COLLECTOR, SALES TAX AND CENTER EXCISE (WEST), KARACHI vs Messrs AL-

MUHAMMAD MUJEEULLAH SIDDIQUI, J.---In this appeal under section 47 of the Sales Tax Act, 1990, the following question of law, arising out of the order of Customs and Sales Tax Appellate Tribunal, requires consideration.

"Whether the respondent can claim refund of Sales Tax on the basis of invoices having wrong/incorrect name of the Claimant, which is contrary to the condition provided under section 23 of Sales Tax Act, 1990?"

2. The relevant facts giving rise to this appeal are that, the respondent a Private Limited Company, was allowed refund on the basis of an invoice in the name of Mr. Muhamamd Akhtar Lakhani one of the Directors of the respondent's Company. Subsequently C.B.R.'s Audit Team, while conducting audit of the refund claims of respondent found that the buyer's i.e. Messrs Al-Hadi Industries '(Pvt.) Ltd.

Respondent's name was not written on the tax invoice. A show-cause notice was, therefore, issued calling upon the respondent to explain as to why the, refund allowed against the provision of Sales Tax Act, 1990 may not be recovered. After providing opportunity of being heard to the respondent, the Additional Collector directed the respondent to deposit the amount wrongly refunded which was deposited by the respondent. During the course of hearing before the Additional Collector-II, Sales Tax, it was contended that the purchases were made by the respondent's Company Messrs Al-Hadi Industries (Pvt.) Ltd., although the name of Mr. Muhammad Akhtar Lakhani, one of the directors of the Company was written on the tax invoice. It was submitted that it was result of inadvertence that instead of Company, the name of Director was mentioned by the supplier. A certificate was produced in this behalf from the supplier confirming that the sales were made to the Company through their Managing Director. Mr. Muhammad Akhtar Lakhani. The account books were also produced to show that the purchases were made .By the respondent's Company through their Managing Director, Mr. Muhammad Akhtar Lakhani and the purchases were not made by Mr. Muhammad Akhtar Lakhani in his personal capacity. The Additional Collector, however, did not accept the contentions that on the basis of other material produced by the respondent and notwithstanding, the sales invoice in the name of Mr. Muhammad Akhtar Lakhani, the refund was 'rightly allowed. The Additional Collector held that the tax invoices were admittedly in the name of Mr. Muhammad Akhtar Lakhani, and not in the name of respondent Messrs Al-Hadi Industries (Pvt.) Ltd., therefore, the requirements of section 23 of the Sales Tax Act were not fulfilled and thus the tax invoice in the name of a person other than the buyer could not be considered for the purpose of adjustment/refund under the Sales Tax Act.

3. Being aggrieved with the above finding of Additional Collector, the respondent preferred first appeal reiterating the same contentions. The contentions could not. Find favour with the learned Collector (Appeals) and the first appeal was dismissed.

4. The respondent thereafter, preferred second appeal before the Customs Excise and Sales Tax Appellate Tribunal, reiterating that there was no evasion of tax and it was a matter of procedural mistake whereby the supplier issued the disputed invoices in the name of Mr. Muhammad Akhtar Lakhani, instead of the Company. It was submitted that a Certificate from the supplier was also produced to substantiate the contention that the purchases were made by the company and not by the Director whose name appears on the tax invoice. The contention found favour with the Tribunal. It was observed that the submissions of the assessee had considerable force. It was held that, if in some invoices the name of Director is given instead of trade name, and subsequently it is certified by the supplier that the supplies were made to the company, the irregularity stands cured.

It was further observed that there is other documentary evidence on record, filed by the assessee and' thus the irregularity pointed out by the department stood cured. The appeal was allowed

5. Being dissatisfied with the findings of the learned Tribunal, the appellant has preferred the present appeal before this Court.

6. It is averred in the grounds of appeal that, the invoices having wrong/incorrect name of the unit does not fulfil the condition required under section 23 of the Sales Tax Act, 1990, and therefore, the respondent is not entitled to claim refund against the said invoices.

7. Other objections were also raised in the appeal but they have not been pressed at the time of arguments.

8. We have heard Mr. Shakeet Ahmed, learned counsel for the appellant and Syed Mohsin Imam, learned counsel for the respondent.

9. Mt. Shakeel Ahmed, learned counsel for the appellant has submitted that the refund was claimed' under section 7 of the Sales Tax Act, 1990, which provides that a registered person shall be entitled to deduct input tax paid during the tax period for the purpose of taxable supplies made from the output tax that is due from him and it is further provided in subsection (2) of section 7 that a registered person shall not be entitled to deduct input tax from output tax unless. In case of claim for input tax in respect of taxable supply made in Pakistan, he holds tax invoice in respect of such supply. He has further submitted that the term "tax invoice" has been defined in section 2(40) of the Sales Tax Act, 1990, to mean a document required to be issued under section 23.

10. He has argued that section 23 has prescribed the particulars of a tax invoice. It is specifically provided in section 23(1)(b) that a tax invoice shall contain name, address and registration number of the recipient. He has pointed out that, by virtue of second proviso to section 23(1), not more than one tax invoice shall be issued for a taxable supply.

11. On the basis of above provisions of law, Mr. Shakeel, has contended that in order to claim the deduction of input tax or adjustment thereof or refund, a, claimant shall inter alia satisfy the following requirements:

(1) he should be a registered person:

(2) he should hold a tax invoice in respect of such supply and;

(3) the tax invoice held by him should contain the particulars prescribed in section 23 including the name, address and registration number of the recipient.

12. He has argued that subsection (2) of section 7 is couched in negative terms and the Legislature has specifically enacted that a registered person shall not be entitled to deduct input tax unless he holds a tax invoice. According to him the word, "holds" cannotes the possession or keeping or retaining something. Thus the condition precedent for claiming deduction/refund/adjustment of input tax is that a claimant should be in possession of tax invoice as defined in section 2(40) of the Sales Tax Act. He has further submitted that whenever there is some condition precedent prescribed by law in negative terms it has to be adhere to strictly and any failure in fulfilment of such condition is fatal. He has next contended that the definition of tax invoice given in section 2(40) starts with the word "means" with the result that the definition is conclusive and not inclusive.

Consequently, nothing can be added to the definition of tax invoice given in section 2(40). He has asserted vehemently that by virtue of the provisions contained in sections 2(40) and 23 of the Sales Tax Act, neither any other document except' the tax invoice issued under section 23 can be considered for the purpose of deducting input tax or refund thereof, nor any evidence other than tax invoice can be treated to be the fulfilment of the requirement of law. According to learned counsel there is no room for any substitution of tax invoke, with any other documentary evidence or certificate as in this case, for two reasons, first, no other document other than tax invoice issued under section 23 can be treated as .Tax invoice and no registered person can issue more than one tax invoice for a taxable supply.

13. The learned counsel for the appellant has contended that the stringent provisions have been enacted by the Legislature to curb and rule out the mal-practices and scandals which were detected from time to time in the matter of adjustment, deduction and refund of taxes. He has maintained that, the view taken by the Tribunal is not in consonance with the plain language of law and avowed intention of the Legislature. He has argued that subsection (2) of section 7 has provided that a registered person shall not be entitled to deduct input tax unless he 'holds' tax invoice in respect of such supply and the provision of law being in negative terms shall be deemed to be mandatory in nature. The violation or non-compliance of a mandatory requirement of law would amount illegality, disentitling a person from preferring a claim and it would not be a mere irregularity as held by the learned Tribunal. He has vehemently assailed the impugned finding that the absence of trade name in the tax invoice is an irregularity which stands cured by subsequent certification by the supplier and there is no evidence to the contrary on record. Accordipg to learned counsel this view of the Tribunal amounts to travelling beyond the mandate of law and enjoins upon tax officials to hold an inquiry into the factum of input tax claimed on taxable supply, recording of evidence and then rebut the same by bringing evidence to the contrary on record. All this exercise is not envisaged in law and is fraught with the danger ofnullifying entire purpose of law, i.e. To curb the scandalous attempts by unscrupulous persons in the matter of refund of tax causing huge Imes to the State Revenue. It is further likely to open the Pandoras box and initiation of unwarranted lengthy process of ascertaining the claim of adjustment/reffind/deduction of tax instead of resorting to the simple and scandal free procedure prescribed by Legislature. According to him the tax officials are not required to enter into any exercise of proving, the truth or otherwise of the claim and to allow the deduction/adjustment/refund to a person who iss not in possession of tax invoice fulfilling the requirements of section 23 of the Sales Tax Act. For the foregoing reasons he has submitted that the observation of the Tribunal to the effect that there are other documentary evidence on record filed by the appellant, while representative of the department is not in a position -to meet and that these documents fully cured the irregularity pointed out by the department, is reflective of the above apprehension. He has concluded that if the observations and findings of the Tribunal are allowed to hold the field the entire simplicity of the scheme envisaged in the law shall be destroyed and in every case of non-compliance, the claimants shall start producing extraneous material and the possibility of fabrication of evidence cannot be ruled out. In every such case, the department shall be put to a burden of meeting the evidence produced by the claimants not warranted in law and as such the department would be put to unnecessary exercise and performance of a duty not enjoined upon it in law.

14. On the other hand, Syed Mohsin Imam, learned counsel for the respondent has fully supported the impugned judgment and findings of the Tribunal. He has submitted that the facts are admitted and according to him it was a case of mistake on the part of Mr. Muhammad Akhtar Lakhani, the Director of: the respondent's Company. He has stated that there are two Directors only in the Company, one Mr. Muhammad Akhtar Lakhani and the other his wife, and therefore, due to inadvertence the tax invoice was issued in the name of Mr. Akhtar Lakhani. -The sole contention of ivIr. Mohsin Imam, was that the mistake was subsequently rectified with the production of certificate from the supplier to the effect that sales were in fact made to the Company and not to Mr. Akhtar Lakhani. According to him the furnishing of evidence by the respondent at the subsequent stage fulfilled the purpose of law and therefore, the Tribunal has rightly held that the irregularity stood cured.

15. We have carefully considered the contentions raised by the learned Advocates for the parties and the material available on record. As already stated, the facts are admitted and therefore, we will consider the proposition of law only convassed before us.

16. Mr. Shakeel Ahmed, learned counsel for the appellant has placed reliance on the provisions contained in sections 7, 23 and 2(40) of the Sales Tax Act, 1990. It would be appropriate to reproduce the above sections before dilating on the contentions of the learned Advocates. The above sections read as follows: "Section 7: Determination of tax liability.---(1) For the purpose of determining his tax liability in respect Of taxable supplies made during a tax period, a registered person shall be entitled to deduct input tax paid during the tax period for the purpose of taxable supplies made, or to be made, by him from the output tax that is due from him in respect of that tax period and to make such other adjustments as are specified in section 9.

(2) a registered person shall not be entitled to deduct input tax from output tax unless,-

(i) in case of a claim for input tax in respect of a taxable supply made in Pakistan, he holds a tax invoice in respect of such supply for which a return is furnished;

(ii) in case of goods imported into Pakistan, he holds the bill of entry duly cleared by the customs under section 79 or section 104 the Customs Act, 1969 (IV of 1969); [(iii)*] [(iv)*] Section 23. Tax Invoice.---(1) A registered 'person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, namely:- --

(a) name, address and registration number of the supplier;

(b) name address and registration number of the recipient;

(c) date of issue of the invoice;

(d) description and quantity of goods;

(e) value exclusive of tax; .(f) amount of sales tax; and

(ff) amount of sales tax as specified in subsection (1A) of section 3; (g) value inclusive of tax: Provided that the Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons: Provided further that not more than one tax invoice shall be issued for a taxable supply.

(2) No person other than a registered person or a person paying turnover tax or retail tax shall issue an invoice under this section.

Section 2(40) 'tax invoice' means a document required to be issued under section 23; -

17. After very careful- and anxious consideration of the contentions raised by the learned Advocates for the parties and the perusal of above sections, we are persuaded to agree with the submissions of learned counsel for the appellant that, while interpreting a fiscal statute only the letter of the law must be looked to and there is no room for any intendment. -The taxing statute must be interpreted in the light of what is clearly expressed. A Court cannot imply, anything which is not expressed. It cannot import provisions in the statute, so as to support assumed deficiency.

The golden rule of interpretation of statutes that the statutes should be given their ordinary meaning should be strictly applied to the fiscal statute. However, we would like to add a note of caution, that, if there is any ambiguity in interpreting any fiscal statute or application thereof, then the ambiguity should always be resolved in favour of assessee. At the same time, the principle that if the words of law are clear then the question of any hardship is totally immaterial is always to be kept in view. If there is a mandatory provision of law clearly spelt out from the language used by the Legislature, then the Court has to implement the provision as it exists. Neither anything is to be presumed nor to be deduced. Nothing is to be added or subtracted from any provision of statute, so as to give a meaning other than one which obviously and plainly flows or can be inferred from it.

18. We further agree with the contention of learned counsel for the appellant that the provision contained in subsection (2) of section 7 is mandatory in nature. The reason being that, it is an enabling provision which prescribes the way in which the claim for deduction/adjustment/ refund of the input tax is to be preferred. One of the principles, regarding the enabling statutes is that where the Legislature has expressly prescribed one or more particular modes of dealing with the matters specified therein, then it excludes any other method of doing acts . Mostly enactment expressed in negative and prohibitory language are treated as absolute enactments. The following passage from Craies on Statute Law Vth Edition, page 243 (the Edition page 263), has been cited with approval by a Full Bench of the Hon'ble Supreme Court, in the case of Allied Bank of Pakistan v.

Khalid Farooq 1991 SCMR 620:--- "If the requirements of the statute which prescribes the manner in which something is to be done are expressed in negative language, that is to say, if the statute enacts that it shall be done C in such a manner and in no other manner, it has been laid down that those requirements are in all cases absolute, and that neglect to attend to them will invalidate the whole proceedings."

19. Now reverting to the provisions contained in sections 7, 23 and 2(40) reproduced above, we find that, subsection (2) of section 7 is couched in negative language and specifically prescribes that registered person shall not be entitled to deduct input tax from output tax unless he holds a tax invoice. Thus, we have no hesitation in holding that subsection (2) of section 7 prescribes a particular manner of claiming deduction/ adjustment/refund and on plain reading of the provision, it is abundantly clear that the non-compliance disentitles a registered person from deducting input tax from output tax.

20. A plain reading of the above provision further shows that, the condition precedent for claiming deduction etc. Of input tax is that the claimant should hold a tax invoice, meaning thereby that, he should be in possession of the tax invoice. The invoice has been defined in section 2(40) to mean, a document required to be issued under section 23. The definition is conclusive meaning thereby that no other document can be treated as a tax invoice. It is admitted position that under section 23, a tax invoice should contain name, address and registration number of the recipient. It is further admitted proposition that under second proviso to section 23(1) not more than one tax invoice shall be issued for taxable supply.

21. Now, when the impugned finding of the Tribunal is read with the plain language of law, it appears that the learned Members of the Tribunal have not kept in view the established principles of the interpretation of statutes and the impugned finding cannot be sustained without doing violence to the express and the plain language of law. In the first instance, the learned members of the Tribunal have assumed that any document other than the tax invoice as defined in subsection 2(40) can form basis for allowing the claim of deduction/adjustment/refund of tax which is clearly in violation of the provisions contained in sub- E section (2) of section 7 which provide that a registered person shall not be entitled to deduct input tax from output tax unless he holds a tax invoice. Secondly, the impugned finding of the Tribunal envisages an inquiry for ascertaining if a person is the recipient of a taxable supplies and fulfills the purpose of law for claiming deduction/adjustment/refund of input tax and again it would amount to reading too many things in the statute which are not there. Thirdly, the impugned finding of the Tribunal, has placed another burden on the Department whereby it is required to produce evidence in rebuttal of the evidence furnished by claimant and in the absence thereof to allow the deduction/adjustment/ refund on the basis of evidence other than the tax invoice and it is manifestly against the plain language of the statute. The Department has been saddled with an onerous duty which the Legislature has not cast on it. Fourthly, another important principle of the interpretation of law has escaped the notice of learned Members that, the things should be done as they are required to be done, or not at all.

When the law specifically provides that a claim for deduction etc. Of input tax shall not be allowed if the claimant does not hold a tax invoice, then no Court has jurisdiction to prescribe any other method. In short from whatever angle, we examine the issue, we are convinced without any scintilla of doubt in our mind that the impugned findings of the Tribunal are not in accordance with law. The question referred to us, is therefore, answered in the terms that the respondent was not entitled to claim the refund of sales tax on the basis of tax invoice which is not in accordance with the requirement of section 23 of the Sales Tax Act. The impugned judgment and finding of the Tribunal is not sustainable in law.

The appeal is allowed as above, with no order as to costs.

A copy of this judgment should be sent under the seal of the Court to the Customs, Excise and Sales Tax Tribunal, which shall pass such orders as are necessary to dispose of the case in conformity with this judgment as required under subsection (5) of section 47 of the Sales Tax Act, 1990. .