COLLECTOR OF SALES TAX, FAISALABAD VS Messrs ARAFAT CHEMICAL (PVT.) LTD., FAISALABAD.
2005 P T D 1337
[Lahore of High Court]
Before Nasim Sikandar and Jawwad S. Khawaja, JJ
COLLECTOR OF SALES TAX, FAISALABAD
versus
Messrs ARAFAT CHEMICAL (PVT.) LTD., FAISALABAD.
Customs Appeal No.103 of 1998, heard on 10/03/2005.
Sales Tax Act (VII of 1990)---
----Ss. 18, 14, 23 & 59---Commercial importer had imported Chemicals through various bills of entry prior to 17-8-1996 and at that time importer was not obliged to register itself compulsorily under S.14, Sales Tax Act, 1990 as an importer---Importer however, opted for voluntary registrationunderS. 18oftheActandwasregisteredassuchon17-8-1996---Importer, thereafter, supplied the imported Chemicals to registered manufacturers and also issued replacement invoices in respect of such supplies---Department had taken the objection that the importer had passed on the incidence of Sales tax to registered persons under the cover of S.59, Sales Tax Act, 1990 although the benefits of the said section were not available to persons who had opted for voluntary registration under S.18 of the Act and that as a result of the replacement, invoicesissuedbytheimporterahugelosswascausedtotheexchequer---Importer was therefore, charged with the violation of Ss.18 & 59 of the Sales Tax Act, 1990 and was called upon to show cause as to why sales tax along with additional tax should not be recovered from it---Validity---Held, importer, being a registered importer, was fully authorized to issue replacement invoices---Department had no statutory basis for the objection in view of clear and unambiguous wording of S.18, Sales Tax Act, 1990, at the relevant time whereby importer was duty bound to issue replacement invoices where it had opted for voluntary registration---Principles.
A. Karim Malik for Appellant.
Latif Ahmad Qureshi for Respondent.
Date of hearing: 10th March, 2005.
JUDGMENT
JAWWAD S. KHAWAJA, J.---Through this appeal the Revenue-appellant impugns the judgment of the Customs, Excise and Sales Tax Appellate Tribunal rendered in Appeal No.132 of 1998, decided on 20-7-1998. The questions oflaw arising from the impugned judgmentoftheTribunalwerenotsetoutintheappealitselfbutwere formulated by learned counsel for the Revenue on 9-3-2005, as follows:--
"(i)Whether the learned Tribunal has erred in law to give retrospective effect to omission of section 59 of the Sales Tax Act, 1990 by the Finance Act, 1997?
(ii)Whether the learned Tribunal has committed an error of law while interpreting different provisions of Sales Tax, 1990 particularly sections 14, 18, 23and 59?"
2.We heard learned counsel for the parties at some length yesterday and also today. Withtheir assistance, we have also gone through the impugned appellate judgment and the decisions rendered by the departmental forums. It appears to us that the departmental forums as well as the learned Tribunal have been misled on account of the amendments brought about in sections 18 and 59 of the Sales Tax Act during 1996 and 1997. For reasons discussed below, we are of the opinion that the Order-in-Original No.209 of 1997, dated 12-11-1997 passed by the Additional Collector, Sales Tax, Faisalabad, and the Order in Appeal No.123 of 1998 passed by the Collector of Customs are not legally sustainable. The learned Tribunal has set aside the aforesaid orders but for reasons which are different from those whichhave prevailed with us.
3.In order to understand the questions in issue, we need to set out the facts in brief. The respondent, namely, Messrs Arafat Chemical (Pvt.) Ltd., is a commercial importer. It imported 21,210 Kgs of chemicals through various bills of entry. These imports were affected prior to 17-8-1996. At the time the respondent was not obliged to register itself compulsorily under section 14 of the Sales Tax Act as an importer. However, it opted for voluntary registration under section 18 of the said Act and was registered as such on 17-8-1996. It thereafter supplied the imported chemicals to registered manufacturers and also issued replacement invoices in respect of such supplies.
4.The Superintendent, Sales Tax (Audit), Faisalabad, conducted an audit of the respondent on 11-7-1997 on the basis of which he objected to the issuance of replacement invoices by the respondent. In brief, the objection was that the respondent had passed on the incidence of sales tax to registered persons under the cover of section 59 of the Sales Tax Act although the benefits of the said sections were not available to persons who had opted for voluntary registration under section 18 of the said Act. According to the department, as a result of the replacement invoices issued by the respondent a loss of Rs.12,90,633 was caused to the exchequer. The respondent was, therefore, charged with the violation of sections 18 and 59 of the Sales Tax Act and was called upon to show cause as to whysales tax amounting to Rs.12,90,633 along with additional tax should not be recovered from it.
5.At the time of the respondent's voluntary registration as a commercial importer, section 18 of the Sales Tax Act provided as under:--
"18. Voluntary Registration.---(1) A person who makes or intends to make taxable supplies but is not required to be registered under this Act, may make an application for registration in such form and manner as the Board may, by notification in the official Gazette, specify.
(2)A person registered in pursuance to application made under subsection (1), shall not be de-registered before expiry of two years from the date of registration.
(3)The importers, distributors or wholesalers making taxed supply of goods may, on their own accord, apply for registration in accordance with subsection (1):
Provided that on registration, such importers, distributors and wholesalers shall not charge output tax on the supplies made by them, but they shall issue replacement invoices in respect of such supplies.
6.It is abundantly clear to us that the respondent, being a registered importer, was fully authorized to issue replacement invoices. This is precisely what the respondent did. It has not been possible for us to find any statutorybasis for the department's objections because of the clear and unambiguous wording of section 18 at the relevant time whereby importer were duty bound to issue replacement, invoices where they had opted for voluntary registration.
7.From the arguments advanced before us by learned counsel for the Revenue as also the contents of the Order-in-Original and Order in Appeal impugned before the learnedTribunal, it appears that the objections of the Revenue arose because of repealed amendments of the Sales Tax Act. Section 18 was amended through the Finance Act of 1996 and 1997. Section 59 was substituted through the Finance Act, 1996 and was omitted by the Finance Act, 1997. It was reinserted in amended form through the Finance Act, 1999 when, for the first time, voluntary registrants under section 18 were brought within its ambit.
8.At the time when the respondent obtained voluntary registration section 59 made reference only to such persons as were required to be compulsorily registration under section 14 of the Sales Tax Act. It is through the Finance Act, 1999 that section 59, for the first time, made a mention of persons opting for voluntary registration under section 18 of the said Act. It is this sequence of amendments which appears to have misledthe departmental forums. For the same reason learned counsel fortheRevenuealsobasedhisargumentsprimarilyonthegroundthat the learned Tribunal had wrongly given retrospective effect to section 59.
9.In our opinion section 59, as it exited prior to the Finance Act, 1997, had no application in the case ofvoluntary registrants such as the respondent. The entire thrust of discussion in the departmental orders and in the impugned judgment of the learned Tribunal is, therefore, misplaced. The amendments which were brought about in section 18 and deletion of section 59 of the Sales Tax Act, through the Finance Act, 1997 have no bearing on the present case. The decision in this appeal rests solely on section 18 as it existed during the period which is relevant for the present case. As noted above, there is no question that the respondent was not only justified in issuing replacement invoices butwas actually obliged by law to do so once it had obtained voluntary registrationundersection18aforesaid.Therespondent,assuch,didnot violate sections 18 and 59 of the Sales Tax Act as charged and nor did it commit any illegality by issuing the disputed replacement invoices.
10.In view of the foregoing discussion, we find that although the questions of law framed above arise out of the judgment of the learned Tribunal, the same do not need tobe answered in the circumstances of the present case.
M.B.A./C-50/LOrder accordingly.