S.T.A. No. 1430/LB of 2005, decided on 23rd December, 2006. Versus S.T.A. No. 1430/LB of 2005, decided on 23rd December, 2006.
ZAFAR UL MAJEED, MEMBER (TECHNICAL).--- This appeal is directed against Order-in-Appeal No. 31 of 2005, dated 11-10-2005 passed by Collector (Appeals), Lahore.
2. Briefly, the facts giving rise to this appeal are that the staff of Collectorate of Sales Tax, Lahore audited the appellant's sales tax record for the period 9/2000 to 6/2002 and after examining the appellant's income tax assessment orders reported following irregularities:
(i) That the appellant made taxable sales/supplies of Rs.79,59,000 during the period 9/2000 to 6/2002 without payment of sales tax amounting to Rs.11,93,850.
(ii) That the appellant did not file sales tax returns for the aforesiad tax period.
(iii) That the appellant did not maintain sales, purchase and inventory record as required under section 22 of the Sales Tax Act read with S.R.O. 583(I)/98 dated 12-6-1998.
(iv) That the appellant did not issue invoices in accordance with the provisions of section 23 of the Sales Tax Act read with rule 6 of the aforesaid S.R.O.
3. The case was adjudicated by the Deputy Collector (Adjudication), Lahore who vide Order-in-Original No. 49 of 2005 dated 14-4-2005 directed the appellant to pay sales tax amounting to Rs.11,93,85,0 along with additional tax besides penalties of Rs.59,692, and Rs.35,815 for not maintaining sales tax records and not issuing invoices in accordance with law. Appeal filed by the appellant against this order was rejected by Collector (Appeals) vide impugned order.
4. The appellant deals in retail business and are registered as such with the sales tax department. Their main contention against the impugned order is that their annual turnover being less than rupees five million, they were liable to pay turnover tax @ 2% according to section 3(A) of the Sales Tax Act and the Rules made thereunder. However, the department treating their annual turnover higher than rupees five million on the basis of income tax assessment order dated 27-5-2002 whereby their sales were estimated at Rs.52,00,000, worked out the amount of sales tax payable by them at Rs.11,93,850 @ 15%. The appellant states that on an appeal filed by them, the income tax assessment order dated 27-5-2002 was set aside by Commissioner of Income Tax, Appeals, Lahore vide order dated 20-7-2004 and their sales were reduced to Rs.49,00,000. The appellant accordingly calculated their tax liability @ 2% applicable to them at Rs.1,82,000 and deposited the same under the amnesty granted by the government vide S.R.O. 500(I)/2003, dated 7-6-2003. Copy of the payment challan dated 28-6-2003 has been attached with the memo. of appeal.
5. Learned D.R. assisted by Mr. Asif, Auditor opposed the appeal on the ground that the appellant was not entitled to amnesty under S.R.O. 500(I)/2003 dated 7-6-2003 in view of condition (b) provided therein. He, however, verified the amount of Rs.1,82,000 deposited by the appellant vide challan dated 28-6-2003.
6. I have examined the case record and given due consideration to the submissions made by the parties. The main issue, involved in this case is whether the appellant was entitled to turnover tax @ 2% under the Rules or not. The department relying on the income tax assessment order of the appellant dated 27-5-2002, wherein their sales were estimated at Rs.52,00,000, denied this facility and worked out the tax payable at Rs.11,93,850 at the standard rate of 15%. However, later on, the Commissioner of Income Tax Appeals vide her order dated 20-7-2004 reduced the appellant's sales to Rs.49,00,000 which changed the very basis of their placement in the standard tax regime of 15% instead of turnover tax scheme. Non-payment of tax by the appellant is admitted but it is established that they worked out the amount of tax payable by them @ 2%, to which they became entitled in the wake of revised sales tax estimation and deposited an amount of Rs.1,82,000 in terms of the amnesty granted by the government. Calculation of the amount so determined and its deposit is not disputed by the department although learned D.R. objected to the application of amnesty in view of condition (b) of the notification dated 7-6-2003 which denies the benefit of amnesty in cases of tax evasion. This plea of the department is not very well founded as the case of tax evasion framed against the appellant was not entirely correct as discussed above. Therefore, keeping in view the overall circumstances of the case and the submissions made by the appellant in this regard, I allow the application of amnesty granted by the government in this case. Rest of the charges i.e., non-maintenance of record, non-issuance of invoices and non-filing of returns automatically stand dropped in consequence thereof.
7. In view of the aforesaid reasons, appeal is accepted and the impugned order is set aside.
C.M.A./40/Tax(Trib.) Appeal accepted.