2006 PLP (Trib (PTD)

SAEED AKHTAR, MEMBER (TECHNICAL):

This appeal is directed against Order-in-Appeal No. 79 of 2005 passed by the learned Collector, Customs Excise and Sales Tax (Appeals), Faisalabad issued vide C. No. 367/Coll/Appeals/2003/5025, dated 26-5-2005 whereunder appeal against Order-in-Original No.296 of 2003, dated 22-8-2003 passed by the learned Deputy Collector (Adjudication), Faisalabad was dismissed upholding the Order-in-Original against the appellant directing to pay the adjudged amount of sales tax amounting to Rs.86,544 pertaining to the period August, 1999 to December, 2001 along with additional tax and penalty of Rs.5,000 under sections 36, 34 and 33(2)(cc) of the Sales Tax Act, 1990.

2. Brief facts of the case as reported to the Adjudicating Officer are that a notice for Audit was issued to the appellant vide C. No. ST (Audit-III)/718, dated 27-12-2001 as per Audit Schedule for the month of January, 2002. The registered person in response to the Audi' Schedule intimated that he had not carried out any business activity during the tax period and therefore, no sales tax record was maintained by him. However, in consequence of an investigation against the tax on the supplies made during the tax period August, 1999 to December, 2001. Accordingly a contravention case was made out against the registered person and the matter was referred to the Adjudicating Officer for further necessary action under the law. A show-cause notice was issued to the respondents (now appellant) and after due process of law and hearing the parties concerned the impugned liability was adjudged against the appellant payable along with addition tax and penalty. The appellant feeling aggrieved with the orders of the learned Adjudicating Officer, filed appeal before the learned Collector, Customs, Excise and Sales Tax (Appeals), Faisalabad who after considering the contentions of the parties concerned upheld the impugned Order-in-Original and appeal of the registered person was dismissed. The appellant feeling aggrieved with the impugned Order-in-Original and Order-in-Appeal filed appeal before this Tribunal under section 46 of the Sales Tax Act, 1990.

3. The main contentions of the learned counsel for the appellant at the time of hearing were as under:-- (1) That the impugned orders passed by the learned Deputy Collector (Adjudication) and learned Collector (Appeals) are against the law and facts of the case. (2) That the learned Collector (Appeals) has not given his verdict on all the grounds of appeal raised by the appellant and as such the impugned Order-in- Original is not justified. (3) That the learned Collector, Customs, Excise and Sales Tax (Appeals) has mis- interpreted the law particularly exemption given under Schedule-VI of the Sales Tax Act, 1990. (4) That the supplies which were subjected to sales tax were not part of the imports because no imports were made by the appellant. (5) That the Collector (Appeals) has not treated the supplies which were subjected to sales tax as imports made by the appellant and the appellant did not claim any exemption as importer whereas he declared nil imports in the monthly sales tax returns filed by him. (6) That the auditors only discovered certain local sales/supplies and the figure discovered by the Audit was exempt from sales tax under Schedule-VI of the Sales Tax Act, 1990. The appellant was entitled for the exemption of sales tax as he was not registered as retailer and imposition of sales tax along with additional tax and penalty is not justified. In view of above, the impugned adjudication order and the order in appeal may be vacated.

4. The respondents were represented by Mr. Nasir Abbas, Auditor who submitted written reply at the time of hearing before this Tribunal as under:-- (1) That the appellant got himself registered under section 14(1)(iii) of the Sales Tax Act, 1990 as importer. The registered person declared nil business activity during the audit period July, 1999 to November, 1999, through monthly sales tax return-cum- payment challan and did not declare taxable supplies made by him during the tax period. (2) That the appellant during the period under report made supplies as retailer and issued cash memos. However, failed to deposit sales tax on the plea that he was not registered as retailer and he has got registration as importer. (3) It is clear from the perusal of Sr. No.42(b) of the Sixth Schedule to section 13(1) that it is retailer who is exempt from sales tax i.e. he is not liable to be registered under the Sales Tax Act, 1990 and not the taxable supplies made by a person already registered under the Act. The appellant got himself registered with the department under section 14(1)(iii) as importer and he neither applied for registration nor was registered as retailer. Moreover, turnover threshold has not been fixed for an importer under section 14 of the Sales Tax Act, 1990. (4) That section 14 of the Sales Tax Act, 1990 make it clear that a person who engage himself in making of taxable supplies in the course or furtherance of any taxable activity carried on by him, does not need further registration if he is already registered under the Sales Tax Act, 1990 and any of the taxable activities carried on by such registered person is covered under the existing status of registration. Therefore, the plea taken by the registered person that the taxable activity carried on by him was not covered under his existing registration has no legal justification. (5) That under section 22 of the Sales Tax Act, 1990, the registered person was required to maintain sales tax records in terms of section 22(1) ibid after his registration. (6) That the appellant was registered under the Sales Tax Act, 1990 and supplies made by him were not exempt from sales tax under section 13 and he was required to pay sales tax under section 3 of the Sales Tax Act, 1990.

5. I have heard the contentions of both the sides and perused the appeal file available before me. The learned counsel for the appellant at the time of hearing contended that the appellant got himself registered as importer voluntarily under section 14 of the Sales Tax Act, 1990. However, no imports were made by him therefore, he was not required to pay any sales tax as he has not transacted any business as importer. The learned counsel further contended that those persons are required to be registered under section 14 of the Sales Tax Act, 1990 who meet the criteria for registration as laid down in the relevant provisions of Sales Tax Act for different categories of persons. The learned counsel contended that no requirement for registration as importer is prescribed and the person who intend to involve himself in the business of imports is required to register himself with the sales tax department under section 14 of the Sales Tax Act, 1990. The appellant therefore, registered himself under section 14 ibid as an importer. The learned counsel further contended that the appellant was not required to get himself registered as retailer as the value of supplies was less than the required threshold of rupees five million mentioned in the Act itself. The learned counsel contended that the appellant was exempt from payment of sales tax under Sr. No.42(b) of the Sixth Schedule to the Sales Tax Act, 1990 as his annual turn over during the year was less than rupees one million. The learned counsel contended that there is no doubt about B the fact that the appellant himself got registration as importer but practically no imports were made by him. Therefore, he was not required to maintain sales tax record under section 22 of the Sales Tax Act, 1990. The learned counsel contended that the appellant made retail sale/purchase of certain goods and issued cash memos. As he was not registered as retailer and not competent to issue sales tax invoice as retailer. The learned counsel further contended that as the annual turnover of the appellant from the retail sale was much below the turnover threshold of Rs.10,00,000 therefore, the appellant was exempt from payment of sales tax under the Sixth Schedule to the Sales Tax Act, 1990. The learned counsel contended that his client was neither required to register himself as retailer under section 14 of the Sales Tax Act, 1990 nor he was required to pay sales tax on his business of retail sale as he was exempt from payment of sales tax under Sr. No. 42(b) of the Sixth Schedule to the Sales Tax Act, 1990. The learned counsel, further contended that the interpretation of law made by the respondents is not correct and sales tax liability has been created illegally against the appellant. On the other hand, the learned DR contended that the appellant was required to pay sales tax on all supplies made by him as he was registered under the Sales Tax Act, 1990. During the course of hearing, the learned DR pointed out that a commercial exporter whose supplies are zero rated is required to pay sales tax on its local supplies. However, the learned counsel for the appellant in response contended that the commercial exporters are required to pay sales tax on their local supplies because they had availed the facility of input tax adjustment on the raw materials consumed in such goods. I have carefully examined the case record and considered the verbal as well as written arguments of the appellant and the respondents. The appellant in the instant case was required as importer and nothing was imported by him therefore, he was not required to maintain sales tax record in terms of section 22 of the Sales Tax Act, 1990. It has been observed that only those retailers were required to be registered who meet the requirement for registration as laid down under section 14 of the Sales Tax Act, 1990. As the value of supplies was much below the threshold fixed in section 14 of the Sales Tax Act, 1990. Moreover, the value of supply of goods as retailer during the period August, 1999 to December, 2001 amounted to Rs.314,650 only meaning thereby the value of supply during the year did not exceed Rs.150,

000. The appellant therefore, was neither required to be registered as retailer under section 14 nor he was required to pay sales tax in view of exemption available under Sr. No.42(b) of the Sixth Schedule to the Sales Tax Act, 1990. In view of above, the impugned orders are set aside and appeal is accepted.

6. The appeal stands disposed of as above. H.B.T./172/Tax (Trib.) Appeal accepted.