating monthly sales tax liability, appellant has paid Rs.5,025/- per ton (10,625-5,600) on taxable supplies in due course. However, in case appellant had paid Rs.8,400/- at import then sales tax liability would have been Rs.2,225/-. per ton (10,625-8,400) instead of Rs.5,025 per ton. Hence, there is no loss of revenue and under these circumstances; any recovery of principal amount at import stage is unjustified. Appellant has also relied on Judgment of this ATIR through S.T.A No. 1108/LB/14 dated 20 November, 2014.

8. On the other hand, when departmental representative confronted with the situation cited supra, he has assailed the case on similar grounds and the charges as levelled earlier in the show-cause notice and impugned order as nothing newel, except to reiterate his earlier contentions, is put forth by him.

9. We have thoroughly examined the case record and have heard at length the rival parties based on which we do agree with the assertions of the appellant made on legal premises duly supported by the case laws relied upon with regard to recovery of sales tax short-paid at import in respect of which tax is charged and paid in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969. The collection, payment and enforcement of sales tax on imported goods is governed under the Customs Act, 1969 as envisaged in section 6 of the Act, 1990. As such, the cases of recovery of sales tax non-levied or short-levied at import should all the more be adjudicated in terms of provisions as contemplated in section 32 of the Customs Act, 1969 by an appropriate Officer of Customs under section 179 ibid instead of Officers of Inland Revenue having no powers to enforce its recovery under the Sales Tax Act, 1990.

10. Besides on above, Commissioner of Inland Revenue has no powers of Customs Officers under the Customs Act, 1969 whereas Officers of Customs have vested with powers to adjudicate upon cases of sales tax non-levied and short-levied at import. It is a well-settled law, "when the order has been passed without jurisdiction it is coram non judice, it does not exist in the eye of law and every person and authority has to ignore it as if it does not exist" as held by Peshawar High Court, Peshawar in case of Messrs Frontier Ceramics v. Government of Pakistan and others [1999 PTD 4126]. It is again a settled law that where basic order is coram non judice whole superstructure built thereon by way of any show-cause notice or any order or even recovery notice shall also become invalid and inoperative.

11. Even otherwise, it is relevant to mention here that no loss of revenue is occurred in the present case because appellant has paid input tax Rs. 5,600/- at import stage and has accordingly adjusted the same conversely, if he would have paid Rs.8,400/- then it would constitute his input tax. In the instant case, appellant has already paid around Rs.10,625/- per ton (62,500 x 17%) as output tax on its taxable supplies. While calculating monthly sales tax liability, appellant has paid Rs.5,025/- per ton (10,625-5,600) on taxable supplies in due course. However, in case appellant had paid Rs.8,400/- at import then sales tax liability would have been Rs.2,225/- per ton (10,625-8,400) instead of Rs.5,025 per ton. Hence, there is no loss of revenue and under these circumstances; any recovery of principal amount at import stage is unjustified. Appellant has also relied on Judgment of this ATIR through S.T.A No. 1108/LB/14 dated 20 November, 2014.

12. In view of above, we mutually agree with the assertion of appellant that the charge of suppression of sales of iron bars and its value of supply is unfounded and unsubstantiated, illegal and unlawful having no merits at all therefore; impugned show-cause notice and consequent order are declared to be illegal, ab initio void and are hereby cancelled and impugned demand on account of sales tax and further tax made therein is also vacated as the instant appeal not only succeeds on its legal stance but is found stronger on its factual premises as well. SA/93/Tax (Trib) Appeal allowed.