Appeal No. S.T.A. No. 1587/LB of 2001, decided on 29th December, 2004. VS Appeal No. S.T.A. No. 1587/LB of 2001, decided on 29th December, 2004., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 648 (2004)

Sales Tax Act (VII of 1990)---

----Ss. 3, 6, 23, 33, 34, 37(a)(b) & 2(9)---Scope of tax---Audit staff observed that appellant supplied oil cake and oil dirt without issuing sales tax invoices and payment of sales tax---Contravention report was made out for violation of S.2(9), 3, 6, 23, 33, 34 & 37(a)(b) of the Sales Tax Act, 1990---Show-cause notice was issued and adjudged sales tax liability payable along with additional tax---Validity---Registered person was required to deposit sales tax along with additional tax as adjudged by the Adjudicating Officer---Department confirmed that entire principal amount had been deposited and an amount of additional tax liability was still recoverable---Beneficial amendment had been made in S.34 of the Sales Tax Act, 1990 allowing payment of additional tax at the simple rate instead of compound rate---Department was directed to re-calculate the amount of additional tax at the rate which is presently applicable and recover the balance amount of additional tax after allowing adjustment of additional tax already deposited by the appellant---Order was modified accordingly by the Appellate Tribunal.

Munawar Warraich for Appellant.

Khalid Bashir, D.R. with Safdar Bashir, Auditor for Respondent.

Date of hearing: 12th October, 2004.

JUDGMENT

SAEED AKHTAR, MEMBER (TECHNICAL)---This appeal is directed against Order-in-Original No.155 of 1999 passed by the learned Additional Collector Sales Tax, Multan issued vide C. No.37/99/Adj/ST/1998, dated 13-11-1999 whereunder the appellant (then respondent) was directed to deposit sales tax amounting to Rs.665,788 along with additional tax under the relevant provisions of the Sales Tax Act, 1990.

2. Brief facts of the case are that sales tax audit staff, after scrutiny of the sales tax records observed that the appellant Messrs Punjab Cotton Ginning and Oil Mills, R.Y. Khan supplied oil cake and oil dirt in the period 1998-1999 without issuing sales tax invoices and payment of sales tax amounting to Rs.654,340 and Rs.11,448 respectively. Consequently a contravention report was made out against the appellant (then respondent) for violation of sections 2(a), 3, 6, 22, 23, 26 and 34 of the Sales Tax Act, 1990. A show-cause notice was accordingly issued to the respondent and Additional Collector adjudged sales tax liability of Rs.665,788 payable along with additional tax. The appellant feeling aggrieved with the decision of the 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 at the time of hearing were as under:

(1) That the appellant is engaged in the business of cotton ginning and seed crushing. It was alleged that during the period 1998-99 the appellant cleared oil cake and oil dirt without payment of sales tax amounting to Rs.665,788. The appellant appeared before the Adjudicating Officer and explained that there was a

total collapse in the business of cotton ginning and oil mills and no sales/supplies took place during the entire season.

(2) That during the season there was total confusion and grower frequently threw their crop without acceptance/consent of the ginners. The said crop either eroded or returned. So the same could not be accounted for against the ginners.

(3) That appellant, however, in order to remain on the right side of the law promised to pay the principal amount of the alleged liability and sought forgiveness for the additional tax and penalty' without prejudice to the fact that physical stock taking was not conducted in the presence of representatives of the appellant. However, without considering the contentions of the appellant, the Adjudicating Officer adjudged huge liability and also directed for payment of additional tax.

(4) That it is humbly and respectfully prayed that appeal may be accepted and the impugned order directing payment of any amount in addition to the principal amount may be declared as illegal, without authority and of no legal effect.

4. The learned D.R., who was assisted by Mr. Safdar Bashir, Auditor opposed the contentions of learned counsel for the appellant and contended that the impugned order has been passed in accordance with the law and the same may be upheld.

5. We have heard the contentions of both the sides and perused the appeal file available before us. At the time of hearing, the learned counsel for the appellant contended that the entire principal amount of sales tax along with some amount of additional tax has already been deposited by the appellant despite the fact that physical stock taking was not carried out in the presence of the representative of the appellant. The learned counsel further contended that there is no justification for imposition of additional tax in view of the fact that no supplies of taxable goods were made by the appellant and the appellant at the time of adjudication promised to pay principal amount in order to resolve the issue and avoid any conflict with the department. The learned counsel further contended that in view of circumstances of the case additional tax may be remitted as the principal amount has been paid in good faith. The learned counsel for the appellant was directed to provide copies of return-cum-payment challans against which payments of principal amount and some amount of additional tax were made so that necessary verification may be made by the representative of the respondent-Collectorate. The learned DR was directed to scrutinize the relevant records and submit a verification report to the Tribunal regarding deposit of principal amount and additional tax.

6. The representative of the respondent-Collectorate Mr. Safdar Bashir, Auditor appeared on 12-10-2004 and submitted a report confirming payment of principal amount of sales tax and part payment of additional tax. The learned DR reported that the appellant has not so far deposited the entire amount of additional tax and still an amount of Rs. 180,600 is outstanding against the additional tax liability of appellant. The learned counsel for the appellant, however, could not appear on 12-10-2004 to rebut the contentions of the representative of the respondent-Collectorate. After scrutiny of the relevant records, we are of the view that the registered person was required to deposit sales tax along with additional tax as adjudged by the Adjudicating Officer. It has been confirmed by the representative of the respondent-Collectorate that the entire principal amount has been deposited by the appellant and Rs.180,600 is still recoverable against the additional tax liability. We have observed that a beneficial amendment has been made in section 34 of the Sales Tax Act, 1990 allowing payment of additional tax at the simple rate instead of compound rate as was applicable prior to introduction of the said amendment. After the introduction of amendment in section 34 ibid the superior Courts in a number of cases have allowed payment of additional tax at the rate which is applicable today. In view of what has been explained above, we find it appropriate to direct the respondent-Collectorate to re-calculate the amount of additional tax at the rate which is applicable today after beneficial amendment in section 34 of the Sales Tax Act, 1990, and recover the balance amount of additional tax, if any, after allowing adjustment of additional tax already deposited by the appellant.

7. The impugned order is modified to the above extent and appeal is disposed of accordingly.

Tax confirmed but the department directed to charge additional tax at reduced rates, prevailing as of today.

C.M.A./501/Tax(Trib.)Order accordingly.