APPELLATE TRIBUNAL
INLAND REVENUE, SPECIAL BENCH,
ISLAMABAD
ITA No.226/IB/2014
(Tax Year
2011)
ITA No.227/IB/2014
(Tax Year
2012)
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M/s
Zia Steel Re-Rolling Mills; 1-10,
Islamabad. |
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Appellant |
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Vs |
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Commissioner
Inland Revenue, Enf-IX, LTU, Islamabad. |
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Respondent |
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Appellant
By |
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Mr. Zahid Hussain, ACMA |
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Respondent
By |
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Mr. Faheem Sikandar, DR |
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Date
of Hearing |
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09.09.2020 |
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Date
of Order |
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09.09.2020 |
O R D E R
M. M. AKRAM (Judicial Member): The titled appeals have been filed by the appellant/taxpayer
against the Order Nos.96&97/2014 dated 04.02.2014 passed by the learned
Commissioner Inland Revenue (Appeals-II), Islamabad for the Tax Years 2011 and
2012 on the same grounds as set forth in the memo of appeals. The facts of the
case are slightly different in both the appeals but the issue involved is the same
and identical, therefore, both the appeals are being decided through this
order.
2. Brief facts of the case are that these appeals have been filed
against the order passed under section 182(1) of the Income Tax Ordinance, 2001
(“the Ordinance”). The Assessing Officer observed that the appellant did not
e-filed its income tax returns for the years under consideration till
11.05.2012 and 03.02.2012 regarding which the appellant was confronted through
show cause notice which remained uncomplied with. Accordingly, penalties for
the said default amounting to Rs.15,43,928/- and Rs.398,291/- for the tax years
2011 and 2012 respectively were imposed by the Assessing Officer. The appellant
taxpayer being aggrieved, filed appeals before the learned CIR (A) who
confirmed the impugned penalties orders for the Tax Years 2011 and 2012 vide
Appeal Order Nos.96&97/2014 dated 04.02.2014. Felt aggrieved, the appellant
has now come up before this Tribunal and has assailed the impugned orders on a
number of grounds.
3. This case came up for hearing on 09.09.2020. Learned AR of
the appellant reiterated the contentions already submitted in the grounds of
appeals as set forth in the memo of appeal. However, for the tax year 2011, the
learned AR submits that in terms of SRO No.550(I)/2012 dated 23.05.2012 the
payment of tax was allowed to be paid by 31.05.2012, and in compliance with the
said SRO, the appellant filed its return well within such period. Thus, there
is no delay in filing of return. For the tax year 2012, the learned AR of the
appellant contends that the appellant applied for an extension in time for
filing the income tax return which was allowed up to 12.11.2012 by the
competent authority vide letter C.No.107 dated 02.11.2012. The appellant again
submitted an application for further extension in time before the competent
authority. However, before the rejection of the said application, the appellant
filed its return for the tax year 2012 on 03.12.2012. Further argued that
notwithstanding the aforesaid, the appellant before issuance of show cause
notice filed its returns along with admitted tax liability and as such, there
is no loss of revenue to the Government Exchequer. It has been stated that
there is no willful default on the part of the appellant which is a condition
precedent for levy of penalty. He, therefore, pleaded that the appeals be
accepted. Learned DR opposed the appeals on the ground that learned
Commissioner (Appeals) has passed a speaking order and there is no illegality
or lacuna in his orders.
4. We have heard both the parties to the
case and perused the available record. The submissions made by the learned AR
of the appellant have substance. Through SRO 550(I)/2012 dated 23.05.2012 the
Federal Government had allowed the Steel Melters to deposit the tax liability
by 31.05.2012 who had opted
to pay sales tax under the Sales Tax Special Procedure Rules, 2007 for the tax
year 2011. By availing the aforesaid benefit, the appellant paid the tax
liability and filed the return for the tax year 2011 on 11.05.2012 well within
the aforesaid date i.e 31.05.2012. It is pertinent to mention here that without
depositing the admitted tax liability, the appellant could not e-filed its
return. Thus, according to the said SRO there is no delay in filing the return
for the tax year 2011.
As far as the tax year 2012 is concerned, we have noticed
that the appellant admittedly paid the principal tax liability along with the
tax return and there is no dispute regarding the tax liability. The penalty is
imposed by the assessing officer only for the late filing of the return. The
case of the appellant for both the tax years is fully covered in the amnesty
given by the Federal Government through SRO 494(I)/2013 dated 10.06.2013 and therefore,
the appellant is entitled to get relief under the said notification by deleting
the penalty imposed by the assessing officer. The said notification is
reproduced hereunder:-
“S.R.O. 494(I)/2013, dated 10th June, 2013:- In exercise of the powers
conferred by section 34A of the Sales Tax Act, 1990, sub-section (4) of section
16 of the Federal Excise Act, 2005, section 202A of the Customs Act, 1969 (IV
of 1969) and section 183 of the Income Tax Ordinance, 2001 (XLIX of 2001), the
Federal Government is pleased to exempt the whole amount of default surcharge,
penalty and other surcharge payable by a person against whom an amount of sales
tax, federal excise duty, customs duty or income tax (including withholding
tax) is outstanding on account of any audit observation, audit report, show
cause notice, adjudication or assessment order, or who has failed to pay any
amount of sales tax, federal excise duty, customs duty and income tax
(including withholding tax) or claimed inadmissible input tax credit,
adjustment, refund, drawback or rebate due to any reason, subject to the
condition that the whole outstanding principal amount of sales tax, federal
excise duty, customs duty or income tax (including withholding tax), as the
case may be, is paid by the 30th June, 2013.
2. The benefit of this Notification shall not be
available to cases of fraudulent refunds, drawback, or any case involving tax
or duty fraud or where prosecution proceedings have been initiated.
-SD-
(Mohammad
Raza Baqir)
Additional Secretary”
The
question may arise that whether the appellant would be entitled to exemption
from the whole amount of default surcharge and penalty under the above SRO as
it had already paid the due tax before issuance of the said SRO? A similar
question came before the Hon’ble Division Bench of Lahore High Court in the
case titled Sheikh Wahid-ud-din Industries v. ACST (2006 PTD 336)
wherein the question was decided by their Lordships in favour of the taxpayer.
The relevant extract of the judgment is reproduced hereunder:-
5. After hearing the learned counsel for the parties we are not persuaded to agree that the amnesty S.R.O. No. 575(I)/98 dated 12-6-1998 is not applicable to the case of the present appellant. It needs to be noted that the amnesty contemplated in that S.R.O. as per paras 2 and 3 thereof was also available to cases of taxpayers pending in appeals. If the interpretation of that S.R.O. as made by the Revenue Authorities, as well as the Tribunal, is accepted then it is likely to create an anomalous situation. It is that whereas the persons who had already paid the amount due will be deprived of the amnesty while those who will pay that amount after the issuance of S.R.O. 575(I)/98 on 12-6-1998 will be spared of the additional tax and penalty. In other words, a person who had already paid the due tax to the public exchequer will be burdened with additional tax and penalty while the one who does so after issuance of that notification and having withheld the amount of the tax due from him in the meanwhile will be rewarded by allowing exemption from penalty and levy of additional tax. This could never be the intention of any superior or subordinate legislation. A person placed in a similar factual situation cannot be discriminated against merely for the reason that he has first to be a continuous defaulter on a particular date of grant of amnesty in order to avail the same. The appellant having paid the fixed tax before the issuance of the said S.R.O. but before the issuance of show-cause notice was clearly entitled to the benefit of the amnesty contemplated in the S.R.O. To hold otherwise would be a negation of justice fair equal protection of the law. (Emphasis supplied)
6. It needs to be brought home that the amnesty granting legislation both superior as well as subordinate needs to be construed liberally so that it does not either trap an unwary taxpayer or else otherwise succeeds in taking away with the other hand while giving it by the one. The petitioner having paid the fixed tax due from him is as much entitled to the amnesty contemplated in the said S.R.O. as any other registered person/ manufacturer who pays the fixed tax amount after issuance of the S.R.O. To hold otherwise would result in the situation as noted above.”
A
similar benefit was also given to the taxpayer in the case titled Yousaf
Sugar Mills Ltd Vs Government of Pakistan etc (2008 PTD 1461). The
Hon’ble Division Bench of the Islamabad High Court in the case titled Premier
Kadanwari Development Co. Vs STAT Islamabad (2013 PTD 1037) by
following the judgment of the Hon’ble Lahore High Court reported as 2006 PTD
336 has also deleted the penalty and default surcharge of the registered
person. Therefore, keeping in view of the aforesaid, the issue raised in this
appeals have already been decided by the Hon’ble High Courts, this Tribunal is
bound to follow the judgments supra. In the circumstances, these appeals are accepted
on the same terms as the law enunciated and articulated in the judgments cited
supra. Consequently, the orders passed by the lower authorities are annulled.
5. The appeals are disposed of in the manner as indicated above.
This order consists of (04) pages and each page bears my signature.
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Sd/- (M.M. AKRAM) JUDICIAL MEMBER |
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Sd/- (HABIB
ULLAH KHAN) ACCOUNTANT
MEMBER |
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CERTIFICATE U/S 5 OF THE LAW REPORT ACT
This case
is fit for reporting as it settles the principles highlighted above.
(M. M. AKRAM)
JUDICIAL MEMBER
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