2010 P T D (Trib.) 1740
[Income Tax Appellate Tribunal Pakistan]
Before Khawaja Farooq Saeed, Chairperson
S.T.A. No.1572/LB of 2009; decided on 23/04/2010.
(a) Sales Tax Act (VII of 1990)---
----S.11---Assessment of tax---Value of supply---Estimate of---Assessee contended that even after modification of value of supply by reduction to 22% higher from 100% of the value declared, was still insufficient as the assessee had shown valid and legal invoices which fulfill all the legal requirements of law and rules; and the taxpayer being a manufacturer was treated at par with the retailer which situation had been accepted by the First Appellate Authority, however, while allowing relief said Authority had not accepted the declared version, that it was neither a case of abnormal results nor while fixing the value the parallel casesof the similar type had beenbrought on record; that since it was a case of one estimate against another for which there was no proper support, the declared version should be allowed to be accepted; and also there was neither any tangible proof on record to hold that the value declared was concealed intentionally or there was no other manufacturer of the same quality of goods---Validity---Estimate of value was one estimate against another---Appellate Tribunal declined to enter into a new controversy of substituting the same with a third estimate---Contentions of the taxpayer to such extent was disallowed by the Appellate Tribunal.
(b) Sales Tax Act (VII of 1990)----
----S.34---Additional tax---Charge of additional surcharge is consequential.
(c) Sales Tax Act (VII of 1990)---
----S.33---Offences and penalties---Penalty, nature of---Penalty is not a regular collection---Amount recovered as penalty is not a source of revenue---Purpose of promulgation of commercial laws including the Sales Tax Act, 1990, is to collect revenue on sale and purchase of taxable goods from the taxable supplies.
(d) Sales Tax Act (VII of 1990)---
----S.33---Offences and penalties---Simultaneous charge of tax and penalty---Validity---Penalty is chargeable by holding a person an offender and is obviously after establishing that an offence had been committed---Such is a severe allegation and is against the normal mode of collection of revenue---Simultaneous charge could not be approved unless the same was based upon proper support, evidence and reasons.
(e) Sales Tax Act (VII of 1990)----
----S.33---Offences and penalties--- Demand created on pure estimation---Appellate Tribunal declined to reduce the value further to avoid another estimate---Fact was obvious that there was no tangible evidence for determination of the value and the matter had been confirmed only on the basis of estimates---Charge of penalty was considered to be without determination of the intention to defraud the revenue in circumstances---Phrase "whosoever commits any offence" which was supplemented by subsequent language require commission of an offence before charging penalty---Such an establishment of the offence was missing, penalty was deleted by the Appellate Tribunal in circumstances.
Cape Brandy Syndicate v. Inland Revenue Commissioner (1921 H.B. 69) rel.
Malik Muhammad Arshad for Appellant.
Dr. Javed Shehyar, D.R. for Respondent.
ORDER
KHAWAJA FAROOQ SAEED, CHAIRPERSON.---This appeal on behalf of the taxpayer is against the order of the Collector (Appeals) dated 21-3-2006.
The issue before me is that even after modification of the value of supply by reduction to 22% higher from 100% of the value declared by the taxpayer; the same is still insufficient. The argument in support of the claim is that the assessee had shown valid and legal invoices which fulfill all the legal requirements of law and rules. The taxpayer being a manufacturer was treated at par with the retailer which situation has been accepted by the First Appellate Authority, however, while allowing relief has not accepted the declared version. It is neither a case of abnormal results nor while fixing the value the parallel cases of the similar type have been brought on record. Since it is a case of one estimate against another for which there is no proper support, the declared version should be allowed to be accepted. Further, there is neither any tangible proof on record to hold that the value declared by the assessee was concealed intentionally or there is no other manufacturer of the same quality of Filters, the default surcharge as well as the charge of penalty is also illegal. It is also challenged that penalty is a separate levy in which the necessary ingredient in terms of determination of mens rea is very important. Further the proceedings with respect thereto should be taken up separately. The penalty should only be charged if the revenue department has documentary evidence or any other reason to believe that the suppression and reduction of the sale is intentional and with the programme to defraud the Revenue.
So far as the issue with regard to estimate of the value is concerned, the same is one estimate against another. This court would not like to enter into a new controversy of substituting the same with a third estimate. Therefore, the argument to the said extent is disallowed.
Similarly, the charge of additional surcharge is consequential; the request is also declined.
So far as the penalty is concerned section 33 deals with the same starting with the phrase "whoever commits any offence described in one of the tables below, shall be charged to a further penalty @ mentioned therein".
So far as the language of law is concerned apparently it also is in a manner consequential to the main proceedings. However, penalty is not regular collection. The Courts in a number of cases have held that amount recovered as penalty is not a source of revenue. The purpose of promulgation of the Commercial Laws including the Sales Tax Act which presently we are dealing with this case, is to collect revenue on sale and purchase of taxable goods from the taxable supplies. The penalty is charged by holding a person an offender and is obviously after establishing that an offence has been committed. It is a severe allegation and is against the normal mode of collection of revenue. Simultaneous charge of the same, therefore, cannot be approved unless the same is based upon proper support, evidence and reasons. The first part of the impugned order before this court has narrated the facts and circumstances under which the assessee has been charged for default surcharge as well as penalty. The demand created in this case is on pure estimation. This court has declined to reduce the value further to avoid another estimate. The fact therefore, is obvious. In this case there was no tangible evidence for determination of the value and the matter has been confirmed only on the basis of estimates; hence the charge of penalty is considered to be without determination of the intention to de-fraud the revenue department. The famous principle of interpretation to remain within the language of law is also applicable here. Reference Mr. J. Rowlet in "Cape Brandy Syndicate v. Inland Revenue Commissioner; (1921 H.B. 69). Relevant verse is as under:-
"It simply means that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity abut a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
Further the phrase, "whosoever commits any offence" which is supplemented by subsequent language require commission of an offence before charging penalty. In this case such an establishment of the offence is missing.
The penalty, therefore, is deleted and the case is decided in the' manner and to the extent as mentioned above.
C. M. A. /90/Tax(Trib.)Order accordingly.