2007 PLP (Trib (PTD)

HAFIZ MUHAMMAD ANEES, MEMBER (TECHNICAL).-This judgment disposes of Sales Tax Appeal No. 591 of 1998 filed by Messrs Huffaz Seamless Pipes Limited, Nooriabad against the Order-in-Appeal No.63 of 1998, dated 20-5-1998 whereby the Order-in-Original No.3 of 1996, dated 6-6-1996 passed by the Additional Collector of Customs, Excise and Sales Tax Division-II, Kotri was upheld.

2. Briefly stated, the relevant facts of the case are that on scrutiny of monthly sales tax returns it was found that Messrs Huffaz Seamless Pipe Industries, Nooriabad supplied seamless pipes and tubes without payment of sales tax during the month of July, 1994 to August, 1994 by availing exemption under serial No.17 of Ministry of Finance, Revenue and Economic Affairs (Revenue Division), Islamabad's Notification S.R.O. 553(I)/94, dated 9-6-1994, which was not admissible to them as the conditional exemption is available for parts and components if used as original equipments in the manufacture or assembly of capital goods and machinery specified in the schedule to the Ministry of Finance and Economic Coordination Notification No. S.R.O. 600(I)/83, dated 11-6-1983.

3. Since Messrs Huffaz Sealmess Pipe and Tube Industries, Nooriabad, have supplied taxable supplies of seamless pipe and tubes without payment of sales tax to the parties who were neither manufacturer nor assemblers of capital goods as listed in the Schedule of S.R.O. 600(1)/83, dated 11-6-1983 as such prima facie the said supplies were outside the scope of conditional exemption provided under S.R.O. 553(I)/94, dated 9-6-1994.

4. Accordingly show-cause notice, dated 1-10-1994 was issued for recovery of principal amount of sales tax Rs.738,669 along with additional tax under sections 36 and 34 of the Sales Tax Act, 1990. On adjudication vide Order-iii-Original, the supplies made to Messrs Agre-?auto Industries and Messrs Al-Ghazi Trading were found in accordance with the conditions contained in, the said S.R.Os. and remaining were in compliance with the said S.R.Os. On appeal, the said order was upheld except that for re-calculation/reconsidering the liability of additional taxes, the case was remanded back to the Adjudicating Officer for de novo consideration vide Order-in-Appeal No.165/94, dated 19-10-1995 which was also applicable to Case No. A/8(31)ST/Court/94. The appellant filed a C.P. No.2390 of 1995 in the Honourable High Court of Sindh, Karachi. The High Court remanded the case to the Adjudicating Officer with the direction to decide the case in totality.

5. In compliance of the aforesaid orders of the Honourable High Court the Assistant Collector Division-III, Hyderabad, after completion of legal formalities decided the case and upheld the liability of Rs.726,320 along with additional tax found recoverable under sections 36 and 34 of the Sales Tax Act, 1990. The order was applicable to case A/8(31)ST/Court/94 mutatis mutandis being identical in nature.

6. The appeal filed before the Collector (Appeals), Karachi was also rejected vide Order-in-Appeal No. 63/98, dated 20-5-1998. The order also disposed of Appeal 1(201)S.Tax/App/WZ/97 of the same unit being identical.

7. The appellant by way of appeal under section 46 of the Sales Tax Act, 1990 has assailed the aforesaid orders before the Tribunal on the ground that the supplies made by them are covered under S.R.O. 553(I)/94, dated 9-6-1994 read with S.R.O. 600(I)/83, dated 11-6-1983 almost on the same grounds as were agitated before the lower forum.

8. We have consulted the record. Also heard the arguments. Anxious consideration has been given to the contentions raised by the appellant as well as by the department. S.R.O. 553(1)/1994, dated 9-6-1994 inter alia provides exemption of sales tax on the supply of parts A and components of respective heading vide S. No.17 of the table of the S.R.O. 553(I)/94 if used as original equipment in the manufacture or assembly of capital goods and machinery specified in the schedule to the Ministry of Finance and Economic Coordination's Notification of S.R.O. 600(I)/83, dated 11-6-1983. Thus, the goods supplied to those units which do not manufacture capital goods and were not enlisted .as manufacturer of capital goods and machinery were not entitled to exemption of sales tax. The parts and components supplied to those units which are manufacturer of sugar and cement are not entitled to exemption of sales tax because those are not manufacturers of cement plants or sugar plants but were producers of cement and sugar. The appellant supplied the parts and components for maintenance purposes as replacement parts and not as original equipments because the buyers were not the manufactures of capital goods or machinery as specified in S.R.O. 600(I)/83, dated 11-6-1983.

9. Therefore, the contention of the appellant is misconceived and devoid of merit and not sustainable in the eyes of law. The appeal is accordingly dismissed. All connected appeals of the appellants being identical in nature on facts and law are disposed of accordingly.

10. Announced.

11. Inform all concerned through registered A.D. post. H.B.T./183/Tax (Trib.)???????????????????????????????????????????????????????????? Appeals dismissed.