' MUHAMMAD JAHANDAR (JUDICIAL MEMBER).---This sales tax appeal has been filed by Messrs Aziz Brothers, Rawalpindi against an Order-in-Appeal passed by the learned Collector Sales Tax and Federal Excise, Rawalpindi dated 10-11-2008.
2. Brief facts are that Messrs Aziz Brothers allegedly made taxable supplies to one Messrs KCA Deutag Drilling Company without getting A themselves registered under Sales Tax Act, 1990 and without payment of sales tax leviable thereon. Messrs KCA Deutag Drilling Company, Islamabad was asked to provide information about the aforesaid supplier. As per information provided by Messrs KCA Deutag Drilling Company, Islamabad, Messrs Aziz Brothers had made taxable supplies worth Rs,11,045,974 during the period July, 2003 to June, 2006 whereon, Messrs Aziz Brothers were requested to provide details of supplies made during the said period but they failed to do so.
Eventually the liability of Rs,1,656,896 was communicated vide letter dated 9-10-2006, on the basis of available record but the unit did not reply. Thus Messrs Aziz Brothers were found to have violated section 3(1)(3) read with clauses (25) and (47) of section 2 ibid of the Sales Tax Act, 1990 and `defaulted in depositing sale tax amounting to Rs,1,656,896. Further, Messrs Aziz Brothers failed to get registration under Sales Tax Act, and thus violated section 14 read with Sales Tax Registration Rules, 2005 including the fact of non-filing of correct monthly sales tax retunes. Besides, Messrs Aziz Brothers failed to deposit the due sales tax in time and manner laid down in section 6(2) read with sections 7 and 8 of the Sales Tax Act, 1990.
3. Consequently, a show-cause notice dated 21-2-2008 was issued envisaging the aforesaid facts.
In reply, it was contended that the business under the name and style of Messrs Aziz Brothers was being run by one late Abdul Waheed predecessor in interest of the appellants who expired during the period under consideration and issuance of show-cause notice to an expired person was invalid and illegal, thus the contention of non-compliance of sections (1)(3), 2(25) read with Sales Tax Rules, 2005, section 25, 6(2) read with sections 7 and 8 sections 23, 3(1), 3(a), 6(2)(3), 7, 11, 14, 22(1), 23, 26, 34, 36(1) of Sales Tax Act, 1990 read with Sales Tax Registration Rules, 2005 is baseless and invalid due to the fact that all these provisions are applicable on the person duly registered under the Sales Tax Act and these provisions do not pertain to an unregistered person. Further, as per Part-V of S.R.O. 485(1)/2004 no proceedings of default can be initiated against legal heirs of expired person if it was not determined or created during the life time of the deceased.
4. Learned Additional Collector after hearing came to the conclusion that Messrs Aziz Brothers made taxable supplies to Messrs KCA Deutag Drilling Company amounting to Rs,11,045,974 but did not deposit the due sales tax amounting to Rs,1,656,896 for the period 2003-2006. As regards the contention of the appellant that the previous owner Mr. Abdul Waheed had expired and his son continued his business after his death, it was found that the liability of Messrs Aziz Brothers was not being demanded from an individual or from deceased person but from the business entity and as per section 49 of the Sales Tax Act, it was a transfer of ownership from father to son. Further, it was held that the evidence produced regarding supplies made by Messrs Aziz Brothers to Messrs KCA Deutag Drilling Company showed that the unit was liable to be registered under section 14 of the Sales Tax Act, 1990 thus the registered person had failed to deposit the sales tax amounting to Rs,1,656,896 which was recoverable along with default surcharge including penalty. He also directed to register Messrs 'Aziz amount of sales tax which they did not collect and which was never demanded earlier. It may kindly be noted that the case of sales tax relates to the period prior to the date of registration of the appellants.
(9) Treating unregistered person like registered person and imposing liabilities on him like registered is absolutely illegal, void ab initio. The deceased was never asked to issue return or charge and pay sales tax.
(10) The present appellants got themselves registered in November, 2006 after the demise of Abdul Waheed (Late) ex-proprietor of Messrs Aziz Brothers and since then they are regularly paying sales tax and abiding by the instruction issued by the Department from time to time.
6. Arguments have been heard. At the outset, learned D.R took an exception to the maintainability of the appeal by this Tribunal on the ground of limitation which issue has not been legally disposed of till to date. He contended that appeal was filed before the then Customs, Federal Excise and Sales. Tax Appellate Tribunal and despite pointing out that the appeal was late by 101 days, no order was passed. In reply, learned A.R pointed out that a Bench of the said Tribunal on 26-5-2009 directed the appeal to be registered which amounts to condonation of delay. Further, he pointed out that a copy of the order of the Collector dated 10-11-2008 was received on 18-4-2009 and the appeal was filed on 20-4-2009 which is thus within time. Learned A.R mentioned that the appellant came to know about the passing of the order of the Collector when a direction by the Deputy Collector (Regional Tax Office) was issued to the Branch Manager, Standard Chartered Bank, Rawalpindi to deduct an amount of Rs,1,656,896 along with penalty of Rs,82,846 from the account of Messrs Aziz Brothers, whereon the appellant made a request to the Collector (Appeals) on 14-4- 2009 for supply of copy of the order of the Collector (Appeals) filed by Messrs Aziz Brothers against order-in-original. Accordingly, a copy of the order was delivered to Messrs Aziz Brothers on 18-4- 2009 and the appeal was filed on 19-4-2009. Learned A.R produced a copy of letter dated 2-4- 2009 from the office of the Deputy Collector (E&C) to the Branch Manager, Standard Chartered Bank, Rawalpindi regarding recovery of amount from Messrs Aziz Brothers. As against this, department has failed to produce any record of the Collector (Appeals) to show the communication of the order passed in appeal filed by the Messrs Aziz Brothers before the Collector (Appeals). In these circumstances, it is found that the appeal is within time as the department has failed to prove earlier communication of the order-in-appeal.
7. So far as the liability of Messrs Aziz Brothers with regard to the payments of sales tax for the period July 2003 to June, 2006 is concerned, it seems that order-in-original in this regard envisaged that Messrs Aziz Brothers made taxable supplies to Messrs KCA Deutag Drilling Company amounting to Rs,11,045,974- but did not deposit the due sales tax amounting, to Rs,1,656,896 for the relevant period and the stance of the appellant that the previous owner i.e Mr. Abdul Waheed had expired and liability of sales tax could not be demanded from deceased person was held to be baseless. It was further found that the liability of Messrs Aziz Brothers is not being demanded from an individual or from deceased person but from the business entity and as per section 49 of the Sales Tax, Act, 1990, it was a transfer of ownership from father to son. On the basis of evidence produced by the department, it was found that the registered person was liable to be registered under section 14 of the Sales Tax Act, 1990 and Messrs Aziz Brothers had failed to deposit the due sales tax in time as laid down in section 6(2) of the Sales Tax Act, 1990. Besides, learned Additional Collector, while passing the order-in-original directed to register M/s. Aziz Brothers under section 14 of the Sales Tax Act, 1990 if not already registered.
8. Learned A.R firstly, raised an objection that the show-cause notice dated 2-2-2008 has been issued by an Assistant Collector who was not competent to proceed in the matter as per the then section 45 of the Sales Tax Act, 1990 (since repealed) and it was only the Deputy Collector who had the jurisdiction to adjudicate in the matter and as such proceedings culminating in Order-in- Original are without jurisdiction. In this regard, he referred to 2007 PTD 2265 High Court in the case of Inam Packages v. Appellate Tribunal Custom, Lahore and PLD 1975 Karachi 1029 (Jamal Hussain v. Deputy Collector Custom). Learned D.R while refuting this argument, contended that a perusal of order-in-original shows that it has been passed by Additional Collector on 19-5-2008 who was competent to pass such an order. He added that the mere fact that show-cause notice was issued by an Assistant Collector does not militate against or negate the powers of adjudication exercised in the case by the Additional Collector.
9. It seems that while passing the order-in-original the appellant was confronted on all the aspects of the case. Firstly, the taxable supplies made by their father and then on his demise, the very fact of inheriting the business of their father and continuation thereof by the appellant in the same name and style; secondly, the amount of sales tax which was not paid including a reference to the relevant provisions of the Sales Tax Act, 1990 which showed the liability of appellant to pay the tax along with the default surcharge thereon. The Additional Collector then entertained the reply and after evaluating the same passed the order-in-original. It seems that not, only the very requirement of adjudication by Additional Collector within the purview of the then section 45 was met but also the procedural modalities of justice were fulfilled. In view of this matter, the objection is without any force.
10. The next objection raised by the appellant before this Tribunal is that order-in-appeal was not passed within the stipulated period of 120 days under section 45(B) of the Sales Tax Act, 1990. It seems that the appeal before Collector was filed on 7-7-2008 and judgment was announced on 7- 8-2008. Further it shows another date i,e, 10-11-2008 with number of letter at the top which seems to be the date of issuance of the order. Therefore, so far as the passing of the order within 120 days is concerned, the requirement has been met.
11. The other ground taken in appeal pertains to the default of the predecessor in interest of Abdul Waheed, father of the appellant. In this regard, it is useful to reproduce sections 49 and 53 of the Sales Tax Act, 1990 which are as under:--
49. (1) In case of termination of taxable activity or part thereof or its sale or transfer ,of ownership to a non-registered person, the possession of taxable goods or part thereof by the registered person shall be deemed to be a taxable supply and the registered person shall be required to account for and pay the tax on the taxable goods held by him: ' Provided that if the tax payable by such registered person remains unpaid, the amount of unpaid tax shall be the first charge on the assets of the business and shall be payable by the transferee of business.
(2) In the case of sale or transfer of ownership of a taxable activity or part thereof to another registered person as an ongoing concern, sales tax chargeable on taxable goods or part thereof shall be accounted for and paid by the registered person to whom such sale is made or ownership is transferred.
53. The tax liability of a deceased registered person under the Act shall be the first charge on his estate in the hands of his successors.
Given this situation, there is no dispute as to the inheritance of the business of late Mr. Abdul Waheed, in the name and style of Messrs Aziz Brothers by the appellant, therefore, the liability to pay sales tax by them cannot be disputed. Equally, there is hardly any need to highlight the fact of predecessor in-interest of appellant being liable to be registered under section 14 of the Sales Tax Act, 1990 on account of having made taxable supplies. In these circumstances, Messrs Aziz Brothers appear to have failed to deposit the due sales tax. Accordingly, the sales tax amounting to Rs,1,656,896 along with default surcharge and penalty during the relevant period, as computed in the order-in-original is recoverable.
11. Thus there is no force in the appeal which in result is rejected.