Appeal No.2676/LB/2001, decided on 13th March, 2002. Versus Appeal No.2676/LB/2001, decided on 13th March, 2002.
MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑‑‑ This judgment shall dispose of the appeal filed by Messrs Abdullah Sugar Mills Ltd., against Order‑in‑Original No. ST‑59/2001, dated 29‑10‑2001 passed by the Collector (Adjudication), Lahore.
2. Briefly stated, the facts giving rise to this appeal are that coming the course of audit of the record of the appellant Mills, the staff of the Collectorate of Sales Tax Lahore observed that during the year 1996‑97, the Mills produced 137661 M. Tons of bagasse and used in‑house as fuel but did not pay sales tax‑thereon. Value of the bagasse was worked out @ Rs.1100 per M. Ton on the basis of the evidence of sale by another Sugar Mills and contravention case was made out against the appellants for evading sales tax amounting to Rs.2,72,56,878 payable thereon. The appellants were issued a show‑cause notice and after tearing them, learned Adjudicating Officer directed them to pay the aforesaid amount of sales tax alongwith additional tax in terms of section 34 of the Sales Tax Act, 1990 besides penalty of Rs.8,17,706,34 under section 33 ibid Hence this appeal.
3. The appellants have challenged the impugned order mainly on he following grounds.
(1) That bagasse being an intermediary product used in the manufacture of taxable end‑product i.e. Sugar is exempt vide Sr. No.3 of the Sixth Schedule to the Sales Tax Act, 1990. Even otherwise, the tax paid on bagasse being adjustable as input tax, it would be a futile exercise to collect sales tax on it.
(2) That while determining value of bagasse, the Department has acted arbitrarily by applying the value of Rs.1100 per M. Ton on the basis of a single evidence of sale by Messrs Brother Sugar Mills while sales by other Mills being assessed at values ranging from Rs. 100 to Rs. 1000 per M. Ton have not been considered. The Govt. of Punjab vide notification, dated 23‑9‑1996 had fixed the price of sugar can at Rs.600 per M. Ton and, therefore, the value of bagasse, which is its product, cannot be more than the price of sugar cane.
4. During the course of hearing, learned counsel for the appellants placed on record a copy of the judgment of Lahore Bench‑I of this Tribunal in Appeal No. 1352/LB of 2001 and requested for disposal of the instant appeal in the same terms.
5. We have examined the appellants case in the light of arguments advanced by them and this Tribunal's precedent referred to by their counsel. The issue regarding chargeability of sales tax on bagasse has since been decided by the Hon'ble Supreme Court vide its judgment, dated 27‑2‑2001 in Civil Appeals Nos. 1805‑1811 of 1998, 1392, 1417, 1418 of 1999, 2, 22, 129, 488, 489 of 2000 and C. P. S. No. 386‑L and 799‑L of 2000 whereby bagasse has been held chargeable to sales tax at the value which is to be calculated at market price excluding the amount of tax. This leaves us only with the issue reading valuation of bagasse produced by the appellants to be resolved. The appellant's arguments in this regard, that the value of bagasse has been calculated by the Department arbitrarily on the basis of one sale invoice of a Sugar Mills completely ignoring the lower sale values in the range of Rs.100 to 1000 per M.T. Ton declared by other Mills and accepted by the Department and the value of Rs. 1100 per M. Ton assessed in the appellant's case being higher than even the price of sugarcane fixed by the Punjab Government, do carry weight and we find that there is need to ascertain correct value of the goods in accordance with the provisions section 2(46) of the Sales Tax Act, 1990. This exercise can best be done at the original stage of adjudication.
6. Lahore Bench‑I of this Tribunal while deciding a number of identical appeals vide its judgment in Appeal No. 1352/LB of 2001 has asked the C.B.R. to constitute a committee comprising Senior Officers of the Sales Tax Department and representatives of the Pakistan Sugar Mills Association to advise the market price of bagasse in the light of orders of the Supreme Court and relevant provisions of the Sales Tax Act, 1990. It has further been directed that the value so advised shall be notified by the C.B.R. in terms of section 2(46) of the Sales Tax Act, 1990, the respective Collectors of Sales Tax will re‑determine the demand of sales tax accordingly and inform the appellants about their liability in writing.
7. Considering to overall circumstances of the case and aforesaid judgment of the Tribunal the impugned order is set aside and the case is remanded to the learned Adjudicating Officer for de novo consideration with the direction to re‑determine the amount of sales tax payable by the appellants on the basis of the value of bagasse notified by the C.B.R. under section 2(46) of the Sales Tax Act, 1990. While deciding the case afresh issue regarding levy of additional tax and imposition of penalty may also be considered by the learned Adjudicating Officer in accordance with law.
C.M.A./721/Tax (Trib.) Case Remanded.