LYALLPUR CHEMICALS LTD. through Chief Executive VS FEDERATION OF PAKISTAN through Secretary Revenue Division
2009 P T D 1697
[Lahore High Court]
Before Ch. Naeem Masood, J
Messrs LYALLPUR CHEMICALS LTD. through Chief Executive
Versus
FEDERATION OF PAKISTAN through Secretary Revenue Division and 4 others
Writ Petition No.4099 of 2007, decided on 14/07/2009.
(a) Sales Tax Rules, 2006---
----R. 28---Filing of refund claim beyond statutory period of two months being time-barred was rightly rejected by Collector of Sales Tax.
(b) Sales Tax Rules, 2006---
----R. 28---Vires of R.28---Sales Tax Rules, 2006 having been framed by the Central Board of Revenue, a competent authority, were not ultra vires.
Messrs Mayfair Spinning Mills Ltd., Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and 2 others PTCL 2002 CL 115; Messrs Pfizer Laboratories Ltd., v. Federation of Pakistan and others PLD 1998 SC 64 distinguished.
Mian Abdul Ghaffar for Petitioner.
Muhammad Nawaz Waseer, Standing Counsel for Pakistan.
ORDER
CH. NAEEM MASOOD, J.---Through this writ petition the petitioner has made the following prayer:--
"Under the circumstances, it is respectfully prayed that this Hon'ble Court may be enough to declare:---
(a) That the petitioner was entitled to file refund claim of excess input which could not be utilized within subsequent 3 tax periods and refusal to entertain refund claim by respondents is illegal, void, unjust, without lawful authority and of no legal effect.
(b) That the time period mentioned in rule 28 of Sales Tax Rules, is not applicable to the refund claim to be filed under Refund Rules after expiry of 3 tax periods and that the interpretation and application thereof to the claim of the petitioner by the respondents is illogical, illegal, void and of no legal effect.
(c) That refusal acceptance of refund claim filed by the petitioner during November, 2006 after expiry of 3 tax periods against adjustment advice issued by respondent No.5 by illogical and illegal interpretation and application of Rule 28 of the Sales Tax Rules is illegal and resultantly acts in this regard of omission and commission by respondents are liable to be declared illegal, void and of no legal effect.
(d) That Rule-28 of Sales Tax Rules is contradictory to Refund) Rules and cannot be pressed into for refund claim of excess input tax which cannot be adjusted within subsequent 3 tax periods and the interpretation by the respondents for filing such claim within 60 days of the relevant, date is illegal, void, arbitrary and of no legal effect.
That while granting such declaration, this Hon'ble Court may be further gracious enough to direct the respondents to entertain claim of excess input tax which could not be utilized within 3 tax periods against adjustment advice issued by respondents No.5."
2. Brief facts of the case are that the petitioner is registered with the Collectorate of Sales Tax and Federal Excise, Large Taxpayer Unit (LTU), Lahore, under Sales Tax Registration No.04-04-2087-002-91. The tax period in question is July, 2006. The petitioner had submitted an adjustment note on 12-7-2006. The petitioner claims an excess input tax of Rs.29,13,980. The petitioner's refund claim for the tax period July, 2006 was rejected on 28-2-2007 by respondent No.4. The petitioner has challenged the same through the above prayers.
3. It is contended by the learned counsel for the petitioner that according to law the petitioner was entitled to carry forward his unutilized input tax for the next three months/tax periods and subsequently apply to refund the claim. It is further submitted that the availability of input tax is a substantive and statutory right granted by section 7 of the Sales Tax Act, 1990, which may not be denied on the technical grounds.
4. The respondents have submitted the written comments. The relevant paragraphs of the comments read as under:--
"(9) As per Rule 28 of the Sales Tax Rules, 2006 Monthly Sales tax return filed by a claimant shall be treated as a refund claim once all the supportive documents including the requisite data in the format of software (RCPS) has been received. Provided that no refund claim shall be entertained if the claimant fails to furnish the claim on the prescribed software (RCPS) along with the supportive documents within six days of the filing of return. The line "no refund claim shall be entertained if the.... "covers all types of refunds including the refund created due iv excess amount of input tax which could not be consumed within three months.
10-16 The Adjustment Advice is actually an authorization of refund of the specified amount to utilize the admissible amount as specified in the advice for adjustment against his future output tax liabilities.
The Adjustment advice for the tax period of July of 2006 is issued to the petitioner on 12-9-2006. Actually the petitioner was authorized to adjust the amount specified in the advice, in sales tax return to be filed for the tax period of August, 2006, Sep-2006 and Oct-2006. But the petitioner carried forward the amount in column 12 of the return mentioning the tax period therein and if the amount not adjusted/or partially adjusted in three tax periods (Aug-2006 to Oct-2006) then to take the unadjusted amount in column 12(g) of sales tax return for Oct-2006 as refund claimed lodged. The time limit of 60 days as per provision of Rule 28 of Sales Tax Rules, 2006 began on the filing of return for Oct-2006. Hence the time limit of sixty days and further thirty days has expired on 13-2-2007."
5. I have considered the arguments of the learned counsel for the parties and have perused the record.
6. The legality and interpretation of Rule 28 of the Sales Tax Rules, 2006 is the debatable point in the present case, therefore, the relevant portion of. Rule, 28 is reproduced below:---
"(28) Filing of refund claim.---(1) Monthly sales tax return filed by a claimant shall be treated as a refund claim once all the supportive documents including the requisite data in the format or software (RCPS), has been received:
Provided that no refund claim shall be entertained if the claimant fails to furnish the claim on the prescribed software (RCPS) along with the supportive documents within sixty days of the filing of return:
Provided further that the period of six days as aforesaid, in case of a commercial exporter, shall be reckoned from the date when the BCA is issued to him by the concerned Bank.
(2) In cases where such supportive documents are not submitted to the officer-in-charge within the time specified under sub-rule (1), the Collector of Sales Tax having jurisdiction may, on a written request from the claimant justifying the reasons for delay in submission of such documents or data on RCPS, extend the time limit for a further thirty days."
7. The petitioner in his own application, dated 5-12-2006 filed through Riaz Ahmad and Company, Chartered Accountants, had admitted that the refund claim was due on 15-10-2006, but the claim could not be made because the concerned staff was engaged in preparation of financial statements, therefore, condonation of the delay was prayed for. Similarly in letter, dated 16-1-2007 submitted through Riaz Ahmad and Company to the Member, Sales Tax, Central Board of Revenue, Islamabad, it was admitted that refund claim for the tax period July, 2006 had become barred by time. Therefore, instructions be issued to the lower authorities for condonation of the delay in not filing the aforesaid refund claim. The Central Board of Revenue vide its memo., dated 28-12-2006 had also observed that the Board was still receiving requests for extension even in respect of claims relating to the tax periods July, August and September, 2006 about which there was no confusion or ambiguity as to the time limit for submitting the supportive documents, therefore, the C.B.R. expressed its inability to extend the abovesaid time period.
8. In this view of the matter, as the refund claim was barred by the statutory period of two months, therefore, the same was rightly rejected by respondent No.4.
9. So far as the submission of the petitioner that Rule, 28 of the Sales Tax Rules, 2006 is contrary to the Refund Rules and the time period mentioned in the said rule is illegal and void, suffice it to say that the Sales Tax Rules, 2006 have been framed by the Central Board of Revenue/competent authority and are not ultra vires. Additionally Rule, 28 prescribed 60 days for filing of the return of claim, which by no stretch of interpretation of a Statute can be said to be ultra vires.
10. The learned counsel for the petitioner has also relied on Messrs Mayfair Spinning Mills Limited, Lahore v. Customs, Excise and Sales Tax Appellate Tribunal Lahore and two others (PTCL 2002 CL 115) and Messrs Pfizer Laboratories Ltd., v. Federation of Pakistan and others PLD 1998 SC 64.
11. With reverence and with great respect of the Hon'ble Apex Court, it may be observed that in the said judgments Rule 28 of the Sales Tax Rules, 2006 has not been declared illegal and void, which still holds the field.
12. In sequel thereof, the writ petition being devoid of merit is dismissed.
M.B.A./L-26/LPetition dismissed.