2007 PTD 2456

SYED KAZIM RAZA SHAMSI (MEMBER JUDICIAL).--- This appeal is directed against an order in original dated 30-11-2004 passed by Additional Collector, Faisalabad whereby the appellants were directed to deposit sales tax recoverable under section 36(1) of Sales Tax Act, 1990 along with additional tax and penalties.

2. Briefly stated the facts of the case are that during the audit of the appellants unit for the period October, 2001 to June, 2003 about ten discrepancies in different heads were found and the show-cause notice to this effect was served upon the appellants. During adjudication proceedings nine points, were dropped by the department and only one point of inadmissible input tax adjustment against invoices issued by the suspected units was .found against the appellants. It was held that the input tax adjustment claimed against the invoices of Messrs Anwar Brothers, Kasur and Messrs S.W.S. Traders, Faisalabad were inadmissible as the units had been black listed. Hence this appeal.

3. Arguments heard. Record perused. The appellants were show caused on this charge on the basis that the appellants had claimed input tax on the basis of invoices of the units which were declared black listed and (heir registration were suspended according to a list obtained from the STARR. The department has .failed to produce any independent evidence showing that the appellants were ever informed that the firms 'with whom they were dealing were declared as fake units. It is also not proved that the provisions of section 21(4) of the Sales Tax Act, 1990 were eyes adhered to before declaring the units as fare. The show-cause notice issued to the appellants is ambiguous and vague in material particulars. The appellants remained filing monthly returns during the audit period with the department showing the purchases from the units so declared fake but did not raise any objection or inform the appellants that the invoices issued by those units were not acceptable. The information so clown loaded from the STAR cannot be held as reliable information and after obtaining such information the department was duty bound to establish through independent evidence that the units with which the appellant were dealing were fake and the appellants were duly apprised about these facts. In the circumstances the order to the extent of dis allowing input tax adjustment against the invoices of Messrs Anwer Brothers, Kasur and Messrs S.W.S. Traders, Faisalabad is not justifiable.

4. For the fore-going reasons, the appeal is accepted by setting aside the impugned order to the extent of claim of input tax against invoices issued by suspected units and show-cause notice to this extent is also set aside holding that the appellants were entitled to the input tax adjustment against such invoices. Copy of the order be communicated through registered post or by UMS to the parties.

5. File be consigned after completion.

C.M.A./127/Tax (Trib.) Appeal accepted.