Appeal S.T.A. No. 1038/LB of 2000, decided on 24th December, 2004. VS Appeal S.T.A. No. 1038/LB of 2000, decided on 24th December, 2004., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 524 (2004)

Sales Tax Act (VII of 1990)---

----Ss.34 & 33---S.R.O. 461(I)/99, dated 9-4-1999---S.R.O. 247(I)/04, dated 5-5-2004---Additional tax---Evasion of sales tax against supply of cotton lint---Case was decided ex parte on the basis of evidence available on record adjudging of amount of sales tax payable along with additional tax and penalty---Appellant contended that principal amount of sales tax had already been paid through crossed pay order as soon as it was received from the buyer and there was a genuine delay because of late receipt of banking instrument from the buyer; that additional tax was not payable because the Federal Government had already granted amnesty in payment of additional tax vide S.R.O. 461(I)/99 dated 9-4-1999; that Government in subsequent amnesty Notification No.S.R.O. 247(I)/04 dated 5-5-2004 granted exemption in the payment of additional tax for the registered persons who made payment of principal amount of sales tax and since principal amount had been paid, available exemption was allowed vide S.R.O. 247(I)/04 dated 5-5-2004 by depositing 25% of the payable additional tax---Validity---Appellant was required to deposit 25% of the additional tax to avail exemption of remaining 75% of additional tax and penalty---Correct amount of additional tax i.e. 25% of the additional tax liability was not deposited within time specified under amnesty notification---Benefit of amnesty scheme was available to the persons who made payment of outstanding ,liability in accordance with the terms and conditions of the amnesty notification S.R.O. 247(I)/04 dated 5-5-2004---Appellant failed to avail the benefit of amnesty scheme as correct amount of additional tax was not deposited---Benefit of amnesty was not available to the appellant---Lower rate of additional tax had been allowed by the Government by making beneficial amendment in S.34 of the Sales Tax Act, 1990---Order was set aside by the Appellate Tribunal and appellant was allowed payment of additional tax at the simple rate in view of beneficial amendment in S.34 of the Sales Tax Act, 1990---Appellant having already deposited principal amount of sales tax, penalty levied in the order was remitted---Department was directed to calculate the additional tax liability at the simple rate and adjust the amounts of additional tax and penalty already deposited against the amount of additional tax calculated at the simple rate.

Jamil Hussain for Appellant.

Ahmad Raza Khan, D.R. assisted by Naseer Iqbal and Waqas Qureshi, Auditors for Respondent.

Date of hearing: 7th December, 2004.

JUDGMENT

SAEED AKHTAR, MEMBER (TECHNICAL).---This appeal is directed against Order-in-Original No. 351 of 2000 issued vide C. No.322/97/Adj/ST/1421, dated 30-9-2000 passed by the learned Deputy Collector Customs, ST & CE, (Adjudication), Multan where-under the appellant (then respondent) Messrs Gold Flower (Pvt.) Ltd., Burewala was directed to deposit sales tax amounting to Rs.196,646 along with additional (calculated up to the date of deposit) and penalty of Rs.5,000 under sections 36, 34 and 33 of the Sales Tax Act, 1990.

2. Brief facts of the case are that the audit of sales tax records of the appellant was carried out by the auditors of the Sales Tax Collectorate and it was observed that the registered person evaded sales tax amounting to Rs.196,646 during the period Nov. & Dec., 1996 against supply of cotton lint. The appellant (then respondent), therefore, violated the relevant provisions of Sales Tax Act, 1990 and show-cause notice was issued by the Deputy Collector (Adj.) directing to explain as to why the short paid amount may not be recovered from him along with additional tax and penalty. The hearing of the case was fixed by the Adjudicating Officer on 20-9-1997, 14-5-1999, 30-10-1999 and 18-1-2000 but nobody appeared to defend the charges. The Adjudicating Officer on failure of the respondents to face the changes, decided the case ex parte on the basis of evidence available on record adjudging of Rs.196,646 payable along with additional tax and penalty of Rs.5,000. The appellant feeling aggrieved with the decision of Adjudicating Officer filed appeal before this Tribunal under section 46 of the Sales Tax Act, 1990.

3. The main contentions of the learned counsel for the appellant were as under:---

(1) That the appellant is private limited company engaged in the business of cotton ginning and oil mills. During the course of audit, it was observed that the sales tax amounting to Rs.196,646 was not deposited against supply of 200 bales of cotton lint during the period Nov. and Dec. 1996. A contravention case was made by the auditors which resulted into issuance of show-cause notice by the Adjudicating Officer. The case was fixed for hearing a number of times but the appellant (then respondent) could not appear and an ex parte decision was made by the learned Adjudicating Officer.

(2) That the appellant-company did supply 200 bales of cotton lint involving sales tax amounting to Rs.196,646. The sales tax amount involves on the supply of cotton lint was required to be deposited on or before 20-10-1996 on receipt from the buyer. The requisite banking instrument i.e. crossed pay order issued by the National Bank of Pakistan, dated 25-11-1996 was received late from the buyer which resulted into delayed payment of sales tax. The crossed pay order was, however, deposited along with return-cum-payment-challan on 12-1-1997 i.e. late by 23 days. The registered person/appellant, therefore, was not at fault and sales tax could not be deposited within due date because relevant bank instrument was received late from the buyer which caused delay in the payment of sales tax.

(3) That the Adjudicating Officer has not taken into consideration the facts and circumstances of the case and has adjudged huge amount of sales tax against the appellant along with additional tax and penalty ignoring the fact that the appellant was not at fault and deposited the crossed pay order as soon as received from the buyer. The adjudication order, therefore, needs to be cancelled/quashed.

4. The learned D.R. who was assisted by Mr. Waqas Qureshi, Senior Auditor and Mr. Naseer Iqbal, Auditor, opposed the contentions of learned counsel for the appellant and supported the impugned order.

5. I have heard the contentions of both the sides, and perused the appeal file available before me. At the time of hearing, the learned counsel for the appellant contended that the principal amount of sales tax has already been paid by the appellant through crossed pay order as soon as it was received from the buyer. The learned counsel for the appellant further contended that the crossed pay order received from the buyer could not be utilized anywhere else by the appellant and there was a genuine delay because of late receipt of banking instrument from the buyer. The learned counsel for the appellant further contended that the additional tax was not payable by the appellant because the Federal Government had already granted amnesty in the payment of additional tax vide Notification S.R.O. 461(I)/99, dated 9-4-1999. The learned counsel contended that the Federal Government in the subsequent amnesty Notification No. S.R.O. 247(I)/04, dated 5-5-2004 granted exemption in the payment of additional tax for the registered persons who made payment of principal amount of sales tax. The learned counsel for the appellant contended that since his client had already paid principal amount of sales tax, therefore, availed exemption allowed vide S.R.O. 247(I)/04, dated 5-5-2004, by depositing 25% of the payable additional tax. There is, therefore, no liability outstanding against the appellant. In view of position explained by the learned counsel for the appellant, the learned D.R. was directed to examine the sales tax record for verification of payment of principal amount of sales tax and additional tax availing the amnesty scheme vide S.R.O. 247(I)/04; dated 5-5-2004. After scrutiny of the sales tax records of the appellant, the respondent Collectorate submitted a report vide C. No.IV-D(8)R/ ST/27/1609, dated 3-12-2004. The relevant portion of the report is reproduced as under:--

"As per the computer history of the said unit shows that the said unit deposited such amount of demand draft of the sales tax Rs.196,646 to the Government Treasury on 19-3-1997 (Unit Profile attached) which is late by approximately three and a half months. The said unit must deposit this demand draft of sales tax on 15-12-1996 to the Government Exchequer. This delay of depositing of sales tax attract additional tax @ 5% compounded during 15-12-1996 to 19-3-1997 on the Principal Value of Sales Tax Rs.196,646 i.e. 30,996."

According to the report submitted by the respondent Collectorate, the appellant caused delay of 3-1/2 months in the deposit of principal amount of sales tax, which attracted additional tax amounting to Rs.30,995 @ 5% for the period 15-12-1996 to 19-3-1997 on the principal amount of Rs.196,646. According to report the appellant was required to deposit 25% of the additional tax to avail amnesty under S.R.O. 247(I)/2004, dated 5-5-2004 against which the appellant has only deposited additional tax amounting to Rs.1,884 and penalty of Rs.1,475. Appellant has, therefore, not deposited the correct outstanding liability of additional tax i.e. Rs.7,742 for availing the benefit of amnesty Notification S.R.O. 247(I)/04, dated 5-5-2004. The appellants, therefore, have not fulfilled the terms and conditions of amnesty notification by depositing less amount of additional tax. The learned D.R. contended that amnesty/concession granted by the Government is not available to appellant and now he is required to deposit the outstanding liability as adjudged by the Adjudicating Officer.

6. After hearing the parties concerned, I have observed that the appellant was required to deposit 25% of the additional tax (Rs. 7,742) to avail exemption of remaining 75% of additional tax and penalty under S.R.O. 247(I)/04, dated 5-5-2004. However, correct amount of additional tax i.e. 25% of the additional tax liability was not deposited by the appellant within the time specified under amnesty notification and additional tax of Rs.1,884 only along with penalty of Rs.1,475 was deposited by the appellant. The learned D.R. has correctly pointed out that benefit of amnesty was available to the persons who made payment of outstanding liability in accordance with the terms and conditions of the amnesty Notification S.R.O. 247(I)/04, dated 5-5-2004. The appellant, therefore, has failed to avail the benefit of amnesty scheme as correct amount of additional tax was not deposited. The benefit of amnesty in view of above position is not available to the appellant. It has further been observed that the lower rate of additional tax has been allowed by the Government by making beneficial amendment in section 34 of the Sales Tax Act, 1990. Moreover, superior Courts in a number of cases have allowed payment of additional tax at the rate, which is applicable today. In view of above discussion, the impugned order is set aside and the appellant is allowed payment of additional tax at the simple rate, as is applicable today and allowed in different cases by the superior Courts in view of beneficial amendment in section 34 ibid. As the appellant has already deposited principal amount of sales tax, therefore, considering the circumstances of the case, penalty levied in the impugned order is remitted. The respondent Collectorate is, therefore, directed to calculate the additional tax liability at the simple rate as applicable today and adjust the amounts of additional tax and penalty already deposited by the appellant against the amount of additional tax calculated at the simple rate.

7. The appeal stands disposed of as above.

Appeal failed except for reduction in amount of penalty.

C.M.A./495/Tax(Trib.)Order accordingly.