BEFORE SAJID HUSSAIN, MEMBER (JUDICIAL) AND ZAFAR IQBAL, MEMBER (TECHNICAL) VS BEFORE SAJID HUSSAIN, MEMBER (JUDICIAL) AND ZAFAR IQBAL, MEMBER (TECHNICAL)
2002 P T D (Trib.) 329
[Income-tax Appellate Tribunal Pakistan]
Before Sajid Hussain, Member (Judicial) and Zafar Iqbal, Member (Technical)
Appeal No. K-30 of 2001, decided on 22/05/2001.
Sales Tax Act (VII of 1990)---
----S. 5(b) & Sixth Sched.---S.R.O. No. 922(1)/99, dated 16-8-1999-- Customs Act, 1969, Ss. 32(2) & 79(2)(4)---Change in the rate of tax-- Exemption---Crude oil---Import of---Exemption from sales tax-- Presentation of Bill of Entry as on 7-8-1999---Delivery of manifest as on 12-8-1999---Sales tax was levied as on 16-8-1999 vide S.R.O. No. 922(1)/99, dated 16-8-1999---Bill of Entry was completed for final assessment and payment exempting the goods from sales tax being not chargeable, when the manifest for vessel was delivered---Show-cause notice after lapse of more than two years---Sales tax was levied on the ground that Bills of Entry were filed after issuance of the said S.R.O.-- Validity---Demand raised by the Department was declared to be illegal by the Tribunal in the circumstance.
Ataullah Khan, Consultant for Appellant.
Nihar Khan, Appraising Officer for the Department.
Date of hearing: 22nd May, 2001.
JUDGMENT
ZAFAR IQBAL, MEMBER (TECHNICAL). ---This appeal has been filed against the order, dated 31-1-2001 passed by the Collector of Customs (Adjudication), Karachi-II.
2. The brief facts of the case are that the appellant-company imported two consignments of crude oil from Aramco, Saudi Arabia. On 7-8-1999 two separate bills of entry for home consumption were presented in the Oil Section of Custom House, Karachi, under section 79 of the Customs Act, 1969. Both of the bills of entry were presented at the same time as per the prevalent procedure, the Oil Section of Customs House, Karachi, received the bills of entry and opened a joint file numbered 63, dated 7-8-1999 for the processing of the bills of entry in terms of subsections (2) and (4) of section 79 of the Customs Act, 1969 as is evident from the records that---
(a)the company presented/filed the bills of entry for the clearance of the aforesaid consignments on 7-8-1999;
(b)the bills of entry were received by the oil section and assigned file No. 63;
(c)the bills of entry were processed in the Oil Section by the concerned Appraiser, Principal Appraiser and Assistant Collector (Oil) for the purpose of. allowing discharge of crude oil for home consumption in terms of section 79 of the Customs Act, 1969 and for allowing provisional assessment in terms of section 81 of the Customs Act, 1969.
3. The Import General Manifest was delivered on 12-8-1999.
4. At the time of the presentation of bills of entry on 7-8-1999 as well as at the time of the delivery of manifest on 12-8-1999, crude oil was liable to customs duty @ 10% ad valorem and sales tax was exempt in terms of the Sixth Schedule to the Sales Tax Act, 1990. On 16-8-1999, there was a change in the rate of sales tax as the exemption available to crude oil was withdrawn through the issuance of the Notification S.R.O. No. 922(1)/1999, dated 16-8-1999. During the finalization of the assessment, the Appraising Officials demanded payment of sales tax. However, the company through noting on the reverse of the bail of entry stated that the exemption from sales tax was available on 12-8-1999, the day, when the manifest for the vessel was delivered. Therefore, the company was not liable to pay sales tax on the imported goods. The contention of the company was accepted by the officials of the oil section and the bill of entry was accordingly, completed for final assessment and payment.
5. After a lapse of more than one year, a show-cause notice was issued. It was stated therein---
" ....The assessment was done on the misunderstanding that the import had been covered under section 79(2) of the Customs Act, 1969 and accordingly, the crucial date for assessment was taken as, the date of IGM, i.e. 12-8-1.999 when exemption of sales tax was allowed under Schedule VI to the Sales Tax Act, 1990. Whereas in terms of S.R.O. 922(1)/99, dated 16-8-1999 the sales tax was chargeable on the consignment under section 30 of the Customs Act, 1969 for which the bill of entry was presented on or after 16-8-1999. Keeping in view the application of the said S.R.O., the sales tax should have been levied 0 15%, on all bills of entry filed after the issuance of the said S.R.O. Thus, on account of misinterpretation of section 30 of the Customs Act, 1969, an amount of Rs. 7,74,50,602 was short levied towards the sales tax .... "
6. The company denied the charges levelled against it. The adjudicating officer, however, did not agree with the contention of the company. He accordingly enforced the demand. The said order is now being assailed through the present appeal inter alia on the following grounds:
(a) The factual position in respect of both of the consignments, as admitted by the department as well as the respondent-Company, is follows:
(i) Both of the bills of entry were presented in advance of the arrival of the conveyance on 7-8-1999.
(ii) The machine numbers for both the bills of entry were allocated on 18-8-1999.
(b) The only dispute is with regard to the change in the rate of sales tax which was made effective from 16-8-1999. The provisions with regard to the change in the rate of tax are contained in section 5 of the Sales Tax Act, 1990.
7. We have heard the parties. We believe that the demand raised by the department is illegal and not called for due to the following reasons:
(a) that the sales tax in respect of goods imported into Pakistan is to be charged and paid in the same manner and at the same time as if it were a duty of customs and the provisions of the Customs Act, so far as they relate to collection, payment and enforcement of tax on such goods are applicable, and where no specific A provision exists in the Sales Tax Act, 1990. Thus, it is categorically envisaged in subsection (1) of section 6 that where specific provision exists in the Sales Tax Act, 1990, the same shall override the provisions contained in the Customs Act, 1969. It is evident from the perusal of the foregoing paragraphs that specific provisions exist in the Sales Tax Act with regard to the change in the rate of tax and these provisions are contained in section 5 of the said Act.
(b) the proviso to subsection (b) of section 5 clearly envisages that where a bill of entry is presented in advance of the arrival of the conveyance by which the goods are imported, the tax shall be charged as in force on the date on which the manifest of the conveyance is delivered. Therefore, for all purposes of law and fact, the critical date for the charging of tax on the subject case was 12-8-1999 when the goods were exempt in terms of Schedule VI to the Sales Tax Act, 1990;
(c) the show-cause notice was issued in pursuance of the provisions contained in subsection (2) of section 32 of the Customs Act, 1969. It is admitted, in the show-cause notice itself that the assessment of sales tax was made by the customs officials of the oil section on account of a misunderstanding. Therefore, the provisions contained in subsection (2) of section 32 of the Customs Act, 1969, are not attracted and the case is covered by subsection (3) of section 32 of the Customs Act, 1969, which has a time limit of six months from the date of payment of the issuance of the show-cause notice. The show-cause notice is therefore, time-barred and ab inito void;
(d) the subsequent manifestation of the bill of entry and its resubmission on 18-8-1999 for completion and finalization of assessment is not relevant for the purpose of the levy of sales tax in terms of section 5 of the Sales Tax Act, 1990. The fundamental legal point involved in the case is that section 30 of the Customs Act, 1969 was amended by the Finance Act, 1999 whereby the word "presented" in the First Proviso to subsection (b) of section 30 was substituted with the word "manifested" and it was further stated that "manifested" means the day when a machine number is allocated to a bill of entry and is registered in the customs record. The case of the department is' that the machine numbers on the two bills of entry in question were assigned on 18-8-1998, and therefore, in the light of the amended section 30, the rate of "duty" leviable on the subject goods would be the rate of duty applicable on 18-8-1998. The amended provision of section 30 were applicable to the import "duty" levied under section 18 of the Customs Act, 1969, whereas the change in the rate of sales tax was specifically governed by the provisions contained in section 5 of the Sales Tax Act, 1990 which was not amended and continued to refer to the day of the filing/presentation of the bills of entry and the delivery of the manifest of the conveyance, as before. It is an admitted fact that both of the bills of entry were filed/presented by the appellant-Company in the oil section on 7-8-1999 and in terms of the provisions contained in section 5 of the Sales Tax Act, 1990, the subject goods were exempt from tax (as on 7-8-1999) in accordance with the Sixth Schedule to the Sales Tax Act, 1990;
(e) that as per noting on the files of oil section, the presented bill of entries were accepted on 7-8-1999 and processed in terms of special procedure laid down vide Central Board of Revenue's Letter C. No. 81-82/Cus/Bud/10(6), dated 7-10.1982 which prescribed the procedure for filing of the bill of entry in respect of import of crude oil. As per condition No. 3, the importer was required to file a bill of entry on the day of tender is berthed and as per Condition No. 4, the importer was required to re-submit A the bill of entry within two months from the filing of Import General Manifest. The company did follow the same procedure. In these circumstances, the bill of entry should have been machine numbered on 7-8-1999 and it was required to be done by the customs authorities, however, they did fail in their duty `and obligation and for no fault of the appellant, he cannot be penalized.
8. Accordingly, we set aside the order appealed against. The appeal is allowed accordingly.
C.M.A./M.A.K./165/Tax(Trib.) Appeal allowed.