APPELATE TRIBUNAL INLAND REVENUE,
LAHORE BENCH, LAHORE
STA No.633/LB/2020
M/s Ashraf Sugar
Mills Limited, Lahore. …Appellant
Versus
Appellant by: Mr.Waseem Ahmed Malik, Adv.
Respondent by: Mr. Ali Noor, DR
Date of hearing 21.04.2021 Date of order: 21-04-2021
O R
D E R
M. M. AKRAM (Judicial Member): The titled appeal has been preferred by the appellant registered person, is directed against an order No.11 dated 03.06.2020, passed by learned CIR(A), Lahore, on the grounds as set forth in the grounds of appeal.
2. Brief facts for disposal of present appeal are that the registered person is a manufacturer of white crystalline sugar which was chargeable to sales tax @ 8% on value of supply vide Serial No.32 of Table-I of the Eight Schedule to the Sales Tax Act, 1990 (“the Act”). During the course of analysis of monthly sales tax cum-federal excise returns, it was observed by the assessing officer that during the tax periods July 2016 to June 2018, the registered person made sales to un-registered persons having value of Rs.43,852,780/- but failed to pay further tax amounting to Rs.877,057/- which was required to be paid @ 2% in terms of sub-section (1A) of Section 3 of the Act. On the basis of this discrepancy, the registered person was called upon to show cause as to why further tax amounting to Rs.877,057/- may not be recovered along with default surcharge and penalty. Adjudication proceedings were culminating in passing the impugned order-in-original No.37/2019 dated 06.09.2019, whereby the said amount of further tax at Rs.877,057/- was ordered to be recovered along with default surcharge(to be calculated at the time of payment) and penalty of Rs.43,853/-.
3. Being aggrieved, the registered person filed appeal before the learned CIR(A) which was disposed of vide impugned order whereby the learned CIR(A) upheld the action of the assessing officer. Felt aggrieved, the registered persons filed instant second appeal before this Tribunal and assailed the impugned appellate order on a number of grounds.
4. This case came up for hearing on 21.04.2021. We have heard the arguments of both sides and have perused the available record. The learned AR for the appellant submitted that there was no justification for the learned CIR(A) to uphold the assessment order passed by the assessing officer which was barred by time limitation as provided under section 11(5) of the Act. In this behalf, he submitted that show cause notice was issued on 10.05.2019 and the date of judgment shown on the assessment order is 11.09.2019, hence, the impugned order was passed after 124 days after issuance of show cause notice whereas the same was required to be passed within 120 days as provided under the law. In support of his arguments, the learned AR relied upon the judgment reported as 2019 PTD 1961. It is further submitted by the learned AR that there was no justification to charge further tax in terms of section 3(1A) of the Act. He contended that further tax is required to be paid on supplies made to those unregistered persons who were liable to be registered but not registered whereas, the registered person made supplies of sugar to those unregistered person who were ‘end consumers’ and were not liable to be registered. He submitted that the authorities below have failed to appreciate the provisions of sub-section (1A) of Section 3 of the Act and the notification SRO 648(I)/2013 dated 09.07.2013. In support he relied upon PTCL 2014 CL 659 and 2018 PTD 1600.
5. Conversely, the learned DR supported the orders of the authorities below and contended that the further tax has rightly been charged as the supply of sugar in the present case was not made to end consumers rather to Provincial Government i.e DCOs, Lahore, Rahim Yar Khan and Gujranwala who were not end consumers.
6. We have heard the arguments, perused the
available record and carefully gone through the case law relied upon by the
learned AR for the appellant. The case of the appellant is that it has made
supplies of sugar to the unregistered person but it has not paid further tax
under section 3(1A) of the Act on these taxable supplies. The contention of the
appellant that the original order passed by the Assessing Officer is hit by
limitation prescribed in proviso to sub-section (5) of section 11 of the Act is
misconceived and not tenable. The record shows that the show cause notice was
issued on 10.05.2019 and the
Order-in-Original was passed on 06.09.2019
well within the prescribed time of 120 days from the date of issuance of show
cause notice. The learned AR has computed the limitation from the date of
issuance of Order-in-Original i.e 11.09.2019 which is contrary to the proviso
to sub-section (5) of section 11 of the Act which read as under:-
“Provided that order under this section shall be made within one hundred and twenty days of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded in writing, fix provided that such extended period shall in no case exceed ninety days:”
The above proviso inter alia clearly provides that the order has to be made/passed within 120 days from the date of issuance of show cause notice and not the order has to be issued within 120 days. Had it been the intention of the legislature then the word “issued” would have been used instead of the word “made” in the said proviso. The judgment relied upon by the learned AR reported as 2019 PTD 1961 also does not support the contention of the appellant. In this judgment, the Hon’ble Supreme Court has held that “it is mandatory that the decision comes within 180 days after the date of show cause notice.” In the aforesaid judgment the Hon’ble Supreme Court has followed its earlier judgment titled as Collector of Sales Tax Vs Super Asia Mohammad Din and Sons, (2017 SCMR 1427 at paragraph 11). Thus, the contention of the appellant on this score is rejected.
7. As far as the other contention of the
learned AR, admittedly the appellant supplied the sugar to the Government of
Punjab i.e DCOs, Lahore, Rahim Yar Khan and Gujranwala for further supply to
Ramazan Bazaars. Thus the appellant has not supplied the sugar bags directly to
the end consumer. To substantiate his contention, the learned AR has placed on
record the judgments titled as M/s Zia Brothers Vs Federation of
Pakistan etc, (PTCL 2014 CL 659) and M/s Al-Zarina Glass Industries
Vs Federation of Pakistan etc, (2018 PTD 1600). Both the judgments
are distinguishable and not relevant to the facts of the case. In former case,
the petitioner was engaged in manufacturing of flour and supply thereof.
Admittedly, the supply of flour was exempted under section 13 read with Item
No.19 of the Sixth Schedule to the Act. In the said judgment it was held that
section 3(1A) of the Act has no applicability to the case of the petitioner who
enjoy exemption under the Act and not making any taxable supplies in terms of
section 2(41) of the Act. Thus, was not required to be registered under the
Act. In the latter case, the petitioner was engaged in manufacturing of glass
bangles, the product of glass bangles was exempted from payment of tax under
section 13 read with Item No.29C of the Sixth Schedule to the Act. Thus, the
petitioner was not required to be registered under the Act. In the said case it
was held that being an exempt supplies, the appellant cannot be charged further
tax under section 3(1A) and extra tax under the Act. Whereas in the instant
case, the recipient of the appellant i.e Government of Punjab is further making
taxable supplies of sugar to the end consumer in Ramzan Bazaars. The expression
“Provincial Government” falls in the definition of a “Person” prescribed in
section 2(21) of the Act and none of the provisions of the Act give any
exception/right to the Provincial Government not to register under the Act.
Thus, the appellant was required to charge further tax under sub-section (1A)
of section 3 ibid while supplying the taxable goods to Government of Punjab i.e
DCOs, Lahore, Rahim Yar Khan and Gujranwala. Hence, the contention of the
appellant is ill founded.
8. The learned AR for the appellant has
further contended that the case of the appellant also squarely falls in Sr.No.5
of SRO.648(I)/2013 dated 09.07.2013 which read as under:-
“S.No.5. Supply of goods directly to the end consumers including food and beverages, fertilizers and vehicles.”
As
stated above, the appellant admittedly supplied the sugar to Government of
Punjab i.e DCOs, Lahore, Rahim Yar Khan and Gujranwala for further supply to Ramzan
Bazaars. Thus the appellant has not supplied the sugar bags directly to the end
consumer. Therefore, the case of the appellant does not fall in the above S.No.
Further, we have noted that through SRO.692(I)/2019 dated 29th June,
2019 the S.No.12 has been added in SRO.648(I)/2013 by virtue of which further
tax under section 3(1A) shall not be charged if the supplies are made to
Government, semi-government and statutory regulatory bodies. This subsequent inclusion of S.No.12 by
positive act of the Federal Government is a conclusive proof of
the fact that the same were excluded in the earlier SRO.648(I)/2013.
However, the said Sr No would apply w.e.f 1st July, 2019
onwards. The case of the appellant
relates to the prior tax periods. The said S. No is reproduced hereunder:-
“S.No.12. Supplies
made to Government, semi-government and statutory regulatory bodies.”
It is settled law that amendments are made in the statute to bring a change in the law. Reliance may be placed on the judgment of the Hon’ble Supreme Court of Pakistan titled as Commissioner of Income Tax/wealth Tax Companies Zone-II, Lahore Vs M/s Lahore Cantt Cooperative Housing Society, Lahore and 7 others, (2009 PTD 799). In the said judgment it was held by the Hon’ble Supreme Court that the societies are not covered by the definition of the Company as provided in section 2(16)(b) of the repealed Income Tax Ordinance, 1979. While enacting Income Tax Ordinance of 2001, such Cooperative Societies were included in the definition of Company. This subsequent inclusion of Cooperative Societies by positive act of legislation is a conclusive proof of the fact that the same were excluded in the earlier enactment. Therefore, for the forgoing reasons, this contention of the appellant is also rejected.
9. For what has been discussed above, the orders passed by the lower authorities are maintained. Resultantly, the appeal of the appellant is rejected being devoid of merit.
-SD-
(M. M. AKRAM)
-SD- Judicial Member
(DR. MUHAMMAD NAEEM)
Accountant Member
No comments:
Post a Comment