S.T.A. No. 1334/LB of 2001, decided on 5th April, 2002. Versus S.T.A. No. 1334/LB of 2001, decided on 5th April, 2002.

MIAN ABDUL QAYYUM, MEMBER (JUDICIAL),--- This appeal is directed against the sales tax Order-in-Original No. 728 of 2001, dated 2-4-2001 (dispatched on 16-5-2001) passed by the learned Deputy Collector (Adjudication), Multan.

2. The appellant was awarded a contract by Public Health Engineering Department. Lahore, for Drainage Sewerage Scheme of Yazman Part 1 (providing laying of main sewerage line).

3. Allegedly the appellant manufactured and supplied RCC Pipes to the Public Health Engineering Department for Sewerage Scherrie at Yazma as per the following details contained in para 1 of the impugned order:--

"(i) 33Dta. 503 Rft. 457.38 Per Rft. Rs.230,062 Value

(ii) 30" 3249" 415.80" Rs.1350934"

(iii) 24" 1686" 195.20' Rs.329107"

(iv) 18" 1654" 115.95" Rs.191781"

(v) 15" 756" 97.86" Rs.73982"

(vi) 12" 7765" 75.98" Rs.589985"

4. The charge against the appellant was that it had failed to deposit the amount of Rs.4,97,858 on account of sales tax which was recoverable alongwith additional tax. The Senior. Auditor, Sales Tax, Rahim Yar Khan prepared a contravention report on the basis of which the learned Adjudicating Officer issued a show-cause notice to the appellant requiring it to explain as to why the amount of Rs.4,97,858 alongwith additional tax, be not recovered and why penalty action be not taken.

5. The appellant resisted the show-cause notice on the ground that the unit was registered with the Sales Tax Department on 14-4-2000; that the learned Adjudicating Officer illegally refused the appellant the facility to pay turn-over tax @ 2% of the value of the supply because the total turnover of the appellant was Rs.17,23,626.00 which was less than 2.5 Million, that the sales tax was not to be charged on the total value of production but was to be levied on the value of supply; and that since the Public Health Engineering Department did not pay the amount, of sales tax involved despite repeated requests, therefore, the appellant could not pay the same.

6. The learned Adjudicating Officer after considering the stand taken by the appellant concluded that the appellant could not opt for payment of turnover tax as the earlier registration could not be withdrawn unless expiry of two years as laid down under section 18(2) of the Act. The learned Adjudicating Officer agreed with the, appellant that the sales tax was to be charged on actual value of the supply and not on the volume of the total "project cost" and reduced the. amount of sales tax from Rs.4,97,858 to Rs.2,24,820 with a direction to the appellant to pay the same alongwith additional tax and penalty of Rs.11,241.

7. During the course of the arguments, it was' admitted by the learned counsel for the appellant that it did no apply for registration under the turnover tax regime as required under subsection (2) or 3(a) of the Sales Tax Act, 1990. In the absence of any application for registration under the Turnover Tax Scheme, the appellant could not claim benefit of the said scheme. This is also an admitted position that the appellant was duly registered with the Sales Tax Department on 14-4-2000 and could not be de-registered before expiry of two years from the date of registration. The learned Adjudicating Officer has, therefore, passed a balanced and speaking order keeping in view all the relevant provisions of law. While maintaining the impugned order to the extent of sales tax amounting to Rs.2,28,820 alongwith additional tax we remit the amount of penalty amounting to Rs11,241 as the conduct of the appellant was not such as to invite its imposition. The appeal partly succeeds as indicated above and the impugned order is modified accordingly.

C.M.A./743/Tax (Trib.) Order accordingly.