2007 PLP (Trib (PTD)

ZAFAR UL MAJEED, MEMBER (TECHNICAL).

This appeal is directed against sales tax Order-in-Appeal No. 245 of 2006, dated 4-4-2005 passed by the Collector, Customs, Sales Tax and Federal Excise, (Appeals), Multan.

2. Brief facts leading to this appeal are that during the course of audit or appellant's sales tax record for the period 2001-2002 and 2002-2003, the staff or Collectorate of Sales Tax, Multan noted following irregularities:-- (1) That the appellant disposed of scrap valuing Rs.8,22,793 without charging sales tax amounting to Rs.1,48,103. (2) That during the period 2001-2002.the appellant claimed excess input tax of Rs.15,357. (3) That during the period 2001-2002 and 2002-2003 the appellant claimed inadmissible input tax amounting to Rs.2,77,841 on certain items, on which input tax adjustment was not admissible under S.R.O. 578(I)/98. (4) That according to audited accounts of the appellant, during the period 2002-2003, the appellant disposed of vehicles but did not pay sales tax amounting Rs.2,60,582. (5) That the appellant did not pay sales tax amounting to Rs.4,33,739 on electricity consumed in the housing colony and administration branch.

3. The case was adjudicated by the Deputy ' Collector (Adjudication), Multan who vide Order-in-Original No.13 of 2005, dated 29-8-2005 directed the appellant to pay aforesaid amounts of sales tax along with additional tax under section 34 and penalties under section 33 of the Sales Tax Act, 1990. The appeal filed by the appellant was rejected by the Collector (Appeals) vide impugned order, hence this appeal.

4. Through the instant appeal, the appellant has contested the demand raised vide impugned order on the following grounds:-- (1) That the tax in respect of fixed assets i.e. packing material disposed of by the appellant, was not payable as no input tax was claimed on these items. During the course of arguments, learned counsel for the appellant quoted a judgment of this Tribunal (2001 PTD (Trib.) 2590) in support of his contention. He further submitted that no additional tax or penalty could be imposed because there was a dispute regarding interpretation of law relating to chargeability of tax on disposal of fixed assets. (2) That the amount of excess claimed input tax of Rs.15,357 has been deposited by the appellant, a copy of the proof of payment has been placed on record. (3) That the amount of Rs.2,77,841 claimed by the appellant against items listed on S.R.O. 578(I)/98 has been deposited. The only dispute raised by the department is about levy of additional tax and penalty, which is not chargeable in view of the amnesty granted by the Government vide S.R.O. 520(I)/2005, dated 6-6-2005. (4) That no sales tax was payable on disposal of vehicles as no input tax claimed by the appellant against these vehicles in view of the restriction imposed under S.R.O. 578(I)/98. Sales Tax amounting to Rs.27,045 was collected inadvertently against disposal of one vehicle, which has been deposited 'along with return for the month of March, 2003. (5) That the input tax adjustment on self-consumed electricity has been held admissible by the Sindh High Court in its judgment titled Ghandara Nassan Limited, Karachi v. Collector LTU, Karachi 2006 PTD 2066. The demand on this account is, therefore, not justified.

5. During the course of arguments, learned counsel for the appellant placed on record copies of various judgments of the High Court and this Tribunal quoted in support of appellant's contentions. Learned D.R. however, opposed the appeal.

6. I have gone through the written as well as verbal submissions made on behalf of the appellant and carefully examined the connected records of case. My findings on each of the issues involved are as follows: (1) Regarding demand of sales tax on disposal of fixed assets, learned D.R. conceded that the appellant did not claim input tax adjustment on these items as electricity was not chargeable to sales tax at the time of import of the items in question. There is, as such, no justification to demand tax on this account in view of C.B.R.'s ruling issued vide C. No.1(117)STJ/2004, dated 9-9-2004, referred to in para 7(iii) of the impugned order. The demand on this account along with additional tax is, accordingly, remitted. (2) The appellants have placed on record a copy of return showing deposit of Rs.15,357 demanded from them on account of excess input tax adjustment. The department has placed on record a reconciliation statement signed by both sides showing ignorable left over balance of Rs.16 but the D.R. insists that additional tax and penalty for late payment of tax are still due as the amount was deposited before the issuance of S.R.O. 520(I)/2005 and, therefore, benefit of amnesty was not available to them. However, following the principles laid down in the judgment of Lahore High Court cited 2006 PTD 336 a lenient view is taken and demand of additional tax and penalty is remitted. (3) The appellants have claimed waiver of additional tax demanded on account of late payment of tax amounting to Rs.2,77,841 in terms of S.R.O. 520(I)/2005 which according to the respondents is not admissible as the amount in question was paid before issuance of this S.R.O. However, as the principal amount of tax stands deposited, the amount of additional tax is remitted for the reasons recorded in sub-para (2) above. (4) Demand of sales tax on disposal of vehicles is not justified as no input tax was claimed by the appellant against them in view of the bar imposed under S.R.O. 578(I)/98. Sales tax of Rs. 27,045 collected by the appellant on disposal of one vehicle has been deposited along with return for the month of March, 2003, which has been confirmed by the D.R. Demand of sales tax, additional tax and penalty on this account is also remitted. (5) Demand of sales tax on electricity consumed in the housing colony etc. amounting to Rs.4,33,741 is, however, upheld as the same falls under the definition of taxable supply as provided under section 2(41) of the Sales Tax Act and is chargeable to sales tax. The appellant is, therefore, directed to pay the demand of sales tax along with additional tax and penalty on this account.

7. The appeal is disposed of in the above terms and the impugned order is modified accordingly. C.M.A./41/Tax (Trib.) Order accordingly.