1. ' KHILJI ARIF HUSSAIN, J.---Aggrieved by the order of the Customs, Central Excise and Sales Tax, Appellate Tribunal, Harachi in Appeal No,K-191/02/6605 dated 13-1-2004, the appellant preferred this appeal under section 47 of the Sales Tax Act, 1990 and raised following questions of law for the opinion of this Court:- "(i) Whether on the facts and circumstances of the case the learned Customs Central Excise and Sales Tax Appellate Tribunal was justified in holding that the appellant was not entitled to make adjustment of Sales Tax paid on goods, which were exempted from Sales Tax before being sold by issuing the Debit and Credit Notes under section 9 of the Sales Tax Act, 1990?
(ii) Whether on the facts and circumstances of the case the learned Customs, Central Excise and Sales Tax Appellate Tribunal was justified to hold that the claim of the appellant on the basis of debit and credit notes issued under section 9 of the Sales Tax Act, 1990 does not fall within any of the conditions specified in the section?
(iii) Whether on the facts and circumstances of the case the learned Customs, Central Excise and Sales Tax Appellate Tribunal was justified to hold that the appellant was not entitled to retrieve the sales tax paid on unsold stocks through debit and credit notes?
(iv) Whether on the facts and circumstances of the case the learned Customs, Central Excise and Sales Tax Appellate Tribunal was justified in not giving any finding on the levy of additional tax and penalty levied by the respondent No,1, thus acquiescing with the levy of additional tax and penalty levied made by the respondent No,1?"
2. ' The appeal was listed for Katcha Peshi. However, the learned Advocate for the respondent was present therefore with the consent of the parties the case has been heard finally at Katcha Peshi stage.
3. ' Brief facts for the purpose of deciding the appeal are that the appellant-Company is engaged in manufacture and sale of pharmaceutical product and is also a commercial importer of diagnostic kits, chemicals etc. The "drugs" were exempted from Sales Tax under S.R.O. 1199(1)/96, dated October 22, 1996. The appellant claimed input tax on stocks available at the time of exemption granted and adjustment under section 9 of the Sales Tax Act, 1990 for Credit Notes issued in October, 1996 on account of goods, which were delivered to dealers after charging sales tax, but remained unsold till the drugs were exempted from sales tax.
4. ' The appellant sold Pharmaceutical stocks on credit basis to agencies. Pharmaceutical stocks were duly delivered and received by the said agencies on credit basis and in the credit notes issued in favour of the agency, appellant also included amount of sales tax at the rate of 5 per cent as per law. Before the said stocks could be disposed/sold of by the dealer, the drugs were exempted from payment of Sales Tax by S.R.O. 1199(I)/1996 dated 22-10-1996. The appellant issued fresh debit notes to the Agency to whom he sold the drugs on credit basis and thereafter claimed adjustment of the said amount.
5. ' On having information about the adjustment of sales tax on credit notes a show-cause notice was served on the appellant stating legally it was not covered under section 9 of the Act which provides for input adjustment on return of supplies. The appellant was called upon to pay the wrongly adjusted input tax which they wanted to be adjusted against sales tax dues. The Assistant Collector Sales Tax (East) Karachi passed Order-in-Original No,54 of 1999, dated 5-4-1999 and disallowed claim in respect of available stocks as well as adjustment of Sales Tax on Credit notes.
6. The appellant in the meantime availed the facility for nonpayment of additional tax and penalty and paid Rs,70,90,646 as principal amount.
7. ' Aggrieved by the order-in-original, the appellant filed an appeal before the Collector (Appeals) which was dismissed on 25-9-1999. The appellant filed appeal before Excise and Sales Tax Tribunal who by its order dated 24-10-2000 remanded the case to Collector (Adjudication) for de novo hearing. After hearing the parties and taking into consideration submission of Messrs A.F. Ferguson & Co. Departments parawise comments and inspection of record, appeal was rejected on both the issues viz. Adjustment of Sales Tax on available stocks and on credit notes vide order dated 30-3- 2002, and order to recover the amount unlawfully adjusted along with additional tax, and penalty equivalent to 30% of amount unlawfully adjusted was upheld. The appellant filed appeal against said order before Customs, Central Excise and Sales Tax Tribunal, which was allowed to the extent of claim of input tax in respect of raw material available in stock on 21-10-1996 and contention of appellant for adjustment of tax on credit notes was not accepted.
8. ' We have heard Mr. Muhammad Athar Saeed, learned counsel for the appellant and Mr. Raja Muhammad Iqbal, learned counsel for the respondent.
9. ' Learned Advocate for the appellant argued that the learned Tribunal as well as learned Collector of Sales Tax committed error of law in not accepting and allowing claim against credit notes under section 9 of the Sales Tax Act, 1990 aggregating to Rs,4,527,192. Learned counsel for the appellant argued that claim was made against the credit notes issued to the distributors on account of Sales Tax in respect of drugs which remained unsold till they were exempted from the sales tax under S.R.O. 1199(1)/96 dated 22-10-1996 and there was no need of physical return of goods to entitle the appellant for claiming adjustment of the Sales Tax paid as debit and credit notes entry by itself is sufficient compliance of the Rules and the respondent ought to have given effect to it.
10. ' We have taken into consideration arguments advanced by the learned Advocate and also gone through the record. Section 9 of the Sales Tax Act, 1990 reads as under:- "9. Debit and credit note.---Where a registered person has issued a tax invoice in respect of a supply made by him and as a result of cancellation of supply or return of goods or a change in the nature of supply or change in the value of the supply or some such event the amount shown in the tax invoice or the return needs to be modified, the registered person may, subject to such conditions and limitations as the Board may impose, issue a debit or credit note and make corresponding adjustment against output tax in the return."
11. The appellant has admitted that the goods were not physically returned to the appellant- Company by the distributor whereas only documentation has been done to avail benefit on account of withdrawal of sales tax. The benefit under section 9 of the Sales Tax Act can be availed only on satisfaction of the conditions mentioned in the said section. The adjustment under section 9 can be availed in case of cancellation of supply or return of goods or a change in nature of supply or change in the value of supply, necessitating change in the amount shown in tax invoice or return. In the instant case goods were not returned and merely issuance of debit and credit notes cannot be termed as compliance of the requirement of section 9 of the Sales Tax Act so as to entitle the appellant to its benefit. From a bare perusal of section 9 one can see that the return of goods is a condition precedent for the issuance of such notes and in the present case goods were never physically returned to the appellant. The question that the dealer had not passed on the tax to the consumers is not relevant for the purpose of claiming adjustment. Debit and Credit Notes and Distribution of Goods Rules, 1996 relates only to the return of non-consumable products specifically specified therein and not to all types of return of goods.
12. ' Normally payment and delivery of goods are concurrent condition but parties may contract otherwise. It often happens that parties agree that the buyer is to take possession of the goods before paying for them on credit, the titled and right of possession, passes to buyer in accepting the delivery of goods irrespective of fact that the price has not yet been paid, and after transfer of title to buyer, the goods are at the buyer risk.
13. ' For the aforesaid reasons the questions Nos.(i), (ii) & (iii) are answered in affirmative, whereas question No,(iv) does not arise out of the order of Customs, Central Excise and Sales Tax Appellate Tribunal and accordingly same is not required to be answered.
14. Answer declined.