' NAZIR AHMAD (JUDICIAL MEMBER).---The above titled sales tax appeal has been filed at the instance of the registered person/ appellant against the Order-in-Appeal No,75/ST/2009 dated 3- 7-2009 whereby the confirmation of allegation for non-compliance of section 73 of the Sales Tax Act, 1990 (hereinafter call the Act) on account of making payment of Rs,780,273 involving input tax of Rs,101,775 after 180 days of the issuance of input tax invoice to Messrs Allied Associates Karachi, has been agitated.
2. Brief facts emanating from record are that audit of Messrs Imran Pipe Mills (Pvt.) Ltd., Lahore bearing Sales Tax Registration No,03-08-7300-005-73 was conducted for the period July, 2005 to June, 2006 as a result of which certain regularities, were pin pointed by the staff of Collectorate of Sales Tax and Federal Excise, Audit-II, Lahore. Show-cause notice confronting the allegations was issued against which explanation tendered by the registered person was rejected. Subsequently, the matter was brought to the Deputy Collector (Adjudication) who vide Order-in-Original No,362 of 2009 dated 9-6-2009 recorded his positive finding in favour of the registered person exonerating him from all the allegations/charges except the one charge of violation of section 73 of the Act.
Feeling aggrieved, the registered person preferred appeal before the Collector Customs, Sales Tax and Federal Excise (Appeals), who also upheld the action of Deputy Collector (Adjudication) with regard to the violation of section 73 of the Act. Still discontented, the registered person has come up in appeal before this Tribunal.
3. The learned counsel appearing on behalf of the registered person has termed of action both authorities below to be arbitrary. He has elaborated his view point by maintaining that the registered person had already paid the amount in question through Cheque No,071101 on 9-3-2006 simply with the delay 19 days only, against which penalty imposed by both authorities below, by way of refusing the adjustment of input tax amounting to Rs,101,775 by resorting to provisions of section 73 of the Act along with imposition of penalty of Rs,10,000 under section 33(5) of the Act, is quite unjustified as there is no revenue loss to the Exchequer. He has further submitted that in such like situation, the superior courts of Pakistan have always discouraged the departmental actions by holding that if there is no revenue loss to the Exchequer then tax should not be demanded on procedural lapses. In order to lend credence to his submissions, he has placed reliance on reported judgments cited as 2006 PTD 1412, PTCL 2006 CL 389 and PTCL 202 CL 495.
4. In rebuttal to the arguments advanced by learned counsel, the sole contention of learned DR is that since, the registered person/ taxpayer had failed to comply the provisions of section 73 of the Act in letter and spirit by paying the amount of Rs,780,273 beyond the prescribed limit of 180 days, therefore, refusal of adjustment of input tax amounting to Rs,101,775 under section 73 of the Act along with imposition of penalty of Rs,10,000 under section 33(5) of the Act is quite justified and merits confirmation by this Tribunal when time limitation was not condoned by the competent authority specified under section 74 of the Act.
5. I have heard the arguments advanced by rival parties and also carefully gone through the relevant record available on file. Main thrust of the arguments advanced by learned counsel is that since the amount of tax due has been deposited, anyhow, with the delay of 19 days only against which penalty imposed by both authorities below, by way of refusing the adjustment of input tax amounting to Rs,101,775 by resorting to provisions of section 73 of the Act along with imposition of penalty of Rs,10,000 under section 33(5) of the Act, is quite unjustified as there is no revenue loss to the Exchequer. Before I dilate on the issue under consideration, I deem it proper and justified to reproduced the relevant provision of sections 73 and 74 of the Act:-- Section 73 (2):-- "The buyer shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or drawback or zero-rating of tax under this Act if payment for the amount is made otherwise than in the manner prescribed in subsection (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eight days of issuance of the tax invoice.
Section 74:-- "Where any time or period has been specified under any of the provisions of the Act or rules made thereunder within which any application is to be made or any act or thing is to be done, the [Board] may, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate.
' [Provided that the Board may, by notification in the official Gazette, and subject to such limitations or conditions as may be specified therein, empower any [Commissioner] to exercise the powers under this section in any case or class of cases.] "
6. From the plane reading of the above provisions, it is crystal clear that in case of failure to deposit the amount of tax due within prescribed limit of 180 days the taxpayer shall not be entitled to claim input tax until or unless such limitation is condoned by the Commissioner by exercising power delegated by the Board. Now we have a glance on the penalty provisions of section 33(5) of the Act, which reads as under:-- Section 33(5):- "Any person who fails to deposit the amount of tax due or any part thereof in the time or manner laid down under this Act or rules or orders made thereunder. Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher."
7. From the perusal of above, it can easily be gathered that in case of failure to deposit the amount of tax in time, a penalty of Rs,10,000 or 5% of amount of tax involved, whichever is higher, shall be imposed for such offence.
8. Admittedly, in the instant case the registered person is made the payment of tax due through Cheque No,071101 on 9-3-2006 with the delay of 19 days beyond the limit of 180 days prescribed under section 73(2) of the Act, as sequel to which a penalty of Rs,10,000 has been imposed on him by resorting to provisions of section 33(5) of the Act besides payment of Rs,101,775 by refusing the adjustment of input tax by resorting to section 73 of the Act. The learned counsel of the registered person seeks setting aside of the orders passed by both authorities blow on the strength of reported judgments cited as 2006 PTD 1412, 2007 PTD (Trib.) 728 and 2003 PTD (Trib.) 928. In the said judgments, it has been held that input tax adjustment is the substantive right of the taxpayer, which cannot denied simply on the basis of procedural/ technical lapses but there is nowhere held in the said judgments that in case of violation of statutory provisions of the Act, the taxpayer shall not be penalized. Therefore, in the light of ratio settled in above judgments, the order of payment of Rs,101,775 as input tax is deleted and the payment of said amount by the taxpayer on 9-3-2006 is considered to be admissible input tax. However, the penalty of Rs,10,000 imposed by the Additional Collector and confirmed by the Collector (Appeals) does not call for any interference being in accordance with law prescribed under section 33(5) of the Act.
9. Consequently the appeal of the registered person stands disposed of to the extent and in the manner indicated above.