COMMISSIONER OF SALES TAX, CENTRAL ZONE `A', KARACHI VS MESSRS A & B FOOD INDUSTRIES LIMITED, KARACHI
1991 P T D 909
[Karachi High Court]
Before Mamoon Kazi and Salahuddin Mirza, JJ
COMMISSIONER OF SALES TAX, CENTRAL ZONE `A', KARACHI
Versus
Messrs A & B FOOD INDUSTRIES LIMITED, KARACHI
S.T.C. No. 27 of 1979, decided on 03/04/1991.
(a) Sales Tax Act (III of 1951)---
----Ss. 10 & 17(1)---Reference---Exemption --Question as to ratio of packed or unpacked biscuits covered by a notification being a pure question of fact need not be answered by High Court.
(b) Sales Tax Act (III of 1951)---
----S. 10---Exemption---Where it could not be determined from the books of accounts or documents produced before the Sales Tax Officer the exact ratio of manufactured goods for the purpose of granting exemption from payment of Sales Act, the Sales Tax Officer could make an assessment on the basis of his best judgment after giving the assessee an opportunity of being heard.
According to section 10, Sales Tax Act, 1951 every manufacturer or producer and every licensed wholesaler and every exporter is required to furnish within thirty days of the end of the quarter to the Sales Tax Officer a return in the prescribed form and in the prescribed manner relating to the sales made in each quarter. If the Sales Tax Officer is satisfied in respect of the correctness of the return then he shall make an assessment on the basis thereof and determine the amount of tax payable. However, if the Sales Tax Officer is not satisfied, he may after calling for such further particulars and books of account and documents as he may require, determine the tax payable. Subsection (4) of section 10 further shows that if the return under subsection (1) has not been sent or the books of account or documents called for by the Sales Tax Officer have not been produced, the Sales Tax Officer shall make an assessment to the best of his judgment after giving the assessee an opportunity of being heard. It would thus be seen that where it cannot be determined from the books of account or documents produced before the Sales Tax Officer the exact ratio of manufactured goods for the purpose of granting of exemption for payment of sales tax the Sales Tax Officer may make an assessment on the basis of his best judgment.
Shaikh Haider for Applicant.
Iqbal Naeem Pasha for Respondent.
Date of hearing: 3rd April 1991.
JUDGMENT
MAMOON KAZI, J.---The respondent is engaged in manufacture of biscuits. During the year under assessment, the respondent filed sales tax return showing taxable sales of biscuits at Rs.34,73,905. Exempted sales were, shown as amounting to Rs.22,13,729. The Sales Tax Officer, however, estimated the sales at Rs.70,00,000. When the matter went to the Appellate Assistant Commissioner he reduced the same to Rs.60,00,000. When the matter went before the learned Appellate Tribunal it directed that the sales estimate should be based on the corresponding income tax assessment during the previous years and the bifurcation should be made in accordance with the circular issued by the Central Board of Revenue directing that the bifurcation should conform to the old pattern of previous assessment. It would be pertinent to refer in this regard to the two Notifications, the first exempting loose biscuits from sales tax liability while the later exempting biscuits, which were marketed or without any name, brand or trade-mark. The learned Tribunal, however, ordered de novo assessment either on the basis of the record or in absence thereof, the past history of assessment. The department was, however, aggrieved by this order and it filed an application before the Tribunal for making a reference to this our, under section 17(1) of the Sales Tax Act, however the learned Tribunal came to a conclusion that no question of law was involved which could be referred to this Court for its opinion and consequently it dismissed the application. The department was still not satisfied and it has, therefore, referred the following questions to this Court for its opinion:--
"(1) Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in directing to adopt ratio of taxable and non taxable sales on the basis of past history of the case wherein assessments were completed on compromised basis when full facts were not scrutinized.
(2) Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified to direct that exemption should be allowed on old pattern despite the facts that old Notification was substituted by new Notification.
(3) Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in directing that if appellant fails to furnish regular production figure, the formula as per past history of the case should be adopted."
2. After hearing Mr. Shaikh Haider, learned counsel for the applicant and Mr. Iqbal Naeem Pasha, we are inclined to agree with the learned Tribunal that no question of law arises under the facts and circumstances of the case in respect whereof we may express our opinion. The question as to the ratio of packed or unpacked biscuits covered on the aforesaid first or the second Notification is a pure question of fact and not a question of law. Mr. Shaikh Haider has however argued that the directions of the learned Tribunal that the matter be decided on the basis of the past history is against the clear provisions of section 10 of the Sales Tax Act which refers to assessment. We would like to point out that according to this section every manufacturer or producer and every licensed wholesaler and every exporter is required to furnish within thirty days of the end of the quarter to the Sales Tax Officer a return in the prescribed form and in the prescribed manner relating to the sales made in each quarter. If the Sales Tax officer is satisfied in respect of the correctness of the return then he shall make an assessment on the basis thereof and determine the amount of tax payable. However, if the Sales Tax Officer is not satisfied, he may after calling for such further particulars and books of account and documents as he may require determine the tax payable. Subsection (4) of section 10 further shows that if the return under subsection (1) has not been sent or the books of account or documents called for by the Sales Tax Officer have not been produced, the Sales Tax Officer shall make ~an assessment to the best of his judgment after giving the assessee an opportunity of being heard. It would thus be seen that where it cannot be determined from the books of account or documents produced before the Sales Tax Officer the exact ratio of manufactured goods for the purpose of granting of exemption from payment of sales tax the Sales Tax Officer may make an assessment on the basis of his best judgment. It would be under such circumstances that the said circular issued by the Central Board of Revenue would provide guidelines to the Sales Tax Officer and it was for such reasons that the learned Tribunal appears to have directed the assessment de novo on the basis of the said circular. Consequently, in view of the aforesaid facts, the learned Tribunal appears to be right in holding that there was no question of law which required to be referred to this Court for its opinion. As three questions, referred to us by the department, do not raise a question of law upon which we may express our opinion, the reference is dismissed.
M.B.A./C-222/K Reference dismissed.