2010 PTD 857
MIAN MUHAMMAD HANIF TAHIR (MEMBER JUDICIAL).-- This appeal is directed by Messrs Bilal Textile (Pvt.) Ltd, Faisalabad under section 46 of the Sales Tax Act, 1990 against Order-in-Appeal No.516/2009 dated 29-5-2009 passed by the learned Collector (Appeals), Faisalabad, whereby he partly accepted the point of view on certain issues involving refund of sales tax of Rs.51,285 and decided the remaining issues involving refund worth Rs.1,22,766 against the appellants.
2. Brief facts of the case are that the appellant filed refund claim for June, 2007. During scrutiny of refund claim, the refund sanctioning authority observed different discrepancies in the refund claim and issued a show-cause notice dated 31-12-2007 as to why the refund claim of Rs.1,74,051 may not be rejected for violation of sections 2(14), 4, 7, 8(1), 10 and 26 of the Sales Tax Act, 1990 read with Refund Rules, 2006 notified vide S.R.O. 555(I)/2006 dated 5-6-2006. The learned Adjudicating Authority after hearing both the sides, rejected the whole refund claim of appellant vide Order-in-Original No. 195/2008 dated 21-4-2008, hence, this further appeal by Messrs Bilal Textile (Pvt.) Ltd., Faisalabad on the following issues given as under:- a) Invoice requires verification. b) Non-filer. c) Registration suspended. d) Unit does not exist. e) Scrutiny for verification of input tax.
3. Arguments were heard. The learned counsel for the appellant argued that the impugned order-in-original as well as order-in-appeal has been passed in an arbitrary manner, which are illegal, void and liable to be set aside whereas the departmental ,representative reiterated the same arguments as taken in their parawise comments.
4. I have thoroughly examined the case record and have carefully considered written as well as oral submissions made by both the sides. There are several issues involved in this appeal and my findings on each issue is given as under.
5. The first issue as adjudged in the impugned appellate order pertains to rejection of refund on the charge of invoices require verification. The appellants have transacted with the alleged suppliers against proper sales tax invoices issued under section 23 of the Sales Tax Act, 1990 and also incorporated in his sales tax record. If invoices issued by the said units required any verification, then it should have been conducted first before rejecting the appellant's refund claim and prior to disposal of the instant case. The legal obligations resting upon the appellants have duly been fulfilled and he cannot be confronted with rejection of refund merely for want of verification of invoices issued by their suppliers. Since, no verification has been made out by the sales tax department in respect of alleged invoices therefore; rejection of refund on this charge is not only premature, unjustified but also unlawful and illegal. If any verification of the alleged invoices was required, the same ought to be made first, before rejecting the refund claim of appellant. However, rejection of appellants' refund claim, which is an easy job, has been ordered keeping aside all the legal aspects of the instant case. In this state of affair, I am left with no option except to accept the plea of appellant.
6. The second issue involved in this appeal is non-filer. The learned counsel for the appellant produced the sales tax return for period in question and the DR was also found satisfactory hence, the charge of non-filer is over-ruled accordingly.
7. The third issue pertains to rejection of refund on the charge of registration suspended. I find that the appellant's refund claim for period in question has been rejected on the charge of "registration suspended" without any lawful ground as refund against invoices of a person whose registration is suspended can be rejected upon his black-listing by the Collector of Sales Tax after adhering due process of law prescribed under section 21 of the Act and the Sales Tax Rules, 2006 notified vide S.R.O.555(I)/2006 dated 5-6-2006 made thereunder. Rejection of refund during the currency of suspension of registration is premature, invalid, unwarranted and illegal because no formal order of black-listing under the law has been issued by the competent authority therefore; whole proceedings culminated in impugned show-cause notice and consequent orders are nullity in the eye of law. The dictum laid down by the Honourable Supreme Court of Pakistan in a judgment as reported in (2003 SCMR 1505) is also attracted in the circumstances of the present case wherein it has been held that; "Where a thing was provided to be done in a particular manner it had to be-done in that manner and if not so done, the same would not be lawful." I also find that appellant has made all the transactions relying upon the official record of the Sales Tax Department, i.e. registration certificate and computer profile etc. which reflected the suppliers' status as "operative" and as per Articles 2(8) and 92 of the Qanun-e-Shahadat Order, 1984, the presumption of truth attached to official record. The observations contained in the judgment of Honourable Supreme Court of Pakistan as reported in (2003 SCMR 501) are also applicable in the instant case. The ratio decidendi in the said judgment is that; "---Arts.2(8) & 92---Official record---Presumption of truth---In absence of anything to, the contrary, presumption of truth, would be attached to official record." Nevertheless, it at all the alleged supplier has committed any tax fraud, or any default, it has been done on account of Sales Tax Department's negligence. The appellants cannot be held responsible for slackness of the State officials or departmental functionaries. I am fortified in my views on the basis of settled law by the Honourable Supreme Court of Pakistan in judgments as reported in (2002 SCMR 134) and PLD 1989 SC 146) wherein it has been laid down that; "It is well-settled proposition of law that a party should not be made to suffer on account of act/omission on the part of the Court or other State Functionaries." This being so, the plea of appellant is accepted.
8. The fourth issue as adjudged in the first appellate order pertains to rejection of refund On the charge of unit does not exist against invoices of Messrs H.A. Plastic raised by STARR System which is due to wrong feeding of its registration number i.e. 08-00-4919-008-82 instead of 08-00-4819-008-82 therefore, refund of sales tax against his invoices are admissible under law.
9. The fifth and last issue as adjudged in the order of learned Collector (Appeals) is scrutiny for verification of input tax of appellant's suppliers. I find that the objection of "Scrutiny for verification of input tax" is generated by the STARR System having no legal backing by the Sales Tax Act, 1990. No legislative enactment, no contravention of sales tax laws or notification issued thereunder or any specific instruction issued by Central Board of Revenue on the subject-matter is alleged in show-cause notice and the subsequent impugned orders are passed merely on assumptions and presumptions which is not warranted under law as laid down by Honourable Sindh Court, Karachi in a judgment reported at 2004 PTD 868 that; "The sales tax imposed on the basis of some assumption and presumption not warranted in law shall always be struck down.---It is well-established principle of the law of taxation that an assessee can be subject to tax under a provision of law, which is unambiguous and clear," Thus, rejection of refund on this ground is unlawful and illegal in eye of law. The term "Scrutiny for verification of input tax" is nowhere quantified and qualified or even not expressed/ defined in the Sales Tax Act, 1990 therefore, rejection of refund on this ground is beyond scope of sales tax laws. The dictum laid down in a judgment as reported in 2000 PTD 3765 by the Honourable Lahore ''High Court, Lahore is attracted in the instant case that; "a levy can only be made by express and exact words." The observations given by the Honourable Supreme Court of Pakistan in a judgment as reported in (1993 SCMR 274) are also attracted in the instant case that; "The cardinal principles of interpretation of a fiscal statute seem to be that all charges upon the subject are to be imposed by clear and unambiguous words. There is no room for any intendment nor there is any equity or presumption as to a tax. A fiscal provision of statute is to be constructed liberal in favour of the taxpayer and in case of an substantial doubt the same is to be resolved in favour of the Citizen." Reliance is also placed on the judgment of Honourable Sindh High Court, Karachi is a case as reported in 2002 PTD 2457, wherein it was held, "A Court cannot import anything, which is not expressed it cannot import provisions in the statute, so as to support assumed deficiency. The taxing statute must be interpreted in the light of the what is clearly expressed. "
10. In view of the above discussion, there is no force in the arguments advanced by the learned Auditor, so the appeal is hereby accepted and the impugned order dated 29-5-2009 is set aside. Parties be informed through registered post A.D. and TCS.
11. File be consigned to the record after completion.
H.B.T./30/Tax(Trib.) Appeal accepted.