JUDGMENT NASIM SIKANDAR, J- Through this single judgment we intend to dispose of S.T.A. No. 18G of 2002, C.A. No. 191 of 2002, S.T.A.
No. 454/2002, C.A. No. 413 of 2002, S.T.A. No. 179 of 2002 and C.A. No. 190 of 2002.
2. The genesis of these cross appeals are traceable to the two amendments made in Section 3 of the Sales Tax Act, 1990 (for short "The Act') by way of Finance Acts, 1998 and 1999. Through the first amendment subsection (1-A) was inserted whereby a further tax at the rate of 1% of the value of the supply in addition to the rates specified in sub-section (1) of Section 3 was levied on taxable supplies made in Pakistan to a person other than a registered person. The second amendment made through Finance Act, 1999 enhanced the rate of further tax from 1% to 3%. Also the expressions "sub-section (1), clause (c) of sub-section (2) and sub-sections (4) and (5)" were substituted.
3. The charge levied through the first amendment was struck down by the Peshawar High Court while a Division Bench of the Lahore High Court maintained the same. On the challenge by a number of registered persons, on 19.5.2000 the Honourable Supreme Court of Pakistan in re: Tandlianwala Sugar Mills Limited and others v. Federation of Pakistan through Secretary, Ministry of Finance, Revenue and Economic Affairs, Islamabad and others (2001 PTD 2094) rejected the petitions assailing levy of further tax at the rate of 1% imposed by Finance Act, 1998. However, the levy of further tax at the rate of 3% through Finance Act, 1998, However, the levy of further tax at the rate of 3% through Finance Act, 1999 was maintained. The concluding para 5 of the order of the Honourable Court recorded in that case reads as under:-- "Faced with this situation the learned counsel for the . Petitioners did not address arguments on the questions raised in the petitions and took the stance that he would be satisfied if further tax at the rate of 1% levied by Finance Act, 1998 is set aside. The stance is understandable inasmuch as the first amendment being technically defective was struck down on the touchstone of the second amendment which does not suffer from any legal infirmity. Consequently, the petitions are converted into appeals and partly accepted to the extent of further tax at the rate of 1% levied by Finance Act, 1998 and dismissed in respect of further tax at the rate of 3% levied by Finance Act, 1999. No order as to costs."
4. It appears that after the decision of the Honourable Supreme Court the appellant in cross appeal S.T.A. No. 180 of 2002 Messrs Chishtia Sugar Mills Limited adjusted various amounts from their monthly sales tax returns earlier paid as further tax at a rate of 1% under the Finance Act, 1908. On this adjudication proceedings were started by-the Revenue. The adjudicating authority held that the said judgment of the Honourable -Supreme Court of Pakistan did not authorize the registered persons/appellants to adjust input tax and secondly that incidence of taxation having already passed to the consumers the registered persons/appellants were not entitled either to have an adjustment or to have a refund in view of the provisions of Section 3-B of the Act. Accordingly both appellants in the aforesaid cross appeals were found liable to pay further tax as well as penalties of various sums.
5. On challenge a Division Bench of the Customs, Federal Excise and Sales Tax Appellate Tribunal, Lahore (for short the Tribunal) by way of a consolidated order, dated 13,2.2002 partly agreed with the submissions made at the bar by the appellants/registered persons. The adjustment of amounts in question was found to be in violation of provisions of Section 7 of the Sales Tax Act and hence the same was declared to be unlawful. Also it was held that there was no justification for levy of additional tax or imposition of penalties on the registered persons/present-appellants, It was however, held that in view of the said judgment of the Honourable Supreme Court the appellants companies/taxpayers were entitled to refund the amounts under Section 66 of the Act as regard 1% further tax paid by them. The revenue was accordingly directed to process refund claims for which the limitation period of one year as prescribed under Section 66 of the Act was directed to be taken from the date of the order of the Tribunal.
6. After the judgment of the Honourable Supreme Court Messrs Brothers Sugar Mills Limited, appellant in cross appeals S.T.A. No. 454/2002 made an application for refund of the amounts paid at the rate of 1% as further tax after the amendment made in the law as noted above. The adjudicating authority rejected the claim on the ground that the amount of further tax having been collected from the buyers and the incidence having passed on to the consumers, no refund was admissible in terms of Section 3- B read with Section 66 of the Sales Tax Act, 1990.
7. On challenge a Division Bench of the Tribunal accepted the contention in the light of their judgment earlier recorded on 13.2.2002 in respect of other two appellants Messrs Tandianwala Sugar Mills Limited and Messrs Chishtia Sugar Mills Limited. However, the direction of the Tribunal for completion of refund claim on supply of necessary documents has grieved Messrs Brothers Sugar Mills Limited, appellant in cross appeal STA No. 454/2002 in which the Revenue has challenged the direction for payment of refund.
8. It further appears that after the said judgment of the Honourable Supreme. Court of Pakistan, dated 19.5.2000 in re: Tandianwala Sugar Mills Limited (supra) some of the registered persons approached various High Courts in Constitutional jurisdiction seeking a declaration that they were entitled to refund of further tax as supplies made to un-registered persons did not make them liable to pay that tax. The acceptance of these petitions obliged the revenue to approach the Honourable Supreme Court of Pakistan in Civil Appeals Nos. 629/2002, 1150/2002, 857/2003, 984/2004, Civil Petition No. 3733-L/2002 and Civil Appeals Nos. 1151-1153/2004, 965-988, 1000, 1262- 1269/2004. On 18.4.2006 the Honourable Court with the consent of the parties remitted the matter to the respective Collectors of Sales Tax with the observations made in para. 4 of the order which reads as under:-- "Thus for foregoing reasons and in View of the consent given by the respondents learned counsel C.P. No. 3733-L/2002 is converted into appeal and all the appeals are allowed impugned judgment in the listed appeals are set aside, cases are sent back to the relevant/concerned Collectors of Sales Tax for the purpose of disposal of the matter of the respondents after providing them opportunity of hearing. Needless, to observe that both the questions factual and legal shall be available to both the parties before the parties before the Collector and the judgments of the High Court, which are being set aside, will not influence the Collectors of Sales Tax in any manner and the decision shall be taken independently. The Collectors Sales Tax shall dispose of the matters expeditiously as far as possible within a period of eight weeks. Parties are left to bear their own costs."
9. Heard the learned counsel for the parties, In view of the aforesaid judgment of the Honourable Supreme Court whereby the pending issues between the parties in identical situation were remitted to the concerned Collectors there does not appear to be a serious opposition to the idea that a similar direction may be made in the appeals in hand. - The two impugned orders recorded by the learned counsel in the cross appeals are accordingly set aside and the cases - are remitted to the concerned Collectors of Sales Tax for disposal after providing the appellants/registered persons with an opportunity of hearing in terms of the judgment of the Honourable Supreme Court, It further needs to be observed that with the setting aside of the both orders of the Tribunal their- holding the appellants/registered persons to be entitled to refund under Section 66 of the Act shall also cease to exists. A fresh decision in that regard may be made by the revenue authorities keeping in view the relevant provisions of the Act including sub-sections (1) and (3) of Section 3-B and Section 66 of the Sales Tax Act, 1990.
10. The cross appeals stand disposed of with the above direction/observation.