Appeal No. STA 255/LB of 2004, decided on 21st December, 2006. Versus Appeal No. STA 255/LB of 2004, decided on 21st December, 2006.

ZAFAR UL MAJEED, (MEMBER TECHNICAL). ---This appeal is directed against order in appeal No.23 of 2004 dated 20-1-2004 passed by the Collector (Appeals) Lahore.

2. Precise facts of the case leading upto this appeal are that the audit of appellant's sales tax record by the staff of Collectorate of Sales Tax Gujranwala revealed that the appellant, who deals in sale of' imported steel sheets, was not maintaining proper record of their imports i.e. insurance bills, clearing, handling, transportation, storage charges etc. and that their value addition was not in accordance with the parameters laid down by the C.B.R. A contravention case was accordingly made out which was adjudicated by the Deputy Collector (Adjudication), Gujranwala who vide Order-in-Original No.285/ST/ 2002 dated 10-9-2002 determined the appellant's value of supplies after making value addition of 10% and raised a demand of Rs.2,74,895 besides additional tax and penalties of Rs. 8,247 and Rs. 20,000 under sections 33'(2)(cc) and 33(3)(b) respectively of the Sales Tax Act, 1990. The appellant challenged this order before Collector (Appeals) who vide impugned order reduced the value addition to 5% and penalties to Rs.4,000 and Rs.10,000 on the ground that the same adjudicating officer determined value addition in other identical case at 5%.

3. Main contentions of the appellant while assailing the order in appeal dated 20-1-2004 are:

(1) That section 2(46)(d) invoked by the respondents for determining their value of supply after making value addition relates to valuation of goods for the purpose of charging sales tax at the time of import. Once the goods, after import, are sold in the domestic market, sales tax is to be charged on the value of supply as determined under section 2(46)(a) i.e. the consideration the seller receives from the buyer of goods. The respondents are not justified under the law to make a fixed value addition to import value which is otherwise higher than the normal value because the same is based on the ITP and not the actual import value.

(2) That the appellant properly maintained all the record required to be maintained under sections 22 and 23 of the Act which was produced before the auditors and again before both the respondents. As the appellant sold all their imports at Karachi port, they did not incur any handling, transportation or storage charges or they were required to maintain any account to this effect. The insurance charges were mentioned in the bills of entry which were shown to the auditors.

4. During the course of arguments, learned counsel for the appellant referred to a number of judgments of superior Courts and this Tribunal in support of his contentions. Learned DR, however, defended the impugned order.

5. I have gone through the facts on record and relevant provisions of the law on the subject. Having given due consideration to the arguments raised by the appellant, I tend to agree that there is no provision in the Sales Tax Act to empower the department to fix a percentage of value addition and compel the registered person to calculate and pay sales tax on the value so fixed. This issue has been discussed at length and decided by the full bench of this Tribunal in Sales Tax Appeal No.157/LB/2002 (GST 2002 CL.44). In case the department had reasons to believe that the value of supply was not correctly declared by the appellant or it was difficult to ascertain the value for any special nature of transactions, the Sales Tax Act, vide sections 2(46)(c) and 2(46)(e), does provide mechanism to be followed in such a situation but the department has not resorted to any of these provisions although there is some discussion to this effect in the order in original. Similarly, in the absence of any evidence produced by the department to the contrary, I accept the appellant's plea that since the goods were sold at the port, they were not required to maintain record relating to transportation, handling and storage charges.

6. In view of the foregoing, I find that the impugned order is not maintainable under the law. The appeal is, accordingly, accepted and the impugned order as well as order in original No.285/ST of 2002 dated 10-9-2002 are set aside.

7. This judgment shall also apply to the following appeals which involve identical questions of law and facts.

S. No.

Appeal No.

Appellant's Name

Order-in- Original No.

1.

STA 1250/2005

M/s. Arshad Traders, Steel Sheets Market, Gujranwala

588/ST/2003 dated 21-5-2003

2.

STA.1248/2005

M/s. Mondial Expoo, Gondlanwala Road, Gujranwala

03/ST/2003 dated 9-7-2003

C.M.A./27/Tax (Trib) Order accordingly.