COLLECTOR OF SALES TAX, FAISALABAD VS CHAUDHRY SUGAR MILLS LTD., 2017 PTD-LAHORE-HIGH-COURT-LAHORE 2424 (2017)

Sales Tax Act (VII of 1990)---

----Ss. 7, 66, 33, 11 & 47---Determination of sales tax liability---Input tax adjustment---Refund / adjustment under S. 66 of the Sales Tax Act, 1990---Remitting of penalty and additional tax---Scope---Questions before the High Court related input tax adjustment claimed under S. 66 of the Sales Tax Act, 1990 and whether when there existed no willful default on part of taxpayer, additional tax and penalty could be imposed on taxpayer---Held, input tax adjustment was required to be availed under S. 7 of the Sales Tax Act, 1990 during the relevant tax year and in case the taxpayer failed to avail the same, it was required to apply to the Department under S. 66 of the Sales Tax Act, 1990 for refund/adjustment of amount demanded by Department, and in the present case, the Department was ordered to adjust the said amount---Appellate Tribunal, in the present case, was also justified in remitting penalty and additional tax back to the taxpayer---Where a registered person/taxpayer did not deduct input tax within the relevant period, such person may claim adjustment of such tax under S. 66 of the Sales Tax Act, 1990 and no exception could be taken to the same---Reference was answered, accordingly.

Sarfraz Ahmed Cheema for Applicant.

ORDER

JAWAD HASSAN, J.---This is an Appeal/Reference under Section 47 of the Sales tax Act, 1990 (the "Act").

2.Following questions of law are pressed for our opinion, which are asserted to have arisen out of judgment dated 22.05.2003 passed by the Customs, Excise and Sales Tax Appellate Tribunal, Lahore ("Appellate Tribunal"):--

QUESTIONS OF LAW

Whether the learned Tribunal was right in remitting the penalty after recoding the findings that the further tax was payable on the market value of sugar and on the same finding additional tax is upheld, but the penalty is remitted on the ground that the same is harsh when Statute clearly provides so?

Whether the learned Tribunal has power to remand the case for refund/adjustment in terms of Section 66 of the Sales Tax Act, 1990, when the Act does not provide such discretion?

3.We have heard the learned counsel for the Applicant at length and have gone through the judgment dated 22.05.2003 passed by the Appellate Tribunal and find that no questions of law arose in the instant Appeal/Reference. The questions of law that have been framed in the Reference do not arise any substantive question of law arising out of the judgment of the Appellate Tribunal. The case of the Respondent No.1 before the Appellate Tribunal was that since there was no willful default/action on the part of the Respondent No.1, therefore, there is no justification of additional tax and penalty, as such both may be remitted. Whereas, the Applicant held the Respondent No.1, liable to pay the amount of Rs.1526359/- as sales tax along with additional tax and penalty equal to 3% of the amount of tax involved. The Appellate Tribunal has held that as the input tax adjustment was required to be availed under Section 7 of the Act during the relevant tax period and in case the Respondent No.1 failed to avail of the same, the Respondent No.1 was required to apply to the Applicant under Section 66 of the Act for refund/adjustment of the demanded amount and therefore, the Applicant was ordered to adjust the said amount in the tax period so specified. The Appellate Tribunal has also held the penalty to be harsh and remitted the same. We agree with the findings of the Appellate Tribunal which disposed of the Appeal of the Respondent No.1 by modifying the order dated 30.05.2002 passed by the Collector of Customs and set aside the order to the extent of recovery of said amount along with additional tax and penalty because under Section 7 of the Act where a registered person did not deduct input tax within the relevant period, he may claim such tax under Section 66 of the Act. Therefore, no exception can be taken to the same. We see no reason to disbelieve the impugned judgment which does not suffer from any factual or legal infirmity as the same has been passed after scrutinizing the relevant record as well as on the basis of valid reasons.

4.Therefore, Reference application is decided against the Applicant.

5.Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per section 47(5) of the Act.

KMZ/C-24/L Order accordingly.