2008 PTD 1835
HAFIZ MUHAMMAD ANEES, (MEMBER TECHNICAL).--- This judgment disposes of Sales Tax Appeal No. STA No.497/LB/2006 filed by Messrs Shoaib and Sohail Textile Company, Faisalabad against the Order-in-Appeal No.77 of 2006, dated 16-3-2006 (dispatched on 27-4-2006) passed by the Collector (Appeals), Rawalpindi upholding the Order-in-Original No.303 of 2005 dated 28-6-2005 passed by the Deputy Collector (Adjudication), Faisalabad.
2. Precisely, the facts of the case that the staff of the Collectorate of Sales Tax and Federal Excise, Faisalabad audited the sales tax records of the appellants for the period of 7/99 to 2001 and observed during the course of audit that the appellant has committed the following irregularities/omissions:--
(i) that the registered person (the appellant) has made supplies of empty P.P. bags and paper cones without charging sales tax thereon amounting to Rs.185867 which is recoverable, along with additional tax;
(ii) that they have committed tax fraud by claiming double refund amounting to Rs.365802.
(iii) that they have claimed excess refund of Rs.168325 on exported goods weight of which on examination of goods was found less than the weight declared in export documents;
(iv) that they have claimed inadmissible refund of Rs.583546 against invoices issued by fake units;
(v) that they have claimed inadmissible input adjustment amounting to Rs.52876 on electricity bills.
3. Based on the aforesaid irregularities/omissions, a contravention case was framed against the appellants and the matter was referred to the respective adjudicating officer of former Adjudication Collectorate, Faisalabad for decision. The adjudication proceedings culminated in passing of an order dated 28-6-2005 of the recovery of Rs.1136277 (Rupees eleven lacs thirty six thousand two hundred seventy seven) along with additional tax and penalty under section 33(2) of the Act, in charges at para 2(i)(ii), (iii) and (iv) of this order. The charge at para 2(v) was dropped.
4. The Collector (Appeals) upheld the Order-in-Original. The operative part of the judgment is reproduced as under:-
"Examined the record of the case and considered the written and oral arguments of both sides. The impugned order was despatched to the appellants on 28-6-2005 through registered post. The impugned order so despatched to the appellants has not received back un-delivered. As such there are valid reasons to believe that the said order has been properly served on the appellants. But the appeal has been filed on 31-12-2005 after 138 days of the expiry of the period of 30 days prescribed under section 45-B for filing of the appeal. No convincing reasons for not receiving the order have been offered. Without prejudice to the fact that the appeal filed by the appellants is time barred and the appellants have failed to give any reasons for not receiving the impugned order, it is observed that it has been simply stated in the memo. of appeal that the adjudicating officer was not justified in determining and establishing the sales tax liability against them but they have failed to bring any evidence on record to prove that they have discharged their liability on P.P. bags and paper cones, that they had not received double refund of sales tax, that they had not received input adjustment against fake invoices or that there was no discrepancy in the declared weight of exported goods and the weight of goods actually found on examination of the goods by the customs authorities."
5. Being aggrieved, the appellant has filed appeal before the Tribunal mainly on the grounds that the first audit of the unit was conducted for the period July, 2000 to June, 2003 as per audit observation No. STA/IV/743/2003/91 dated 16-2-2004 wherein the amount of Rs.2,46,868 was pointed out to be short paid. The said amount was deposited as per audit observation and there was nothing outstanding against the appellant. As alleged, the second audit pertains to the period July, 1999 to July, 2001 and as per audit report the payable amount works out to Rs.11,81,678. Learned counsel for the appellant has pointed out that no copy of this audit report was available with the appellant nor the show-cause notice was issued to him and inspite of repeated requests before the Collector (Appeals) a copy of the show-cause notice was never made available to him.
6. As agreed, the Collector, Sales Tax, Faisalabad was directed to constitute a committee to look into the matter and submit a final report before the next date of hearing. The Deputy Collector under his letter dated 24-4-2007 has submitted the reconciliation report of the committee duly signed by the representative of the Collectorate and the representative of the appellant. According to the report the liability against the appellant works out to Rs.18586 which is to be recovered. The learned counsel for the appellant has put his signatures on the report and agrees for the payment of the said amount of Rs.18586 but at the same time requested that the additional tax and penalty may be remitted as the same is not wilful or deliberate. In support of his contention he has submitted two judgments of the Honourable Supreme Court of Pakistan and High Court reported as 2005 PTD 1920 and 2006 SCMR 626 = 2006 PTD 1132.
7. I have examined the case record. Also heard the arguments of both sides. Anxious consideration has been given to the contentions raised in the memo. of appeal. As per report submitted by the Collectorate duly signed by the representatives of both the sides, the charges levelled against the appellant were not based on facts. Only liability of Rs.18585 stands out against the appellant. The gist of the report duly signed by both the sides is reproduced below:-
(i) Sales of empty P.P. Bags/paper cone
Rs.18586 to be recovered
(ii) Less weight export
Not sanctioned
(iii) Double claim of refund
Not sanctioned
(iv) Inadmissible refund claimed on suspected units.
Not sanctioned.
(v) Inadmissible refund on electricity bill
Already dropped.
The said amount as agreed by the appellant may be recovered. The orders of the lower fora of adjudication are modified to the above extent and the appeal is disposed of accordingly.
8. Announced.
9. Inform all concerned through registered posts.
C.M.A./75/Tax(Trib.) Order accordingly.