COLLECTOR OF SALES TAX, FAISALABAD VS KASHIF ENTERPRISES, FAISALABAD
2005 PTD 1978
[Lahore High Court]
Before Nasim Sikandar and Jawwad S. Khawaja, JJ
COLLECTOR OF SALES TAX, FAISALABAD
Versus
KASHIF ENTERPRISES, FAISALABAD
C.A. No.567-S of 2002, decided on /01/.
th
May, 2005. (a) Sales Tax Act (VII of 1990)---
----Ss. 33, 34 & 46---Power of Appellate Tribunal to remit, reduce or delete amount of penalty and additional tax---Scope---Tribunal had jurisdiction to wave or remit additional tax or penalty in view of provisions of S.34 of Sales Tax Act, 1990 even after amendment and insertion of word "shall" in subsection (1) thereof---Provisions of S.46, Sales Tax Act, 1990 were neither governed nor controlled by provisions of Ss. 33 and 34 thereof---Imposition of penalty and additional tax with reference to such provisions would not at all be sacrosanct for appellate forums including Tribunal---Principle's.
Messrs Millat Tractors Ltd., Lahore v. Collector of Sales Tax and Central Excise, Lahore 2000 PTD 1445 fol.
(b) Sales Tax Act (VII of 1990)---
---Ss. 33 & 34---Penalty or additional tax should not invariably be imposed for simple reason that it is legal to do so.
(c) Sales Tax Act (VII of 1990)---
---S. 47(1)---Appeal to High Court---Exercise of discretion by Tribunal for valid reasons to remit additional tax and penalty---Validity---No question of law could be said to have arisen out of impugned order.
A. Karim Malik for Appellant.
Habib Ullah for Respondent.
Date of hearing: 30th March, 2005.
JUDGMENT
NASIM SIKANDAR, J.---The respondent, Messrs Kashif Enterprises, Faisalabad, on the report of the Audit Wing of the department was served with a show-cause notice on 19-3-2001 proposing a recovery of Rs.62,122 on account of sales tax along with additional tax as also ,initiation of penal action under the relevant provisions of the Sales Tax Act, 1990. In the proceedings that follow the Deputy Collector (Adjudication) through an order-in-original, dated 24-4-2001 found against the registered person in the following words:--
"(5) I have examined the case record in detail and carefully considered the view point of the respondents. I have come to the conclusion that the version of the Department is correct. The buyers of yarn do not send their yarn to knitting units in a packed form, rather it is sent in a loose fashion, and packing material is disposed of later. Many similar units have paid sales tax on supplies of such packing materials and have not brought this fact to light that the packing material is used by knitting units. Had this been the practice no manufacturer would have paid sales tax on used paper cones. In view of the above the charges stated in the show-cause notice are established. I therefore order Messrs Kashif Enterprises Faisalabad to immediately deposit evaded sales tax amounting to Rs.62122 into the Government Treasury along with additional tax under sections 36 and 34 of the Sales Tax Act, 1990. I also impose a penalty of Rs.5000 upon the respondents for the violation of above mentioned provisions of law under section 33(2cc) ibid."
2. On appeal the learned Members of the Customs, Excise and Sales Tax Appellate Tribunal by way of the impugned order, dated 9-9-2002 maintained the order-in-original as far recovery of Rs.62,122 as Sales Tax was concerned, however, the additional tax in excess 1/4 those actually payable on the said principal amount of Rs.66,122 was remitted along with total penalty of Rs.5,000. The Revenue has challenged allowing of the part relief with regard to reduction in additional tax and remission of penalty in toto by way of this appeal under section 47 of the Sales Tax Act, 1990.
3. After hearing the learned counsel for the parties we will agree with the learned counsel for the respondent that the learned Members of the Tribunal having exercised their discretion no case for interference with the impugned order is made out. Learned counsel for the Revenue is not correct in alleging that the reduction in additional tax and remission of penalty was made without assigning any reason. We have noted that in para 3 of the impugned order the learned Members of the Tribunal detailed the contentions made by the appellant before them with regard to non-levy of the sales tax. Obviously, the learned Members of the Tribunal felt convinced of the bona fides of the registered person in not paying the sales tax despite the fact that on legal premises they upheld the charge. That para in the impugned order reads as under:
"(3) The learned counsel contended that the appellant was a processing unit of knitted fabrics for the purpose of dying, bleaching calandering and they also stitched knitted fabrics. According to him, the appellant did not have the capacity to knit fabrics. He contended that the units supplied knitted fabrics in roles to the appellants and paper cone/paper bags were not received by them. Therefore, he contended that the charge of non-payment of sales tax on the supply of used paper cones and empty bags had not been shown and thus show-cause notice as well as the impugned order were vague. He also contended that there was no justification to levy additional tax and to impose penalty."
Therefore, it cannot be said that the order of the learned Members of the Tribunal was bereft of reasons and justification to allow the impugned relief.
4. We are also not in agreement with the learned counsel for the Revenue that in view of the provisions of sections 33 and 34 of the Act the Tribunal cannot remit, reduce or delete additional tax or penalty. The issue recently came up for consideration before this Court in S.T.A No.3 of 2002 decided on 27-1-2005. to that case the argument that under the provisions of section 34 of the Act or happening of any one of the commissions and omissions mentioned therein on the part of the tax payer, the levy of additional tax and prescribed penalties would be a consequence mandated by law and its waiver by the Tribunal would be an apparent illegality was rejected. On consideration of various judgments of the Hon'ble Supreme Court as well as of this Court we found that the Tribunal had the jurisdiction to waive or remit additional tax or penalty in the face of provisions of section 34 of the Act even after amendment and insertion of the word "shall" in subsection (1) of section 34 of the Act. By making a reference to an earlier judgment of this Court in re. Messrs Millat Tractors Ltd., Lahore v. Collector of Sales Tax and Central Excise, Lahore (2000 PTD 1445) it was opined that provisions of section 46 (Appeals to Appellate Tribunal) were neither governed nor controlled by the provisions of sections 33 and 34 of the Act. It was further observed that in a number of cases on Income Tax and Wealth Tax side in identical situation this Court expressed the view that the fixed amounts of penalties or those imposed with reference to a certain amount leviable for default per day were relevant only in the assessment proceedings. Further that imposition of penalties or additional tax with reference to such provisions was not at all sacrosanct for the appellate forums including the Tribunal. It was further noted that in case the departmental interpretation was accepted then the appeal provisions and the powers of the Tribunal to allow relief with regard to the penalties and additional tax will become redundant and that the same could never be the intention of the legislature. Also we were of the view that the additional tax or penalty should not invariably be imposed for the only reason that it is legal to do so.
5. The learned Members of the Tribunal having exercised their discretion to remit additional tax as well as penalty for the reasons which are apparently valid and sustainable, no question of law can be said to have arisen out of their order. The learned Members of the Tribunal having supported their view for valid reasons this appeal by the Revenue should not have been filed in the first instance.
6. Dismissed.
S.A.K./C-82/L???????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.