2015 PLP (Trib (PTD)

MUHAMMAD WASEEM, CH. JUDICIAL MEMBER.

This appeal has been filed at the instance of registered person, calling in question the impugned Order-in-Appeal dated 9-10-2014 passed by the learned CIR (Appeals-II), Lahore.

2. Brief facts of the case are that as per audit report, the department came to know that the registered person during the period from 07/2011 to 06/2012 had claimed illegal input tax amounting to Rs.3,734,579 which becomes violation of sections 3, 6, 7, 8, 8A, 14, 22, 23, 25, 26, 38 and 73 of the Sales Act, 1990 which was, allegedly, involved in suspicious/fake/inadmissible and the same shall stand recoverable to the registered person. Accordingly, a show-cause notice was issued to the registered person under section 11(2) of the Sales Tax Act, 1990, requiring the registered person to explain as to why the said amount of sales tax should not be recovered from him along with default surcharge and penalty. However, no reply to the show-cause notice was submitted by the registered person. Consequently, the adjudicating officer proceeded to pass an ex parte order and directed the registered person to pay sales tax amounting to Rs.3,734,579 along with default surcharge and 100% penalty. The registered person preferred first appeal before the learned CIR(Appeals) and he being convinced with the submissions made by the registered person, he has held that "Contentions of the appellant have been considered. It is observed that the impugned order dated 22-5-2014 appears to have been passed without service of mandatory show-cause notice upon the registered person. It is not understandable why order remained dormant to follow up the legality of the case. This lends support to registered person's contention regarding non-receipt of notice". However, the learned CIR (Appeals) remanded the matter back to the adjudication officer with the direction to afford reasonable opportunity to the appellant and for passing fresh speaking order strictly in accordance with law. These findings of the learned CIR(Appeals) are assailed by the registered person through second appeal filed before this forum.

3. The learned AR on behalf of registered person assailed the orders of the authorities below as contrary to law and facts of the case. It is submitted by the learned AR that the learned first appellate authority has made the following findings:-- "Prima facie, it seems that impugned show-cause notice as well as letters never reached the appellant's hands and the case was decided ex parte in a single hearing and the appellant was deprived of its right of properly furnishing the requisite documents and explaining of its stance. In this scenario, I am satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the ACIR".

4. It is evident from the order of the learned CIR(Appeals) that the registered person is engaged in the business of commercial importer and GST paid at Rs.3,139,852 @ 16% and additional GST at Rs.594,727 which comes to total amount of GST at Rs.3,734,

579. It was observed by the learned CIR(Appeals) as under:-- "With regard to the merits of the case, the learned AR reiterated that the taxpayer has declared value of commercial imports at Rs.23,347,240 for the period July, 2011 to June, 2012 after depositing the tax in the bank at import stage which is duly reconciled with the income tax return of the taxpayer and can also be verified through bill of entries or on line hence the demand raised by the officer of inland revenue under section 2(37) perhaps committing tax fraud by the appellant is totally incorrect and based on misconception and is ought to be declared null and void. To lend credence to his contentions, the learned AR of the appellant provided statement of bills of entries which have placed on file."

5. That it is very outset the learned CIR (Appeals) has no powers to remand the case which as clearly stated in subsection (3) of section 45-B read as:-- "(3) In deciding an appeal, the [Commissioner Inland Revenue] (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration."

6. In the light of above submission the learned CIR(Appeals) passed an order against the substantive law which was passed by the Parliament and has been endorsed by the Hon'ble Lahore High Court, Lahore Multan Bench, Multan in the Case No.STR No.12/2012 "The Commissioner Inland Revenue v. Messrs Supreme Tech International question "Whether Collector (Appeals) [now Commissioner Inland Revenue, (Appeals)] enjoys the power of remand under section 45-B(2) of the Sales Tax Act, 1990 ("Act").

7. That the study of operative part of the judgment passed by Hon'ble Lahore High Court, Multan Bench, Multan reveals that, the appellate order is totally illegal and unlawful and liable to be struck down/annul because subsection (3) of section 45-B of the Sales Tax Act, 1990 has not conferred the powers to remand back the case. It is another case-law reported as 2013 PTD (Trib) 881 this Appellate Tribunal Inland Revenue also observed that:-- "First Appellate Authority should have cancelled the order-in-Original rather, than remanding the matter back to the Assessing Officer

First Appellate Authority had given a categorical finding that "from the above discussion, it is evident that assessment had been framed without confronting the appellant and appreciating the true position. Such an order therefore is not sustainable and is accordingly set aside. In presence of such unequivocal observation/finding, the First Appellate Authority was not justified to remand the matter back to Assessing Officer for fresh proceedings as such a direction was tantamount to give a change to the department to fill in the lacuna to improve their case. Provision of subsection (3) of section 45-B of the Sales Tax Act, 1990 did not empower the First Appellate Authority to remand the case".

8. It is further submitted by the learned AR that the registered person is made commercial import and paid input tax against purchases and has duly made compliance to the provision of section 7 read with section 73 of the Sales Tax Act, 1990. So, the appellant cannot be burdened with the offence committed by any other person. It is a principle of law that nobody can be responsible for the acts and omissions of other person. Reliance is placed on 2001 SCMR 1959, 2012 PTD (Trib) 350, S.T.A. No.55/LB/2012, S.T.A. No.478/LB/2012 and S.T.A. No.477/LB/2012. He, therefore, prays that the impugned Assessment Order as well as Appellate Order is likely to be struck down as passed illegal and unlawful.

9. That on the contrary, learned DR supported the order passed by the learned CIR(Appeals) and contended that no prejudice is caused to the registered person from the setting aside directions of the learned CIR(Appeals).

10. We have given due consideration to the rival arguments and also gone through the relevant record available on file. After due consideration, we are convinced with the assertions made by the learned AR. From the perusal of record as well arguments made by the learned AR, we have come to inescapable conclusion that the learned CIR(Appeals) should have cancelled the impugned order-in-original rather than remanding the matter back to the assessing officer. The learned CIR(Appeals) has given categorical findings that "Prima facie, it seems that impugned show-cause notice as well as letters never reached the appellant's hands and the case was decided ex-parte in a single hearing and the appellant was deprived of its right of properly furnishing the requisite documents and explaining of its stance. In this scenario, I am satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the ACIR". In the presence of such unequivocal observation/finding, the learned CIR(Appeals) was not justified to remand the matter back to the adjudicating officer for fresh proceedings as such a direction is tantamount to give another chance to the department to fill in the lacuna to improve their case. Furthermore, the following provision of subsection (3) of section 45-B of the Sales Tax Act, 1990, does not empower the learned CIR(Appeals) to remand back the case:-- "In deciding an appeal, the Commissioner Inland Revenue (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration". 11 Having considering all aspects of the case in its entirety and after specifically following the ratio settled in the case reported as 2012 PTD (Trib.) 350 and S.T.A. No.478/LB/2012, Lahore High Court Multan Bench, Multan. We have reached the inescapable conclusion that the department has failed to prove the charge of tax fraud against the registered person. Furthermore, the learned CIR(Appeals) also has erred in law in remanding the case to the adjudicating officer for fresh proceedings.

12. In view of the above submission made by the learned AR, we are inclined to hold that the impugned order passed by the adjudicating officer is not maintainable in the eye of law which is hereby annulled. Order of the learned CIR(Appeals), being against the express provisions of law, is accordingly vacated.

13. Appeal of the registered person succeeds. HBT/14/Tax(Trib.) Appeal allowed.