Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑Ss.2(37), 3, 6, 22, 23, 26; 46 & 47‑‑‑Remand of case by Tribunal‑‑‑ Appeal to High Court‑‑‑Local office of Sales Tax Department on scrutiny of sales tax/private record of two appellants Companies found that companies had supplied taxable goods to different persons without payment of sales tax and further tax‑‑‑Companies accordingly were charged with contravention of different sections of Sales Tax Act, 1990 and were proceeded against‑‑‑Appeal filed by appellant companies was pending before Tribunal‑‑ ‑Appeal filed by Revenue was also pending‑‑ Tribunal by way of impugned order disposed of two appeals filed by appellants Companies and the other filed by Department by remanding matter to original Authority‑‑‑Validity‑‑‑Remand of matter for fresh adjudication was not warranted and remand was directed on ground which was not even the grievance of the Revenue‑‑‑Tribunal aught to have recorded its finding on the legal objections raised before it against maintainability of Departmental appeal‑‑‑Remand of a matter to a lower Authority should only be made if material already available on record was not sufficient to dispose of the issues‑‑‑In Revenue matters benefit of any defaults on the part of detecting agency or Assessing Officer were to go to taxpayers‑‑‑In the present case, Tribunal apparently avoided ruling upon legal objection raised before it‑‑‑High .Court set aside impugned order of Tribunal with direction that ' Tribunal would dispose of legal as well as factual issues raised before it by both Revenue as , well as taxpayers/two Companies‑‑‑Two appeals by tax payer companies and one by Revenue, would be deemed pending before Tribunal to be decided after hearing parties within specified period.

Imtiaz Rashid Siddiqui for Appellant.

Qamar‑ud‑Din Ahmad Mian for Respondent.

Date of hearing: 23rd February, 2004.

JUDGMENT

NASIM SIKANDAR, J.‑‑‑Through this judgment S.T.A. Nos.373, 374 and 375 of 2002 shall be disposed of.

2. These three appeals assail a common order recorded by learned Customs Central Excise and Sales Tax Appellate Tribunal, dated 18‑6‑2002. Through that judgment a consolidated Order‑in- Original No.98‑99/2000 earlier recorded by Addl. Collector Sales Tax, Lahore on 23‑5‑2000 was set aside and the matter was remitted to Collector of Customs (Adjudication), Lahore for de novo consideration of the issues involved.

3. It appears that the local office of the Sales Tax Department on scrutiny of Sales Tax/private record of the two appellants Messrs Jawa A Chemicals Limited and Messrs Jawa Pansari Stores Limited Lahore for the period June, 1997 to March, 2000 concluded that the two Companies supplied taxable goods (chemicals of different descriptions) to different persons valuing at Rs.35,42,70,652 and Rs.3,29,89,379 respectively during the period without payment of sales tax and further tax amounting to Rs.5,94,47,060 and Rs.50,29,557. They were accordingly charged with contravention of sections 2(37), 3, 6, 22, 23 and 26 of the Sales Tax Act, 1990.

4. After issuance of show‑cause notice the protracted proceeding before the said office resulted in passing of the consolidated Order‑in- Original as noted above. In the order, besides others, it was noted that appellants had already deposited an amount of Rs.20 million towards their liability alleged in the two cases made out by the detecting agency.

5. Before the Adjudicating Authority the appellant submitted that since purchases and sales by the two units were the same without any segregation or distinction, these may be consolidated for the purpose of levy of tax. The original authority after considering the rival arguments inter alia concluded as under:‑‑

"There definite is an element of ignorance of respondents to Sales Tax Law as is evident from the documents presented before me.‑‑‑Even after paying sales tax on goods locally purchased, they did not obtain sales tax invoices and in spite of holding invoices to the tune of over Rs.9 million they did not claim adjustment nor refund and few such invoices, issued on 17‑5‑2000, have become time‑barred (over a year). However the lapse and omission was not all that as a result of ignorance but also purposeful and deliberate." (Emphasis supplied)

As regards the claim of the appellants of the sales as well as purchases having been made of the similar goods the original authority observed as under in the next para.‑‑

"The facts and details brought before me by both the sides lead me to believe that there has been no distinction between the purchases and supplies of the two units and since the detecting staff agrees/confirms that details of supplies from both the units are contained in the private record and no segregation, distinction was possible, therefore, it is taken jointly as one. The respondents claimed certain amount of input tax in their returns and adjusted the same against the supplies made by them which they showed in the returns. Therefore, input sales tax adjustment of invoices held by the respondents amounting to Rs. over 9 million which they did not claim in the monthly returns, cannot be allowed under section 7 of the Act being out of relevant tax period and is rejected even though that some have just become time‑barred (those issued to the respondents on 17‑5‑1999). Since the private record contains all the supplies (to registered and unregistered persons) therefore, sales tax charged and paid on supplies shown in the sales tax records is to be deducted from the gross (total) liability as has been alleged on the basis of private record. However, after deducting the amount of sales tax charged as per sales tax records, the remaining supplies in the private record are to be charged at the rate applicable to unregistered person (including further tax). To further, elaborate the foregoing point, while supplies made to registered persons as per sales tax (without the incidence of further tax is as and when applicable) supplies made to unregistered persons are subjected to further tax. Once further tax is paid, it is immaterial as to whom the supplies are made. Therefore, as fat as supplies to unregistered persons were charged to sales tax in the sales tax records, the same are deducible from the total liability alleged on the basis of private record as the same are included there too as is the case with the supplies made to registered persons, shown in the returns and included in the private record. Otherwise, same supplies would be subjected to double taxation. But any supplies besides those which have been shown in the sales tax record are to be charged to tax and further tax as if made to unregistered persons irrespective of the fact that it might have been shown (in the private record) having been made to registered persons."

6. Thereupon the appellants were found liable to pay sales tax; additional tax and penalty under the aforesaid provisions of the Sales Tax Act, 1990. The operative paras. 34, 35 and 36 read as under:‑‑ .

"(34) Respondents positive attitude during the proceedings and their willingness to discharge the liability is on record. They accepted the liability as ascertained by the staff on the basis of their private record, though they did try to take U‑turn and disown and contest .the validity of private record and impliedly tried to delay the proceedings through their attorneys. But, at the time of personal hearing, when the respondents were afforded ample time and opportunity to defend the case, they once again agreed to the liability as ascertained by the staff on the basis of their private record. However, they requested for input tax adjustments on the basis of invoices not claimed in the returns and also submitted for waiver of additional tax and penalty in view of voluntary cooperation being ignorant of Sales Tax Law.

(35) Non admissibility of input tax adjustment on invoices not claimed during the relevant tax period has already been discussed above. Since it has been demonstrated that evasion of sales tax by the respondents was deliverate, additional tax amounting; to Rs.17,630,070 (if paid by 15th June, 2000, and recurring fill total payment is made) is ordered to be paid under section 34 of the Sales Tax Act, 1990.

(36) Even though the respondents have pleaded their bona fides, vet the circumstances of the case and the facts/record brought before me leads me to conclude nothing but that the respondents have been guilty of furnishing false information., knowingly making false statement, and false declaration therefore, I find it absolutely justified to impose the maximum penalty of Rs.10,163,988 under section 33(4)(c) of the Act. 1 rather impose a penalty of Rs.50,000 each on the Chief Executive of the two units under section 33(6)_of the Sales Tax Act, 1990." (emphasis supplied;,

However, subsequently the original authority on 24th May, 2000 issued a corrigendum of the aforesaid two orders making allowing changes therein;

(i) "After para. number 35, the paras. appearing as number 35, 36 and 36‑B numbered as 36, 37 and 38 respectively.

(ii) In paras. 35 and 37, the amount of additional tax Rs.17.630,070 and recoverable amount Rs.48.222.033 respectively be read as Rs.22,913;889 and Rs.53,505,852 respectively "

7. Learned Tribunal by way of the impugned consolidated order disposed of the two appeals filed by the appellants and one appeal by the department and made the impugned direction for remission of the matter to the original authority which in the meanwhile had devolved upon Collector of Customs (Adjudication) Lahore. Earlier after noting/ considering the submissions made from both sides the learned Tribunal concluded:‑‑

"...That being so; the existence of the private records, separately in respect of Jawa Chemicals Ltd., and Jawa Pansari Store Ltd., could not be denied. That exactly was the background that an amount of rupees twenty million got deposited in two instalments even prior to issuance of show‑cause notices. Separate show‑cause notices having been issued to both the registered persons on the basis of the scrutiny of the private records, indicating figures of value of supplies and the amounts of tax due thereon, it is not understood as to on what basis the Adjudicating Officer concluded that it was not possible to distinguish the purchases and supplies of both of them, as per their private records and therefore, both supplies of the two units be taken up jointly and that the detecting staff had agreed/ confirmed to this mode of action (para. 32(iii) of the impugned order refers). Perusal of both the adjudication files No.Adc/Adj/ Jawa/52/2000 and Adc/Adj/Jawa/53/2000 revealed that no such statement/document is available on record to support the said conclusion of the Adjudicating Officer. Both the cases were contested by the authorized legal counsel since beginning but the last hearing held on 22‑5‑2000 was attended directly by Mr. Muhammad Taqi and Mr. Abid Ali both Directors of Jawa Chemicals Ltd. and Jawa Pansari Store Ltd. and hearing proceedings recorded on the note sheet portion of the file do not indicate attendance of anyone from the detecting/reporting agency. First of all rejoinder (in urdu) signed by one of the said Directors was placed on file No. Adc/Adj/Jawa/52/2000 and then reproduced after translating it in English alongwith their verbal contentions made before the Adjudicating Officer. These proceedings are available at para. 31 (pages 8, 9, 10 and 11 of the note sheet portion of the said file No. Adc/Adj/ Jawa/52! 2000). This turning point in the case is without any supporting document/ statement to the effect that the supplies of both the units, as reflected in their private records, could not be segregated and hence the same be grouped together As stated earlier, presence of no officer/staff has been shown during the last hearing held on 22‑5‑2000. Besides, this conclusion was in itself a negation of the stance taken in both the show‑cause notices, which showed the amounts of value of supplies of each separately and the sales tax recoverable thereon from each and which were based on the private records resumed from each unit separately on 13‑3‑2000. In addition to the said major flaw in the findings of the Adjudicating Officer, it is not understood as to how the sales tax already paid by each one of the registered persons, during the period under adjudication was grouped together for off setting the sales tax liabilities worked out on the basis of supplies determined from the private records so as to order them to pay the balance amount. Both of them are separately registered persons. The Adjudicating Officer has failed to distribute the share of Rs.2,03,27,975 between each one of them to be paid by whom Jawa Chemicals Ltd. or Jawa Pansari Ltd., or by both of them. If so, in which ratio. Same is the position with regard to the imposition of penalty of Rs.1,01,63,988 under section 33(4)(c) of the Sales Tax Act, 1990 which does not indicate as to on whom the same has been imposed and if it is on both, how this is to be distributed bet ween them separately. After issuance of adjudication order there was no justification for issuing corrigendum on 24‑5‑2000."

8. The remand of the matter after recording the aforesaid conclusions has brought the appellants in further appeal before us under section 47 of the Sales Tax Act, 1990.

9. Learned counsel for the appellants strongly contends that a consolidated appeal against two Orders‑in‑Original by the Revenue before the Tribunal was not warranted by the provisions of the Sales Tax Act, 1990 and the rule framed thereunder; that Tribunal failed to record a finding on the specific objection taken by the present appellant. It is also stated that even the single appeal against two Orders‑in‑Original was not properly constituted and the objection taken in that regard too was not rued upon by the learned Tribunal. It is further contended that the Order‑in‑Original being in nature of a consent order could not be objected to by the Revenue. The issuance of corrigendum of the consolidated Order‑in‑Original as observed by the learned Tribunal is also stated to be totally unjustified. The imposition of additional tax and penalties by the original authority even after noting "positive attitude" of the appellant is claimed to be too harsh. The findings recorded by the learned Tribunal with regard to separation of the record of two appellant companies, is also assailed on the ground that the Tribunal being a forum of fact as well could very well examine the record itself to reach a definite conclusion instead of pushing the taxpayer to another round of litigation. Learned counsel representing the respondent/Revenue however supports the Orders‑in‑Original as well as the remand order of the Tribunal.

10. After hearing the learned counsel for the parties and on going through the findings recorded by the Tribunal as reproduced above, we are of the view that the remand of the matter for fresh adjudication was not warranted. Learned counsel for the respondent is correct in pointing out that the remand was directed on a ground which was not even the grievance of the Revenue. The learned Tribunal ought to have recorded its finding on the legal objections raised before it against maintainability of the departmental appeal. The remand of a matter to a lower authority should only be made if the material already available on record is not sufficient to dispose of the issues. All the moreso, in Revenue matters where the benefit of any defaults on the part of the detecting agency or the Assessing Officer are to go to the taxpayer. In the present case the Tribunal apparently avoided ruling upon legal objections raised before it. Also, the remand order has in a way connived at the issuance of corrigendum by the original authority despite the fact that the learned Tribunal disapproved of it in the earlier part of its order.

11. Therefore, we will set aside the impugned order and direct that the Tribunal will dispose of the legal as well as factual issues raised before it by both the Revenue as well as taxpayer. The two appeals by the tax payer and the one by the Revenue shall be deemed pending before the Tribunal to be decided after hearing the parties within 45 days when this order is conveyed to it.

12. These appeals succeed partly and to the extent stated above.

H.B.T./J‑56/LAppeals accepted partly.