DEPUTY COLLECTOR, CENTRAL EXCISE AND SALES TAX, LAHORE VS Messrs ICI, PAKISTAN LIMITED, LAHORE
2006 P T D 1132
[Supreme Court of Pakistan]
Present: Faqir Muhammad Khokhar and Raja Fayyaz Ahmed, JJ
DEPUTY COLLECTOR, CENTRAL EXCISE AND SALES TAX, LAHORE
Versus
Messrs ICI, PAKISTAN LIMITED, LAHORE
Civil Petition No. 3068-L of 2001, decided on 07/02/2006.
(On appeal from the order, dated 6-8-2001, passed by the Lahore High Court, Lahore in Writ Petition No. 2087 of 1993).
(a) Sales Tax Act (VII of 1990)---
----Ss. 33 & 34---Additional sales tax and penalty, imposition of---Principles---Manufacturer or producer of goods in appropriate cases of default in payment of sales tax, can be burdened with additional sales tax under S.34 of Sales Tax Act, 1990, as well as penalty under S.33 of the Act, which does not necessarily follow that in every case such levy was automatic, requiring no determination at all.
(b) Sales Tax Act (VII of 1990)---
----Ss. 33 & 34---S.R.O. No. 1136(1)/90, dated 1-11-1990---Constitution of Pakistan (1973), Art. 185(3)---Additional sales tax and penalty, imposition of---Authorities imposed additional sales tax and penalty on the assessee-Company for recovery of short paid sales tax---High Court in exercise of constitutional jurisdiction, set aside the levy of additional sales tax and surcharge---Validity---Lt case of failure or a registered person to pay sales tax within time, such person was also liable to pay additional tax and surcharge---Such liability being not automatic would be determined by appropriate authority as to whether or not there was reasonable ground for default in payment of sales tax, which could be considered to be wilful and deliberate---Each and every case was to be decided on its merits as to whether evasion or non-payment of tax was wilful or mala fide, decision of which would depend upon the question of recovery of additional tax---No material was available on record to the effect that the short payment of sales tax was mala fide or wilful act of omission on the part of the assessee-Company---High Court had justifiably allowed the constitutional petition of the company to which no exception could be taken---Leave to appeal was refused.
D.G. Khan Cement Company Limited and others v. Federation of Pakistan and others 2004 SCMR 456; Shamroz Khan and another v. Muhammad Amin and others PLD 1978 SC 89; Haji Abdul Razzak v. Pakistan through Secretary, Ministry of Finance, Islamabad and another PLD 1974 SC 5 and Muhammad Musa v. Settlement and Rehabilitation Commissioner and 2 others 1974 SCMR 352 rel.
Izharul Haque, Advocate Supreme Court and Mian Atta-ur-Rehman, Advocate Supreme Court for Petitioner.
Shahid Hamid, Senior Advocate Supreme Court for Respondent No.1.
Date of haring: 7th February, 2006.
JUDGMENT
FAQIR MUHAMMAD KHOKHAR, J.---This petition for leave to appeal under Article 185(3) of the Constitution of Islamic Republic of the Pakistan, 1973, is directed against judgment, dated 6-8-2001, passed by the Lahore High Court, Lahore in Writ Petition No.2087 of 1993.
2. The respondent, a public limited company, registered under the Companies Ordinance, 1984, is engaged in the manufacture and sale of paints. The petitioner issued a show-caus6 notice dated 17-5-1992 to the respondent-Company for recovery of short paid sales tax amounting to Rs.73,47,243 for the period from November, 1990 to March, 1992, in the light of S.R.O.No.1136(1)/90; dated 1-11-1990. It was stated therein that the respondent had allowed trade discount on taxable supplies without charging sales tax on the basis of retail price as fixed in accordance with provisions of subsection (2) of' section 4 of the Central Excises and Salt Act, 1944. The additional sales tax and surcharge leviable under section 34 of the Sales Tax Act, 1990 (hereinafter referred to as the Act), was also demanded in addition to penal action as provided by section 33 of the Act. The respondent-Company submitted a reply dated 27-5-1992 thereto and also deposited a sum of Rs.53,93,796 into Government Treasury on the same day. A further amount of Rs.1,55,230 was also paid on 3-6-1992. As such, the total amount of the short paid sales tax as worked out by the Audit and Intelligence staff of the Customs Department was paid.
3. By order, dated 1-8-1992, the petitioner found that no discount was admissible under section 4(2) of the Central Excises and Salt Tax Act, 1944 read with S.R.O. No.1136(I)/90. Therefore, the respondent-Company was directed to pay another sum of Rs.55,50,077 as additional tax and surcharge under sections 34 and 36 of the Sales Tax Act, 1990. In addition, a personal penalty of Rs.1,11,00,154 was also imposed under section 33(2)(b) of the Act. The appeal of the respondent was partly allowed by the Collector, Sales Tax, Lahore, by order, dated 23-11-1992, whereby the penalty of Rs.1,1 1,00,154 was reduced to Rs.55,50,077. However, the amount of Rs.55,50,077 being additional tax and surcharge was kept intact. The revision petition of the respondent was disposed of by the Member/Additional Secretary, Government of Pakistan, Central Board of Revenue, by order, dated 18-2-1993. Consequently, the amount of personal penalty was remitted whereas the additional tax and surcharge were maintained. Therefore, the respondent-Company filed Writ Petition No.2087 of '1993 which was allowed by a learned Single Judge of the Lahore High Court, Lahore vide impugned judgment, dated 6-8-2001 in the light of' an earlier judgment, dated 30-10-1994 of the High Court passed in Writ Petition No.4876 of 1994.
4. The learned counsel for the petitioner submitted that judgment, dated 30-10-1994, passed by the Lahore High Court in Writ Petition No.4876 of' 1994 in the case titled as Lone China (Pvt.) Limited v. Collector of Customs, Central Excise and Sales Tax, Gujranwala and others, was set aside by this Court on 29-10-2001 in Civil Appeal No.1441 of 1995 and the case was remanded to the Collector of Sales Tax for decision on merits. Therefore, the impugned judgment was not sustainable at law. It was further contended that since the respondent was found responsible for short payment of sales tax, therefore, the liability for. the payment of additional tax and surcharge of Rs.55,50,077 was rightly imposed in view of S.R.O. No. 1136(I)/1990 read with sections 34 and 36 of the Act.
5. On the other hand, the learned counsel for the respondent-Company submitted that there was nothing on record to show that the short payment of sales tax on the part of the Company was wilful or deliberate. Therefore, the imposition of additional tax under section 34 of' the Act was justifiably set aside by the impugned judgment. Reliance was placed on the case of D.G. Khan Cement Company Limited and others v. Federation of Pakistan and others 2004 SCMR 456.
6. We have heard the learned counsel for the parties and have also perused the available record. We find that judgment, dated 30-10-1994 passed by the High Court in Writ Petition No.4876 of 1994 was set aside by this Court in Civil Appeal No.1441 of 1995 by consent of the learned counsel for the parties and not on merits. Therefore, the impugned judgment may not be interfered with merely on that score. In an appropriate case of default in payment of sales tax, a manufacturer or producer of goods could be burdened with additional sales tax under section 34 of the Act as well as the penalty under section 33 of the Act. However, it does not necessarily follow that in every case such levy was automatic requiring no determination at all. The respondent had taken a categoric position that it had charged and paid sales tax on the basis of discounted prices which was the same as the prevalent retail prices and that there was no evasion in the payment of sales tax in terms of S.R.O. dated 1-11-1990.
7. The provisions of section 34 of the Act, (as it stood at the relevant time) read as under:---
"Additional tax.--- Notwithstanding the provisions of' section 11, if' a registered person fails to pay the tax within the time specified in section 6, he shall, in addition to the tax due, be liable to pay additional tax and surcharge at the following rates:--
(a) 5 per cent of the tax due during the first month or part thereof;
(b) 10 per cent of the tax due for the next month or part thereof;
(c) 100 per cent of tax due for the succeeding period;
(d) surcharge at the rate of 1 per cent for every month or part thereof on the total accumulated amount that remains unpaid after the expiry of three months...."
The above provisions would clearly indicate that in case of failure of a registered person to pay the sales tax within time, he shall also be liable to pay additional tax and surcharge. The "liability being not automatic would be determined by the appropriate authority as to whether or not B there was any reasonable ground for default in payment of sales tax which could be considered to be wilful and deliberate. Shamroz Khan and another v. Muhammad Amin and others PLD 1978 SC 89, it was held that the expression "he shall be liable to have his defence, if any, struck off" used in Order XII, rule 8, C.P.C., would mean that the Court might strike off defence in an appropriate case and it was not incumbent upon the Court to strike off the defence on failure to supply address. In Haji Abdul Razzak v. Pakistan through Secretary, Ministry of Finance, Islamabad and another PLD 1974 SC 5 by section 168 of the Sea Customs Act No.VIII of 1878, it was provided that conveyance used in removal of contrabands would be liable to be confiscated. It was held that the provision still gave a discretion to the authorities to confiscate the conveyance and that discretion had to be exercised on sound judicial principles. In Muhammad Musa v. Settlement and Rehabilitation Commissioner and 2 others 1974 SCMR 352, the expression "shall be liable to cancellation" was examined. It was held that expression envisaged application of mind by appropriate authority and that failure of auction-purchaser to pity price or instalment did not operate as automatic cancellation of auction sale. In the case of D.G. Khan Cement Factory (supra), it was observed by reference to section 34 of the Act that each and every case hid to be decided on its merits as to whether the evasion or non-payment of tax was wilful or mala fide, decision of which would depend upon the question of recovery of additional tax. There is no material available on record that the short payment of sales tax was mala fide or wilful act of' omission the respondent- C Company. In the facts and circumstances of the case, the High Court had justifiably allowed the writ petition of the respondent-Company by the impugned- judgment dated 6-8-2001 to which no exception could be taken.
8. For the foregoing reasons, we do not find any merit in this petition which is dismissed and leave to appeal is refused accordingly.
M.H./D-3/S???????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.