KHAWAJA FAROOQ SAEED, CHAIRPERSON.-(1). Appeal has been filed by the taxpayer against the order of the Collector (Appeals) dated 08.06.2007.
2. Brief facts leading to this appeal are that the taxpayer claimed input tax adjustment on the basis of its purchase invoices. The Revenue Department allowed the adjustment but subsequently on an audit made by DRRA a show cause notice was issued on 17.05.2006 through which the taxpayer was confronted with thirteen purchase invoices objecting that the registration number was not obtaining on the same. Consequently, demand including default surcharge and penalty was created.
3. The assessee filed appeal against the Order-in-Original wherein it was pointed out that the invoices were in respect of the taxpayer which were supported by other information on the same.
Further the respective suppliers on pointing out by this assessee added the registration number of this taxpayer on photo copies of the said invoices and stamped the same confirming that the same pertain to the present taxpayer. The first appellate authority accepted the same for the obvious reason that the purpose of the requirement of section 7 was to determine the legality of the claim of the input tax. Even otherwise the required registration number having been duly affixed at a later stage there was no reason for not accepting the same. However, he allowed only twelve of the said invoices while rejected one by raising another objection which as per assessee was not subject matter at the the of issuance of the show cause notice or passing the Order-in-Original.
4. The objection now raised is that the machinery which was statedly purchased through the invoice under discussion reached the premises of this assessee in-directly. It was received by Haseeb Waqas Engineering Ltd. First and later passed on to this company.
5. The Learned counsel while challenging the treatment has come out with the following arguments:-
(i) That the proceedings initiated and concluded on the basis of the information of DRRA is illegal.
DRRA does not figure anywhere in the Sales Tax hierarchy; hence Audit done by said Organization and information obtained from their audit could not lawfully be made the base of any addition. In this regard reliance of the taxpayer is on various judgments passed by the Hon'able Supreme Court of Pakistan, High Courts as well as Customs, Excise and Sales Tax Tribunal mentioned below:- 1987 SCUR 1840 PTCL 2010 CL. 393 2008 PTD (Trib.) 261
(ii) That it is not the case of the department that requirements of any of the provision of law with special reference to sections 7 and 73 have not been fulfilled. Now after due verification of the same by the seller and mentioning the registration numbers on the invoices there is no question of disallowance of this amount.
(iii) That the show cause notice and adjudication being on an issue which has subsequently been considered as in-valid by the first appellate court there is no reason to disrespect the invoice concerned now.
(iv) That the argument of the Collector (Appeals) added at appeal stage for rejection of the invoice not being a subject matter of the show cause notice or the Order-in-Original could not be used against the taxpayer. Reliance is on 1997 SCMR 1840.
6. The respondent's case, on the other hand, is that Haseeb Waqas (Pvt.) Ltd. May be a sister concern but the machinery having not come to the books of this taxpayer and the payment having not been made by the present taxpayer the same has rightly been dismissed. He brought the attention of the court to the last para of the order of Collector (Appeals) wherein he has given the following findings:-- "In view of the above discussion and reconciliation report dated 17.6.2007, 1 find that the appellants failed to prove their stand to the extent of invoice No. 95 dated 25.4.2005 issued by M/s. Micas Associates, Karachi involving sales tax amounting to Rs. 2,92,500/- as the purchase of steam turbine of 2500 KW could not be proved through inventory record/concrete evidentiary record whereas the inward gate pass No. 7970 dated 3.4.2005 submitted in this regard showed that steam turbine complete with all accessories of 2000 kw was supplied by M/s. Haseeb Waqas Mills to the appellants instead of M/s. MICASS Associates, Karachi, thus input tax was rightly rejected in the impugned Order-in-Original in view of above position, the impugned Order-in- Original is modified to the above extent only and appeal is disposed of in the above terms."
7. Record perused. Both have been heard. The case of the department stands on the audit conducted by DRRA, a body which have no existence so far as the Sales Tax law is concerned.
Obviously. DRRA had no authority to check the private record of a taxpayer as it is beyond its scope and jurisdiction. In any case, even if one considers that the information which came to the notice as a result of the audit, makes the invoice doubtful, the assessee at of getting its confirmation by fulfilling the requirements of law dislodges the situation in totality. Further this court would not hesitate in holding that at the the of issuance of show cause notice no other discrepancy was found by the department except non- mentioning of the registration number which has subsequently been added. There was, therefore, no reason to find out any new fault and that also by the Collector (Appeals). In fact, Collector (Appeals) while dealing with an appeal filed by the taxpayer had no jurisdiction to discover any new defect in the proceedings. He has neither any revisional authority nor any other issue was before him for discussion. He was dealing with the appeal of the taxpayer in which the only issue to be adjudicated by him was whether non- mentioning of the registration number on the invoices was fatal and whether subsequent printing of the same on the said invoices cure the lacunae or not. The Collector (Appeals) by accepting twelve other invoices had made him functous officio in the case of the present taxpayer. He has impliedly held that the lacunae in invoice was curable. He should have ended the matter there and then.
8. The argument of the Learned DR that the payment has not been passed on by this taxpayer to the said supplier is also of no help at this stage as this was never an issue at subordinate stage.
9. The up-shot, therefore, is obvious. The Collector (Appeals) have come to the conclusion that the invoices have been validated after certification by the concerned suppliers. There is no other discrepancy in the impugned invoice either. The same, therefore, should also have been placed at par with the other twelve invoices. The action, therefore, is dis-approved and the orders of the to officers below to the said extent are also directed to be made at par with other twelve invoices.
10. The appeal is allowed and is accordingly disposed of.