1. Through this appeal, the appellant has objected to the Order-in-Appeal No,565 of 2008 dated 18- 4-2008 passed by the learned Collector, Collectorate of Customs, Sales Tax and Federal Excise (Appeals). Faisalabad on the following grounds:--
(i) The alleged supplier namely Messrs Anwar Corporation, Faisalabad bearing Sales Tax Registration No,08-80-5205-087- 46 is registered since 18th October, 2000 under the Sales Tax Act, 1990 as a wholesaler which also includes "Commission Agent" and has been carrying out his mandated business within framework of law. The alleged supplier is engaged in making of taxable supplies of yarn of different registered spinning units on prices fixed by them and receives only commission thereon. Accordingly his status as commission agent for the period in question can be verified from income tax authorities as well.
(ii) The alleged supplier has duly incorporated sales and purchases of alleged yarn in his sales register and sales tax return for the period in question and accordingly discharged his sales tax liabilities on the money consideration received in respect of such supplies.
(iii) Payments including amount of sales tax against the alleged goods have also been transacted through banking channel as required under section 73 of the Act.
(iv) Sales/purchases of yarn and its corresponding output tax/input tax have duly been incorporated in monthly sales tax returns without making any further payment of tax as no value addition thereon was made by alleged supplier. The goods in question was being purchased and supplied on the same value as fixed by the spinning units from whom he receives "commission and brokerage charges only" against his services for sales of yarn manufactured by them. Since, commission income was not subjected to sales tax and all other legal obligations whatsoever were also duly complied with by the alleged supplier therefore, it is very strange that what sort of scrutiny of his record is required and why his name has been put in the list of units showing abnormal tax profile as both of terms i,e, scrutiny for verification of input tax and abnormal tax profile has not been qualified and quantified in the sales tax laws.
(v) The computer profile of the alleged supplier has also been currently showing his status as "operative" and also indicates that sales and purchases for the period in question were duly declared in monthly sales tax returns.
(vi) Even otherwise, no action whatsoever warranted in this regard has been taken under law against the alleged supplier despite expiry of many years but bona fide and legitimate refund of the appellants has been rejected on the charge that scrutiny for verification of input tax of the alleged supplier is required and too his name has been placed in the list of units showing abnormal tax profile without any lawful authority and legal ' excuse.
(vii) Nevertheless, refund of appellants never exceeds output tax declared by the alleged supplier in his monthly sales tax return and sales register for period in question and rejection of refund on this account is not only illegal but also highly unjustified (Copy of sales tax return and supply register for period in question will be provided during the course of hearing if required by this Hon'ble Court).
(viii) Neither any charge of fake transactions nor of tax fraud either on the part of supplier or appellants has been leveled in show-cause notice without which refund of input tax paid by appellants cannot be rejected.
(ix) The legal obligations under sections 7, 22, 23, 26 and 73 resting upon the appellants has duly been fulfilled by the appellants who cannot be confronted with rejection of sales tax refund merely due any default whatsoever on the part of their supplier. Even otherwise, no action for any default whatsoever on the part of their supplier has so far been taken against the persons in default however, rejection of appellants' refund claim for period in question, which is an easy job, has been ordered keeping aside all the legal aspects of the instant case.
(x) No contravention of sales tax laws or notification issued thereunder or any other specific instruction issued by Central Board of Revenue on subject-matter is alleged in show-cause notice and impugned orders is passed merely on assumptions and presumptions which is not warranted under law as laid down by Hon'ble Sindh High Court, Karachi in a judgment reported as 2004 PTD
868. "The sales tax imposed on the basis of some assumption and presumption not warranted in law shall always be struck down" thus, rejection of refund on this ground is unlawful and illegal in eye of law.
(xi) The objection of "Abnormal tax profile and scrutiny for verification of input tax" is generated by the STARR having no legal backing by the Sales Tax Statute. No legislative enactment or even any written directive from the Federal Board of Revenue for rejection of sales tax refund on such objection is made on the subject matter without which all proceedings taken by the department in this regard are void, ultra vires, illegal and unlawful. Reliance is placed on the judgment of this Hon'ble Court in case of Messrs Niagara Mill's (Pvt.) Ltd., Faisalabad versus the Collector of Sales Tax and another as reported at [VOL 1 1 No,08 TAX FORUM 45] wherein it has been laid down: "The information so down loaded from the STARR cannot be held as reliable information and after obtaining such information the department was duty bound to establish through independent evidence".
(xii) Since, term "Abnormal tax profile and scrutiny for verification of input tax" is nowhere quantified and qualified or even defined in the Sales Tax Act, 1990 therefore, rejection of refund on this ground is beyond scope of sales tax laws. The Hon'ble Lahore High Court, Lahore has laid down in case of Messrs Avari Hotel Ltd. v. The Collector of Sales Tax and 3 others and reported at 2000 PTD 3765; "A levy can only be made by express and exact words". The Supreme Court of Pakistan has also laid down in a judgment of Messrs Mehran Associates Ltd., reported at [1993 SCM R 274]: "The cardinal principles of interpretation of a fiscal statute seem to be that all charges upon the subject are to be imposed by clear and unambiguous words. There is no room for any intendment nor there is any e ui or presumption as to a tax. A fiscal provision of statute is to be constructed liberally in favour of the taxpayer and in case of any substantial doubt, the same is to be resolved in favour of the Citizen".
(xiii)Reliance is also placed on the judgment of Hon'ble Sindh High Court Karachi in case of the Collector, Sales, Tax and Central Excise (West) Karachi v. Messrs Al-Hadi Industries (Pvt.) Ltd., as reported at 2002 PTD 2457 wherein it was held, "A Court cannot imply anything, which is not expressed; it cannot import provisions in the statute, so as to support assumed deficiency. The taxing statute must be interpreted in the light of what is clearly expressed".
(xiv)The Superior Courts have also decided in a number of judgments that input tax paid by registered person is sacred trust of a citizen on national exchequer until and unless it is adjusted or refunded to him. As such refund of input tax paid by the appellants on the goods received from the above-named supplier is their legitimate right created by the legislation and the appellants cannot be deprived off from that very substantive right.
2. Learned A.R. Has reiterated the same arguments which have been mentioned above in the grounds of appeal. In addition to that he has contended that the appellant is a supplier and registered as a commission agent. According to him, the same invoice is purchases which is to be sold out and no sales tax is paid on the commission. He has contended that the officers below have rejected the claim for the reason that the profile of the appellant is abnormal. Learned A.R. In this respect referring to section 2(47) has contended that the wholesaler includes commission agent and there is no abnormality in the amounts received or declared by the appellant. Audit of the purchasers has been done and no abnormality has been pointed out being operative unit.
Learned A.R. Has objected that the STARR objections are wrong. All payments are through banking channel and evidence in this respect has been furnished before the adjudicating authority as well as the appellate authority. Learned A.R. Has also placed the sales tax returns, copies from the supply register, purchase register, statement of account along with photocopies of cheques and other evidences.
3. On the other hand, the learned D.R. Is supporting the impugned orders of authorities below. He has contended that the appellant has supplied cotton yarn and has received payment against the supplies. The computer profile of the appellant shows huge supplies and no tax has been deposited against these supplies into the national exchequer. He is of the view that it is established that the said supplier made only paper transactions and has issued flying invoices where answer of supply is silent.
4. After considering the rival arguments, I am of the view that the adjudicating authority as well as the appellate authority have not considered the fact that the supplier of the appellant is a commission agent and has been registered as such with the Income Tax Department as a wholesaler including a commission agent with the Sales Tax Department and being commission agent was not required to make any value addition and was bound to supply the goods on prices fixed by his principal/manufacturer. I am further of the view that the sales tax invoice by the supplier of the appellant was already paid by the manufacturer/principal supplying such goods, therefore, no tax was required to be paid. I have further noted that it is not objected by the department that the Computer Profile of the registered person has been showing his status as "operative" and the input tax and output tax are equal which confirms his status as a commission agent. Likewise, neither any charge of fake transactions nor of tax fraud either on the part of the supplier or appellant has been leveled in the show-cause notice without which refund of input tax paid by the appellant cannot be rejected. Consequently, the matter is remanded back to the adjudicating authority for fresh order in accordance with the law considering the above said legal position. The appeal is decided in the above manner.