Appeal No. S.T.A. No. 586/LB of 2002, decided on 18th December, 2004. Versus Appeal No. S.T.A. No. 586/LB of 2002, decided on 18th December, 2004.
SAEED AKHTAR, MEMBER (TECHNICAL).--- This appeal is directed against Order-in-Original No.233 of 2002 passed by the learned Additional Collector, Customs, Sales Tax and Central Excise (Adjudica tion), Multan issued vide C. No.188/2002/Adj/ST/Addl/1897, dated 18-3-2002 whereunder the appellant was directed to deposit an amount of Rs.7,895,687 along with additional tax and penalty @ 3% of the principal amount under the relevant provisions of Sales Tax Act, 1990. The learned Adjudicating Officer, however, directed that the respondent-Collectorate should verify deposit of the principal amount of sales tax and if the appellant has already deposited the principal amount of sales tax the same may be adjusted against the adjudged sales tax liability and only remaining amount should' be paid by the registered person.
2. Brief facts of the case as reported by the audit staff of D.G. Khan to the Adjudicating Officer are that the appellant Messrs Khokhar Textile Mills Ltd., Chowk Munda, Kot Addhu purchased 1075288 kgs./7200 bales of cotton lint from different cotton ginners in the month of October, 2001 and November, 2001 valuing Rs.52,627,913 involving A sales tax amounting to Rs.7,895,687 which was not paid in the manner as provided in S.R.O. 127(I)/1996, dated 10-11-1996 and wrongly adjusted input tax against the due output tax in the monthly sales tax returns. On the basis of above-mentioned facts the respondents were called upon to show-cause notice as to why sales tax amounting to Rs.7,895,687 along with additional tax may not be recovered and as to why penal action under section 33 of the Sales Tax Act, 1990 may not be taken against them. At the time of hearing the representative of appellant stated that the staff member incharge on sales tax affairs was on leave and in his absence inadvertently the amount of sales tax could not be paid. It was further contended that the company had no intention to evade sales tax and the same was deposited as soon as it was pointed out by the auditors. The learned Adjudicating Officer after considering the contentions of both the parties adjudged sales tax amounting to Rs.7,895,687 along with additional tax and penalty @ 3% of the principal amount of the sales tax involved. Hence this appeal.
3. The main contentions of the learned counsel for the appellant at the time of hearing were as under:--
(1) That the said order passed by the learned respondent is arbitrary and without legal implications of the provisions of Sales Tax Act, 1990. The penalty of 3% of the principal amount of sales tax is illegal and excessive. Moreover, the show-cause notice is fake.
(2) That the late payment of sales tax was due to unavoidable circumstances and acute financial stress. The appellant is not habitual evader of sales tax nor delayed the payment in the past. Hence invoking the penal clauses of additional tax and penalty is not warranted.
(3) That there is no deliberation on the part of the appellant hence the imposition of additional tax is illegal. No independent notice was served before imposition of additional tax and penalty.
(4) That in view of the facts of the case it is prayed that the impugned order may kindly be annulled.
4. The learned D.R. who was assisted by Mr. Ahmad Khan and Tariq Nadeem, Auditors contended that the appellant failed to deposit the due amount of sales tax in accordance with the law in the relevant tax period. Moreover' the appellant made adjustment of input tax without making of the due tax. The act of non-payment of sales tax and availing illegal adjustment was therefore, deliberate act of the registered person ' for which he is required to pay additional tax and penalty. The learned D.R. further contended that there is no infirmity in the impugned order and the same may be upheld dismissing appeal which is not based on merit.
5. We have heard the contentions of both the parties and perused the appeal file before us. It has been observed from the letter of appellant to the Adjudicating Officer that the staff member incharge of the sales tax affairs was on leave and in his absence inadvertently the amount of sales tax could not be paid. It has further, been stated that the registered person had no intention to evade sales tax. The appellant further contended before the Adjudicating Officer that the principal amount has already been paid. After scrutiny of the case file it has been observed that the appellant not only failed in its duty to deposit the due sales tax within permissible timeframe but also availed input tax adjustment. From this act of the appellant, it is proved that adjustment of input tax was made intentionally/knowingly and it was not an inadvertent error on the part of the registered person. We have further observed that the appellant in his reply to the show-cause notice has not taken plea of financial crises as it has been taken at the appellate stage. The appellants have not produced any evidence in support of this contention of acute financial crises being faced by him which warranted non-payment of principal amount of sales tax within due date. The learned counsel for the appellant has not produced any evidence before this Tribunal regarding payment of the principal amount of sales tax. The learned counsel for the appellant, however, requested that additional tax may be charged at the simple rate which has been allowed by the superior Courts in number of cases. The learned counsel for the appellant further requested for remission of penalty on the plea that subsection under which penalty has been imposed is not mentioned in the show-cause notice. After having considered the contentions of both the parties and the beneficial amendment made in section 34 of the Sales Tax Act, 1990, we find it appropriate to allow the payment of additional tax which is applicable as of today as allowed in number of cases by .the superior Courts. The learned counsel for the appellant has correctly pointed out that subsection of section 33 is not mentioned in the show-cause notice and in view of this fact penalty imposed in the impugned Order-in-Original is remitted. As the learned counsel for the appellant has pointed out that the principal amount of sales tax has already been deposited by the appellant, therefore, the respondent-Collectorate is directed to verify C payment of the principal amount of sales tax amounting Rs.7,895,687 and if the whole principal amount or any part thereof has already been paid the same may be adjusted against the adjudged liability. The respondent-Collectorate is further directed to calculate additional tax at the rate which is applicable as of today as allowed by superior Courts in view of beneficial amendment made in section 34 of the Sales Tax Act, 1990. In view of circumstances of the case as mentioned above the penalty under section 33 is remitted.
6. The impugned order is modified to the extent as mentioned above and the appeal stands disposed off accordingly.
Principal levy confirmed but relief allowed in rate of additional tax.
C.M.A./496/Tax(Trib.) Order accordingly.