Through this order, we intend to dispose of Customs Appeal No. 27 of 1999 filed u/S. 47 of the Sales Tax Act, 1990 against Order-in-Appeal No. 144 of 1998 passed by the learned Customs, Excise and Sales Tax Appellate Tribunal, Lahore Bench, Custom House, Lahore. Brief facts of the case are that the appellant Messrs Mahmood and Company, Badami Bagh, Lahore is engaged in the production of mild-steel products and was paying fixed monthly sales tax at the rate of Rs. 173,250/- per month in terms of S.R.O. 630(l)/95, dated 2.7.1995 read with the Fixed Amount of Sales Tax Rules, 1995 notified vide S.R.O. 639(l)/95, dated 2.7.1995. In the year 1997, records of the appellant- company were audited by the staff of Sales Tax Collectorate, Lahore and it was observed that some treasury challans presented for audit as a proof of payment of their monthly fixed amount of sales tax contain over-writing, manipulation and aIteration in the figures appearing on the original treasury challans. In pursuance of this observation, the officers of Sales Tax Collectorate approached the National Bank of Pakistan, Badami Bagh Branch, Lahore alongwith a list of challans to confirm actual amount paid in the bank. The Bank Manager vide letter No. ,BBL- ESTT/97/150, dated 8,4,1997 confirmed that 8 challans for the months of October, November, December of 1995 and February, March, April, May and June of 1996 were forged ahd manipulated and in these eight challans an amount of Rs. 73,250/- each challan was actually deposited, (totalling Rs. 5,86,000/-_ and these challans were forged to show by adding the figure of one thereby showing depqsit of Rs.
1,73,250/- in each challan, (totalling Rs. 13,86,000/-) thereby defrauding the public exchequer to the tune of Rs. 8,00,000/- . In addition to^ this discrepancy, the audit team alsoobserved that the appellant firm has also deprived the Government of Rs. 40,000/- by repeating TC No. 10, dated 5.11.1995 for Rs. 25,000/- in the monthly returns of October and November, 1994 and TC No. 18,' dated 15.1.1995 for Rs. 15,000/- again repeated in the monthly return of December, 1994 and January, 1995, so the team detected a total fraud of Rs. 840,000/- during the process of audit. Consequently, a show-cause notice was served upon the appellant-company by the Additional Collector-ll, Collectorate of Sales Tax, Custom House, Lahore and an F.I.R, was also lodged in the Court of Special Judge (Customs and Taxation), Lahore. Before the adjudicating authority appellant pleaded innocence on the ground that their Munshi had committed act of fraud without their knowledge. Subsequently, the Additional Collector passed Order-in-Original No. 29/97, dated 2.9.1997 whereby the appellant-company' was directed to deposit defrauded amount of sales tax at Rs. 840,000/- alongwith additional tax and surcharge which was to be calculated upto the date of its actual deposit as stipulated u/S. 34 of the Sales Tax Act, 1990. A penaIty of Rs. 880,000/- was also imposed on th'e appellant-company u/S. 33(2) of the Sales Tax Act, 1990. The appellant- company being aggrieved and dissatisfied with the Order-in-Original, filed an appeal before the learned Collector Appeals, Customs, Central Excise and Sales Tax, Custom House, Lahore who found no merit in the appeal and rejected the same by upholding the Order-in-Original passed by the Additional Collector. Thereafter, the appellant approached the learned Appellate Tribunal against the order of Collector Appeals. However, he failed to convince the learned Appellate Tribunal in his favour thus, his appeal was also rejected and the orders passed by the lower forums were upheld resuItantly, this appeal before us.
2. Learned counsel for the appellant-company has pleaded before us same submissions earlier made before the authorities below that the forgery was committed by the Munshi of appellant- company and as soon as the fraud was detected by the Sales Tax Officers, the appellant- company deposited the whole evaded amount of Rs. 840,000/- vide sales tax returns, dated 13.6.1997, 24.6.1997 and 26.6.1997. He further pleaded that penaIty amounting to Rs. 880,000/- was beyond the scope of Section 33(2) of the Sales Tax Act, 1990 hence, the same may be omitted.
3. On the other hand, the learned counsel for the department has vehemently opposed the arguments and stood firmly behind the department's stance on the basis of which impugned Order-in-Original and two Orders-in-Appeal were passed by the lower forums.
4. We have carefully examined the case records. The arguments put forth by the rival parties have been given due consideration, It is evident on record that the fraud of serious nature has been committed in this case by tampering and forging the amounts deposited irj National Bank of Pakistan on account of fixed monthly sales tax to give an impression that payable fixed tax has been paid whereas physical in each of the 8 challans, short payment amounting to Rs. 100,000/- was made, In this way a total of Rs. 840,000/- was pocketed by the management and the Government was deprived of its legitimate revenue. However, the appellant has deposited principal amount of defrauded sales tax amounting to Rs. 840,000/- in 3 instalments and now he has been praying for waiver of additional tax, surcharge and penaIty on the sole ground that the fraud was committed by their Munshi who had also committed same fraud in two other firms before joining their firm, In support of this contention, the only evidence is that the Munshi before the Investigating Officer of criminal case has confessed that the fraud was committed by him without the knowledge of proprietor of the appellant-company. We have observed that this case was detected during the course of audit of appellant company's records by the Sales Tax Officers who, on bare perusal of sales tax returns, noticed tampering and forging of the figures written by the Bank staff on the challans and this point is worth consideration why the proprietor of the appellant-company failed to notice this tampering and cutting which is not made on one sales tax return/.Challan but it has been made on eight-challans of the appellant-company. However, the plea with regard to innocence cannot be accepted as the law stipulated u/S. 68 of the Sales Tax Act, 1990 prescribes that where any person is expressly or impliedly authorized by a registered person to be an agent for all. Or any of the purposes of this Act, the registered person shall be responsible for the act done by his agent, hence, we hold that the appellant-company cannot be absolved of their responsibility stipulated by the law. Since this is a matter for forgery and manipulation in the tax records, the penaIty imposed u/S. 33(2) amounting to Rs. 840,000/- is not harsh and seems to be reasonable and fair enough. Imposition of additional tax in terms of Section 34 of the Sales Tax Act, 1990 is directory in nature, therefore, prayer for its waiver is not maintainable.
5. The Hon'ble Supreme Court of Pakistan in a latest judgment of a Customs case of fraud and forgery, reported vide 2005 PTD 165, has observed that:- "We have carefully examined the respective - contentions as agitated on behalf of appellant and for the respondents, scanned the entire record and perused the judgment impugned. Let we mention here at the outset that the provisions as contained in Sections 32 and 181 of the Customs Act, 1969 would not be applicable in this case which is a classic example of forgery and fraud committed by the appellant knowingly and deliberately for the evasion of customs duty, It must be noted that it is not a case of any partial misdeclaration or of carrying the excess quantity of dutiable goods but it is a case of fraud, forgery and tampering the documents i.e. Bill of Entry/Invoices, It is worth-mentioning that learned High Court in its appellate jurisdiction cannot transgress certain limits by giving relief which could not have been granted under the relevant provisions of Customs Act, 1969. In our view, option to make'payment of fine in lieu of confiscation would certainly encourage such-like fraud and unscrupulous ' entrepreneurs. The Customs Authorities have proved and established that the fraud practiced upon them was intentional and deliberate as fake and forged invoices were prepared and thus, by no stretch of imagination, such a forgery can bft equated with that of a "bona fide mistake" or "an inadvertent omission". We are conscious of the fact that "in the application of - laws which may culminate in the imposition of these enormous penaIties, the authorities in question should act with complete fairness and the utmost circumstances if there actions are not to have effects detrimental to the maintenance and development of trade and to the wider interests of the public and the country," (Eastern Rice Syndicate v. Central Board of Revenue, PLD 1959 SC (Pak.) 364) but it must not be lost sight of that such naked fraud must be checked with strictness so that such menace qua evasion of customs duties should be eliminated, It is not necessary that option must be given to the delinquents who are responsible for forgery and fraud to get such consignment released in lieu of confiscation as it would not be in consonance with the provisions as contained in Sections 32 and 181 of the Customs Act, 1969, as pressed time and again by Mr. Tariq Mahmood, learned Advocate Supreme Court on behalf of respondents, It transpired from the scrutiny of record that it was not a case of misdeclaration, simpliciter or, bona fide mistake but on the^contrary, it was a case of tampering, fraud, forgery,. Duplication/counterfeiting of relevant documents and therefore, the respondent was not entitled to get any relief jn view of this fraudulent conduct, It hardly needs any elaboration that Section 32 of the Customs Act, 1969 initially deals with the case where by reason of any inadvertence, error or misdeclaration, any duty or tax has not been leyied or has been short-levied orhas been erroneously refunded and cannot be" made applicable where some fraud has been committed knowingly, intentionally and deliberately."
6. With these findings, we are not convinced to interfere in the orders passed by the Additional Collector and upheld by Collector Appeals and learned Appellate Tribunal. /The appeal is- disposed of accordingly in the above terms.