2008 PLP (Trib (PTD)

ZAFAR UL MAJEED, MEMBER (TECHNICAL).

The facts giving rise to this appeal are that the appellant filed refund claim amounting to Rs.7,05,233 for the month of March, 2004 with the Collectorate of Sales Tax and Federal Excise Lahore. After scrutiny of the refund claim, an amount of Rs.4,84,200 was rejected on the ground that according to the report of Collectorate of Sales Tax and Federal Excise, Karachi, two of the suppliers namely Messrs Bismillah Leather Industries and Messrs City Trade International, Karachi were non-existent at their declared business addresses while computerized Cross-matching of data revealed the status of one supplier Messrs Waseem Trading, Karachi as "registration suspended" and one supplier Messrs Kamal Industries as having "abnormal tax profile". The invoices issued by these suppliers were, as such, considered unverifiable and improper. The appellant filed appeal against the rejection order passed by the Deputy Collector vide Order-in-Original No.163 of 2006, dated 24-4-2006, which was rejected by Collector (Appeals), Lahore vide order in appeal No.216/ST/2006, dated 14-11-2006. Hence this second appeal.

2. Through the instant appeal, the appellant has challenged the order rejection of its refund claim mainly on the following grounds:-- (1) That the impugned order was passed ex parte without giving the appellant proper opportunity of hearing. (2) That the appellant made purchases from Messrs Bismillah Leather Industries and Messrs City Trade International wayback in March, 2004 whereas the claim has been rejected on the basis of a report showing their non-existent status in 2006 which is not relevant. The "registration suspended" status of Messrs Waseem Trading has also been reported in 2006 whereas the purchases were made in March, 2004 when their registration was intact. Similarly, the alleged abnormal tax profile of Messrs Kamal Industries has nothing to do with the appellant. (3) That the appellant has not violated any provisions of law, hence the penalty imposed is illegal.

3. During the course of hearing on 21-5-2007, learned counsel for the appellant elaborated the aforesaid arguments and placed on record a copy of STARR report, dated 24-1-2006 and a copy of invoice verification profile, dated 16-5-2005 of Messrs Kamal Industries in support of his contention that the unit was duly registered and operative even in 2005. The D. R. however, opposed the appeal arguing that the refund payment in question was rejected on the basis of report of Collector Sales Tax and Federal Excise, Karachi and information obtained from STARR.

4. I have gone through the facts on record and the contentions raised by both sides. I find considerable force in the appellant's contention that the refund claim in question pertained to purchases made in the year, 2004 while the same was rejected on the basis of Collector Sales Tax and Federal Excise, Karachi's report, dated 18-2-2006 whereby status of two suppliers, Messrs Bismillah Leather Industry and Messrs City Trade International Karachi was indicated as non-existent at their declared business addresses. As it appears from the record, no effort has been made by the department to ascertain the status of these two units at the time of purchases made by the appellant. The STARR report showing "registration suspended" status of Messrs Waseem Trading Karachi is also, dated 24-1-2006. When confronted with the copy of STARR report produced by the learned counsel during the course of arguments, the D.R. could not convince whether the registration was suspended in March, 2004 when the purchaser were made or afterwards. He also could not offer any satisfactory explanation to the appellant's contention that according to the tax profile of Messrs Kamal Industries, their status was shown as "operative" even in July, 2005. The aforesaid discussion leads to the conclusion that the refund claim of the appellant has been rejected without making necessary inquiries regarding the suppliers' status during the period when purchases were actually made. There is, as such, need to re-examine the whole case on this ground which can be done only at the original stage of adjudication.

5. In view of the foregoing, the impugned order is set aside and the case remanded to the Adjudicating Officer for a fresh decision in the light of the observations, on merit and in accordance with the law, after giving the appellant proper opportunity of hearing and after taking into consideration all the evidence that it may produce. S. A.K./68/Tax(Trib.) Case remanded.