M/s D-Watson Chemist. Vs Commissioner Inland Revenue, RTO, Rawalpindi.

 APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-I,
ISLAMABAD

STA No.549/IB/2021

M.A (Stay) STA Ext. No.176/IB/2022

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M/s D-Watson Chemist, Plot No.48-49, Chaklala Scheme III, Rawalpindi.		Appellant
	Vs
Commissioner Inland Revenue, RTO, Rawalpindi.		Respondent
Appellant By:		Mr. Adnan Aslam, ITP
Respondent By:		Mr. Niaz Ahmed, D.R
Date of Hearing:		22.02.2022
Date of Order:		22.02.2022

O R D E R

M. M. AKRAM (Judicial Member): The titled appeal along with the miscellaneous application for stay has been filed by the appellant/registered person against an Order No.76/2021-22 dated 09.11.2021 passed by the learned Commissioner Inland Revenue (Appeals-III), Rawalpindi on the grounds as set forth in the memo of appeal.

2.      Brief facts called out from the record are that the appellant had allegedly failed to integrate his all retail points of sale with the FBR’s computerized system for real-time reporting of sales in violation of section 2(43A), 3(9A) of the Sales Tax Act, 1990 (“the Act”) read with Rule 150ZEA of the Sales Tax Rules, 2006 which rendered 15% of claimed input tax amounting to Rs.1,696,739/- as inadmissible in terms of section 8B(6) of the Sales Tax Act, 1990. Therefore, show cause notice was issued and the proceedings so initiated culminated in the passing of the impugned order whereby input tax of Rs.1,696,739/- was held inadmissible. Being aggrieved, the respondent filed an appeal before the learned Commissioner Inland Revenue (Appeals-III) who decided the appeal of the registered person vide Order No.76/2021-22 dated 09.11.2021. Aggrieved with this order, the registered person has preferred an appeal before this forum and assailed the impugned order on a number of grounds.

3.      The case was heard on 22.02.2022. Learned AR reiterated the contentions already submitted in the grounds of appeal as set forth in the memo of appeal. On the other hand, learned DR opposed the appeal on the ground that learned Commissioner (Appeals) has passed a speaking order and there is no illegality or lacuna in his order. He, therefore, pleaded that the appeal be dismissed.

4.      We have heard the parties and perused the record. The issue involved in the instant case is that undisputedly the appellant had failed to integrate his all retail points of sale with the FBR’s computerized system for real-time reporting of sales in violation of section 2(43A), 3(9A) of the Sales Tax Act, 1990 (“the Act”) read with Rule 150ZEA of the Sales Tax Rules, 2006 which rendered 15% of claimed input tax amounting to Rs.1,696,739/- as inadmissible in terms of section 8B(6) of the Sales Tax Act, 1990. Similarly, the law also imposes a penalty under section 33(25A) of the Sales Tax Act, 1990 in violation of section 3(9A) of the Act. Now the following question arises from the record for determination: -

Whether the Legislature can impose two penalties on the same cause, one in the shape of disallowance of input tax under subsection (6) of section 8B of the Sales Tax Act, 1990 and the other by imposing penalty under section 33(25A) of the Sales Tax Act, 1990?

The relevant provisions of the Act are reproduced below for ease of reference: -   

8B. Adjustable input tax.– (1)…………..

(2)……………

(3)……………….

…………………………….

(6)     In case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by 15%.        

Section 33(25A)

Offences	Penalties	Section of the Act to which offence has reference
25A. A person required to integrate his business as stipulated under subsection (9A) of section 3, who fails to get himself registered under the Act, and if registered, fails to integrate in the manner as required under the law and rules made thereunder.	Such person shall be liable to pay: (i) penalty of five hundred thousand rupees for first default; (ii) penalty of one million rupees for second default after fifteen days of order for first default; (iii) penalty of two million rupees for third default after fifteen days of order for second default;  (iv) penalty of three million rupees for fourth default after fifteen days of order for third default:	Sub-section (9A) of section 3

 

The perusal of the above provisions of law clearly provides that a person who fails to integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by 15% under subsection (6) of section 8B of the Act. Simultaneously, the provision of section 33(25A) of the Act also imposes a penalty to the person required to integrate his business as stipulated under subsection (9A) of section 3, who fails to get himself registered under the Act, and if registered, fails to integrate in the manner as required under the law and rules made thereunder. It appears that both the above provisions are inserted in a clear violation of Article 13 of the Constitution of the Islamic Republic of Pakistan, 1973 which provides that a person cannot be penalized on the same offence twice. The relevant Article of the Constitution is reproduced hereunder: -

         “Article 13. No person—

(a) shall be prosecuted or punished for the same offence more than once; or

(b) …………………………….”    

In the instant case, the assessing officer had passed two orders, on the same date i.e 03.06.2021 one relate to the imposition of penalty under section 33(25A) ibid and the other concerning disallowance of input tax under the garb of subsection (6) of section 8B of the Act. Thus, the impugned order offends and defies the fundamental right set out in Article 13 of the Constitution which provides that no person shall be prosecuted or punished for the same offence more than once. The doctrine of double jeopardy corresponded to the principle of “autre fois acquit and autre fois convict” which prohibited a duplicate trial and a duplicate punishment for the same offence. The higher courts have always deprecated double jeopardy, particularly in fiscal matters. Reliance may be placed on the judgment titled M/s. Seven-up Bottling Company (Pvt.) Limited v. Lahore Development Authority (L.D.A) Lahore through Managing Director, (2003 CLC 513) wherein it is held that: -

"Provisions of a statute must be read as a whole--No tax or fee to be levied twice on same goods as per golden rule of interpretation of the fiscal statute”. 

5.      In view of the above, the orders passed by the lower authorities are annulled being void ab-initio. The appeal filed by the appellant is accepted. Accordingly, the stay application is also disposed of. 

6.      This order consists of (04) pages and each page bears my signature.

 

	Sd/-- Sd/- (M. M. AKRAM) JUDICIAL MEMBER
Sd/-  (MUHAMMAD IMTIAZ) ACCOUNTANT MEMBER