Versus Tariq Najib , Khalid Mahmood, D.R. with Pervaiz Alam

ZAFAR-UL-MAJEED, MEMBER (TECHNICAL).--- This appeal has been filed by Messrs Khokar Cotton Ginning Pressing and Oil Mills, Multan against Sales Tax Order-in-Original No.971 of 2001 dated 12-6-2001 passed by the Collector (Adjudication), Customs, Sales Tax and Central Excise, Multan.

2. The facts giving rise to this appeal are that the Auditor Sales Tax, Multan audited the appellant's sales tax record for the period 1999-2000 and pointed out certain discrepancies as detailed in para. 1 of the impugned order. The appellant was served with a show-cause notice and after observing due process of law, demand of sales tax, additional tax and penalties was adjudged in respect of two charges as detailed below : -

(i) Demand of sales tax amounting to Rs.12,468 along with additional tax and penalty equal to 3% of the sales tax involved on account of under valuation in respect of two supplies of oil cake as detailed below:---

Date

Quantity

Sales Tax paid Rs.150/Ton

Sales Tax at the value of payable at the value of Rs.160/Ton

Sales Tax Short paid.

10-6-2000

51,200

37,040

39,507

2,467

18-7-2000

92,160

61,112

71,113

10,001

Total

12,468

(ii) Demand of sales tax amounting to Rs.6,13,148 along with additional tax and penalty equal to 3% of the sales tax involved' on account of non-payment of sales tax on supplies of oil cake made during the period prior to 19-6-2000, the date on which exemption from sales tax was granted on supply of this item.

3. The appellant's contention with regard to first charge is that supply of oil cake was exempted from sales tax with effect from 19-6-2000 through Finance Ordinance, 2000 and, as such, supply of 92,160 Kgs oil cake made on 18-7-2000 involving sales tax demand of Rs.10,001 was exempt. Short payment of sales tax amounting to Rs.2,467 in respect of supply of 51,200 Kgs oil cake made on 10-6-2000 has, however, been admitted but remission of additional tax and penalty is prayed. Regarding second charge, the appellant's contention is that while alleging non-payment of sales tax, the time of supply has not been given in the show-cause notice or the impugned order. According to the appellant, supplies in question were made in the months of September and October, 2000 when oil cake stood exempt from sales tax vide Finance Ordinance, 2000, effective from 19-6-2000. The department has taken the supplies as chargeable to sales tax pertaining to the period before 19-6-2000 on the basis of presumption and without any evidence. Learned counsel produced copies of invoices and bank statement relating to the months of September and October, 2000 in support of his contention which have been placed on record.

4. The D.R. conceded that supply of oil cake made on 18-7-2000, which involved sales tax demand of Rs.10,001, was exempt from sales tax. However, he opposed the appeal in respect of the second charge pleading that since the appellant failed to produce truck builties and complete address of the buyers, the time of supply could not be verified and, therefore, the supplies were presumably made before 19-6-2000 and invoices produced by the appellant were manipulated.

5. We have heard the parties and perused the record. As, admittedly, the supply of oil cake made on 18-7-2000 was exempt from tax, the demand of sales tax relating to first charge is reduced to Rs.2,467 along with additional tax. Penalty of 3% imposed under section 33(2)"of the Sales Tax Act is remitted keeping in view the small amount of tax involved.

6. Regarding second charge, we are inclined to agree with the appellant's contention that the charge is vague in that the department has not produced any evidence to prove that the supplies in question were made before 19-6-2000 when the goods were chargeable to tax and that the entire case of the department is based on presumption. During the Course of arguments, learned D.R. conceded that the sales tax record maintained by the appellant and relevant invoices produced by it pertained to the period after 19-6-2000 when the supplies of oil cake were exempt. He also conceded that the supplies were presumed to have been made before 19-6-2000 only on the ground that the appellant failed to produce truck builties and detailed particulars of buyers. In our view the department's plea does not hold ground. While, the appellant has made available invoices supported by sales tax record and bank statement to establish its case, the department has not been able to come up with any cogent evidence to prove the charge. With these observations we hold that the demand of Rs.6,13,148 is not maintainable which is dropped along with additional tax and penalty relating thereto.

7. The appeal is disposed of in the above terms and the impugned order is modified accordingly.

H.B.T./134/Tax (Trib.) Order accordingly.