CHIEF JUSTICE NASIR-UL-MULK.-(1). This appeal has been filed by Suhail Jute Mills Ltd., Nowshera, under section 47 of the Sales Tax Act, 1990 against the order in appeal dated 23.12.2003 passed by the Customs, Excise and Sales Tax Appellate Tribunal and the order in original dated 25.11.1999 passed by the Deputy Collector Sales Tax, Peshawar.
2. The basis of the above impugned orders is the show cause notice dated 2.11.1999 issued by the Deputy Collector of Sales Tax to the appellant to the following effect:- "It is reported to the undersigned by the audit team of Collectorate of Sales Tax, Peshawar that M/s. Suhail- Jute Mills, Nowshera adjusted inadmissible input tax amounting to Rs. 8,77,451/- as principal amount in respect of adjusting the input tax beyond the relevant tax period. Consequently, the said unit violated section 7 of the Sales Tax Act, 1990. Additional Tax in this regard amounts to Rs.
5,07,247 (upto 15.10.1999) as per Section 34 of the said Act."
The appellant was, therefore, ordered to pay the said amount or show cause within 10 days as to why it shall not be paid. The appellant submitted reply to the show cause notice. By the impugned order, the Adjudicating Officer held that the appellant had violated the provisions of section 7(1) of the Sales Tax Act, 1990 as amended by the Finance Act, 1998, by claiming input tax adjustment from 01.07.1998 to 15-10-1999 which claim could not be made under section 66 of the Act. The Adjudicating Officer, therefore, ordered the appellant to pay Rs. 8,77,451 /- on account of wrongful adjustment of input tax which was inadmissible to the appellant with additional tax under Section 34 and penalty of 5% under Section 33 of the Sales Tax Act.
2A. Meanwhile, the Central Board of Revenue issued SRO No. 1349(I)/99, dated 17.12.1999 granting 75% concessions in payment of additional tax and penalties imposed under Sections 33 and 34 of the Sales Tax Act if the principal amount was paid within a certain period. The SRO enumerated 14 registered persons who could avail the concessions. The appellant fell in category-VII relating to inadmissible input tax adjustment. It, therefore, availed the concessions under the SRO and deposited the principal amount of Rs. 8,77,451/-.
3. During the course of arguments before the Appellate Tribunal, it was found that though the appellant had deposited the principal amount but not 25% of the penalty and additional tax in accordance with SRO No. 1349(I)/99 within the time prescribed. The Tribunal, therefore, allowed further period of 10 days to the appellant to pay the said 25% of additional tax and penalty and disposed of the appeal in these terms by the impugned order.
4. The learned counsel appearing for the appellant submitted that availing concessions under SRO No. 1349(I)/99 does not bar the appellant from contesting liability. That the Tribunal has, therefore, erred in holding that the appellant could not press the appeal on merits and was to be confined to the provisions of SRO No. 1349(I)/99.
5. The learned counsel representing the Collector of Sales Tax (respondent) argued that having availed the concessions under SRO No. 1349(I)/99 and also made payment in consequence thereof, the appellant was estopped from arguing the case on merits either before this Court or before the Appellate Tribunal. He further pointed out that the appellant has also been given an extended period to fully comply with the requirements of SRO No. 1349(I)/99 by depositing the 25% penalty and additional tax.
6. Admittedly, the appellant had paid the principal amount of Rs. 8,77,451/- in accordance with the SRO No. 1349(I)/99. However, the 25% penalty and additional tax, as further condition for availing the concession under the said SRO, had not been paid. Though the appellant was given time by the Appellate Tribunal to deposit the penalty and additional tax so that the concession of SRO No. 1349(I)/99 is granted to the appellant, by filing the present appeal and also from the contention of the counsel for the appellant, it appears that the appellant wants adjudication of the case on merits. According to Para 2(ii) of the SRO No. 1349(I)/99, the concession was also to apply to:-- "cases in dispute or under audit or under adjudication and cases pending in appeal under Sections 45 and 46 of the Act. However, if the dues are held to be not payable in view of the adjudication order or the appellate order, the amount so paid in terms of this notification shall be refunded within fifteen days of the receipt of the adjudication order or appellate order, as the case may be."
From the above provision it is clear that availing the concession under the SRO would neither affect the adjudication proceedings nor any appeal filed from the order of the Adjudicating Officer and the same shall still have to be decided on merits. Should it be determined that the dues were not payable, the same are to be refunded. Availing concessions under the SRO No. 1349(I)/99, therefore, did not preclude the appellant from the pressing the appeal before the Tribunal on merits. The Tribunal, therefore, ought to have decided the appellant's case on merits. For these reasons, the appeal is allowed, the impugned order of the Appellate Tribunal is set aside and the case is remitted to the Tribunal for deciding the appeal on merits.