2008 PTD 1872

HAFIZ MUHAMMAD ANEES, MEMBER (TECHNICAL).--- This appeal is directed against the Order-in-Original No.55 of 2002, dated 5-11-2002 (dispatched on 14-11-2002) passed by the Additional Collector (Adjudication), Faisalabad.

2. Briefly stated, the relevant facts of the case are that the during the course of audit of the appellant's units for the period January, 1999 to December, 2000 following observations resulting into evasion of sale tax were communicated to the appellant through show-cause notice, dated 30-7-2002 proposing recovery of Rs.3656727 (including penalty amounting to Rs.2148847) along with additional tax and penal action under sections 36, 34 and 33(2)(c) of the Sales Tax Act, 1990. All the observations raised through the show-cause notice were settled except that penalty although reduced from Rs.2148847 to Rs.50000 by the Adjudicating Officer vide order-in-original, dated 14-11-2002 referred to above for non-maintenance of record and secondly input tax adjustment was disallowed on the electricity consumed in the administrative block located within the factory premises.

3. The appellant has assailed the vires and legality of the aforesaid orders mainly on the grounds that huge penalty of Rs.21.48 million was proposed by the special auditor and reflected in the show-cause notice for non-maintenance of record although reduced to Rs.50,000 through adjudication but still it is arbitrary as penalty prescribed under section 33(3) is Rs.10,000 which may also be remitted. The same auditing officer in the case of Messrs M.K. Sons has adjudged as Rs.10,000 which negate equal treatment and secondly input tax adjustment on the electricity consumed in the administrative office within the factory premises disallowed which is discriminatory as well as against the provisions of law. On the other, the departmental representative rebutted the contentions and supported the order-in- original.

4. We have examined the case record. Also heard the arguments of both the sides. Anxious consideration has been given to the contention raised in the memo. of appeal. We agree with the contentions raised by the counsel for the appellant regarding consumption of electricity. The Tribunal in different judgments has held that consumption of electricity in the administrative office located within the four walls of the factory premises is admissible to input tax adjustment. This has also been clarified and declared to the field formations by the CBR that input tax adjustment may not be objected to. The contention is therefore, accepted and objection is dropped. Regarding second objection that penalty prescribed under section 33(3) of the Sales Tax Act, 1990 is Rs.10,000 and not Rs.50,000 for non-maintenance of record. Secondly in another case as referred to above, the penalty imposed was Rs.10,000. Being so, the penalty is reduced to Rs.10,000 (Rs. Ten thousand only). The impugned order-in-original is modified to the above extent and the appeal is disposed of accordingly.

5. Announced.

6. Inform all concerned through registered post.

C.M.A./82/Tax (Trib.) Order accordingly.