' JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).--1. The appellant through this appeal has objected to the Order-in-Appeal No,286 of 2005 dated 19-7-2005 passed by the learned Collector, Collectorate of Customs. Sales Tax and Central Excise (Appeals), Lahore on the following grounds:
(i) That the learned Collector (Appeals-II) has erred in law to suo motu review his own order passed on 15-12-2003 as no such powers have been conferred upon him by the Sales Tax Act, 1990.
(ii) That the learned Collector (Appeals) has condoned the delay in filing of departmental appeal on the same ground, which was even based on misstatement, on which he has already refused to entertain the said appeal. His action is against all the principles of justice and equity and tantamounts to maladministration.
(iii) That the learned Collector (Appeals) has wrongly admitted the departmental appeal being infrucutous on the technical ground that the registered person i,e, Messrs Madina Traders, Kamoke, has not been made a party to the appeal. The only respondent in this appeal is the Deputy Collector (Adjudication), Gujranwala.
(iv) That the learned Collector (Appeals) has not discussed the case with the appellant's Authorized Representative as well as disregarded the parawise reply to the departmental grounds of appeal, thus condemned the appellant unheard.
(v) That the allegation of under-declared sales has been formed on the assumption that the difference of the total sales value and total purchase value constitutes stock. Under the Sales Tax Act, 1990, sales tax is to be charged on supplies and not on assumptions of the department.
(vi) That the allegation of under-declared sales has been formed without having regard to the record of the appellant.
(vii) That the departmental representative ignored the trade discount allowed by the appellant, shown on the sales invoices, which was in accordance with the provisions of relevant law and fulfilled the conditions laid down in section 2(46)(b) of the Sales Tax Act, 1990.
(iii) That the respondent department has conceded during the adjudication proceedings that the amount of trade discount reflected on the sales invoices by the registered person was not given credit while framing the calculations in the audit report. In spite of his admittance, appeal has been filed on the same issues raised in the audit report.
(ix) That the respondent department has not uttered a single word that in what manner adjudication order is not justified. The department's action is nothing more than a try to re-open a closed and final transaction.
(x) That the respondent department has violated the one audit on one year principle laid, down by the Sales Tax General Order No,9 of 1999 in which it is mandatory to have written approval of the Collector, whereas no such approval was taken nor any evidence was produced before the adjudication officer. The auditor was assigned the audit from July, 1999 to onwards but he has made calculations by including the immediately preceding financial year.
(xi) That the respondent department has not referred the case to the Valuation Committee and calculated the sales on assumptions and surmises. If the sales values in his belief were not correctly declared by the registered person, he should have referred to it to the Valuation Committee as required under section 2(46)(e) of the Sales Tax Act, 1990 in spite of concluding that the sale values are under declared.
(xii) That the respondent arrayed at Serial No,2 maliciously has passed the order without having considered the vague grounds of departmental appeal.
(xiii)That the respondent arrayed at Serial No,2 has wrongly and without any basis concluded that the appellant was not authorized to sell the goods below the prices fixed by Messrs Lever Brothers Pakistan Limited, whereas there was no such restriction.
(xiv) That the imposition of additional tax under section 34 by the respondent No,2 is unwarranted because the appellant has done nothing to be said as willful or deliberate.
(xv) That no specific penalties under sections 33(4) and 33(2) have been imposed and therefore are not tenable.
2. I have heard the learned representatives of both the sides and have also perused the impugned orders, the show-cause notice and other relevant record of the case. Learned A.R. Representing the appellant has contended that against the order-in-original, the department filed first appeal before the learned Collector (Appeals) without depositing the mandatory appeal fee as provided under second proviso of subsection (1) of section 45B of the Sales Tax Act, 1990 as applicable at that time. He has, in this respect, referred the said section 45B prevailing at that time of filing the appeal by the department, according to which as per Second Proviso of subsection (1) "the appeal shall be accompanied by a fee of Rs,1000 to be paid in such manner as the Board may prescribe".
Learned A.R. Has contended that it was mandatory for the appellant-registered person as well as the department to deposit the appeal fee and without paying the same, the appeal was not maintainable. Any consequential order in this respect has no legal force. According to the learned A.R. Of the appellant, the payment of appeal fee by affixing court-fee stamps does not fulfil the mandatory requirement of Sales Tax General Order No,11 of 1999 dated 2-10-1999 wherein the C.B.R.
Has directed that the court-fee amounts shall be deposited in the Govt. Treasury or in any designated branch of the NBP under the Tax Head-0220000. Learned A.R. Has contended that the appeal fee was not paid in the manner prescribed by the Board, thus no appeal fee shall be deemed to have been paid by the department.
3. Learned A.R. Has argued that the Collector (Appeals) has wrongly admitted the departmental appeal being infructuous on the technical ground that the registered person i,e, Messrs Madina Traders, Kamoke, has not been made a party to the appeal. The only respondent made by the department in the first appeal before the Collector was the Deputy Collector (Adjudication), Gujranwala. Learned A.R. In this regard has referred the decision of the Customs, Excise and Sales Tax Appellate Tribunal reported as 2003 GST Cl. 13 wherein it has been held that "the adjudicating officer could alone not be made the respondent and thus the original appeal is in itself infructuous whereas filing of miscellaneous application amounts to filing of departmental appeal after the expiry of limitation and the departmental appeal was dismissed. Learned A.R. Has contended that the learned Collector (Appeals) has condoned the delay in filing of the appeal on the basis of misstatement on which she has already refused to entertain the said appeal.
4. According to the learned A.R. The delay of 5 months and 19 days in filing of the first appeal before the learned Collector (Appeals) by the department has been condoned merely for the reason that the order-in-original did not reach in the relevant Division of the Department, Learned A.R. Has contended that the department's plea in this regard was based on misstatement as Demand Notice C. No,ST/Grw-Div/Rec 4563 dated 21-5-2003 had been issued by the Deputy Collector to the appellant in the present case meaning thereby that the Order-in-Original was timely reached to the concerned quarters. He has in this respect placed before this Bench the Demand Notice issued by the Deputy Collector regarding .Order-in-Original No,569 ST/2003 dated 30-4-2003 directing the present appellant, Messrs Madina Traders to deposit the said amount of arrears along with additional tax and penally within seven days of the receipt of the notice. Learned A.R. Has contended that as the condonation has been obtained by the department in filing the first appeal before the learned Collector (Appeals) by making false statement before the Collector (Appeals), therefore, the order condoning the delay is illegal and is liable to be quashed in consequence of which the order-in-original should also be cancelled.
5. He is of the view that the learned Collector (Appeals) has erred in law to suo motu review his own order passed on 15-12-2003 as no such powers of review have been conferred under the Sales Tax Act, 1990. The departmental appeal against the Order-in-Original was filed by the Collector (Appeals) on 19-11-2003 with a delay of five months and 19 days without payment of appeal fee in accordance with law. On 15-12-2003 the Collector (Appeals) held that "the reason given for delay is not cogent and satisfactory. Besides the procedural lapses are there. Hence cannot be entertained". Learned A.R. In this regard has placed before this Bench the Order Sheet of proceedings before the Collector (Appeals). Learned A.R. Has contended that surprisingly the appeal fee in the form of court-fee stamps was placed on file on 23-6-2004. After lapse of more than six months the Collector (Appeals) has suo motu reviewed his earlier order passed on 15-12- 2003 without giving any notice to the present appellant and without giving any reason for reviewing the order which is against the norms of law and the impugned order of the Collector (Appeals) on this ground is also liable to be cancelled.
6. On the merits of the case learned A.R. Has contended that the allegation or under-declared sales has been levelled on the assumption that the difference or the total sales value and total Purchase value constitutes stock. He is of the view that under the Sales Tax Act, 1990, the sales tax is to be charged on supplies and not on assumptions of the department. The allegation of under-declared sales has been levelled without having regard to the records or the appellant and ignoring the trade discount allowed by the appellant. Shown on the sales invoices which was in accordance with the provisions of relevant law and fulfilled the conditions laid down in section 2(46)(b) of the Sales Tax Act, 1990. Learned A.R. Has submitted that the adjudicating authority in the order-in- original has accepted that the amount of trade discount reflected on the sales tax invoices by the registered person was not given credit while framing the calculations in the audit report. According to the learned A.R. In spite of this admitted fact, the department has filed first appeal before the learned Collector. He has contended that the appellant-registered person has paid more than one million as sales tax for the tax period under consideration i,e, from July, 1999 to July, 2000 and the value addition was 3.5% approximately. The adjudicating authority in the order-in-original has not uttered a single word in this regard and has only tried to reopen the closed and final transaction.
He has contended that the department has violated the one audit in one year principle, laid down by the Sales Tax General Order No,9 of 1999 in which it is mandatory to have written approval of the Collector, whereas no such approval was taken nor any evidence was "assigned to audit for July, 1999 onwards but the calculation has been made by including the immediately preceding financial year. Learned A.R. Has contended that the learned Collector (Appeals) has wrongly and without any basis concluded that the appellant was not authorized to sell the goods below the prices fixed by Messrs Lever Brothers Pakistan Limited, whereas there was no such restriction upon the appellant. Learned A.R. Has also agitated the imposition of additional tax under section 34 on the around that nothing has been done as wilful or deliberate and, therefore, no specific penalties have been imposed under sections 33(4) and 33(2) of the Sales Tax Act, 1990. Learned A.R. In view of the above submissions has prayed that the order-in-appeal may be cancelled and the appeal may be allowed.
7. On the other hand learned D.R. Is supporting the impugned order-in-appeal. Regarding the court-fee, learned D.R. Has contended that no court fee is required to be deposited by the department but the department has deposited the requisite court fee in the shape of court-fee stamp amounting to Rs,1000. Regarding the entry in the order sheet by the learned Collector (Appeals) holding the appeal filed by the department being not maintainable, learned D.R. Has contended that no such order has been conveyed to the present appellant and that was the internal working of the department. He is, however, to rebut the contentions of the appellant that the appellant being not made the party in the first appeal, the original first appeal was infructuous as has been held in the case referred by the appellant reported as 2003 GST Cl.
13. Likewise, learned D.R. Is also unable to rebut the contention of the learned A.R. For the appellant that in the order-in-original, the adjudicating authority has admitted that the amount of trade discount reflected on the sales invoices by the registered person was not given credit while framing the calculations in the audit report.
8. I have heard the learned representatives of both the sides and have also perused the impugned order of the learned Collector (Appeals), order-in-original and other relevant record of the case. I have found that in this case, the first appeal against the order-in-original was filed before the learned Collector (Appeals) on 11-12-2003. In the order sheets entry, it has been mentioned that the "(1) Deputy Collector Audit-I Collectorate of Sales Tax and Central Excise Gujranwala has forwarded appeal documents to this office without payment of "Appeal Fee" and also requested that the delay in filing of the appeal may kindly be condoned and appeal be entertained for adjudication in terms of section 45-B of the Sales Tax Act, 1990.
(2) Submitted for kind perusal and further orders please."
' While order sheet's entry dated 12-12-2003 reflects as follows: "The appeal filed do not fulfil the requirements of appeal procedure required under section 45-B of the Sales Tax Act, 1999. Further ONO was passed and issued on 30-4-2003 vide C. No, 110- ST/DC/Adj/2002/737 where incomplete appeal was filed on 15-11-2003, hence time-barred for 5- 1/2 months. Put up for kind information and further orders."
' Through the Order Sheet's Entry dated 15-12-2003, the learned Collector (Appeals) has dismissed the appeal with the observations that"the reason given for delay is not cogent and satisfactory.
Besides, the procedural lapses are there. Hence cannot be entertained."
' But through the Entry in the Order Sheet dated 26-4-2004 on the request of Mr. Abdul Basit. Senior Auditor who appeared on behalf of the appellant-department with the submission that the impugned order was not received in the office of the appellant, certified copies were applied which were delivered on 5-11-2003 and the appeal was filed on 19-11-2003 which was filed within time", the learned Collector (Appeals) accepting the plea of the appellant-department condoned delay in filing the appeal and subsequently the impugned order was passed.
9. Learned A.R. Has placed before this Bench copy of the memo of appeal wherein the present appellant who was the subject matter of the order-in-original has not been made party and, therefore, the original first appeal is in itself in infructuous due to the decision of this Tribunal reported as 2003 GST CI. 13 in S.T.A. No,968/LB/2000 dated 21-1-2003. I have further noted that in this case the learned Collector (Appeals) once holding on 15-12-2003 that the appeal is not entertainable has again suo motu reviewed his judgment by allowing condonation of delay on the ground that the copy of the order-in-original was not received in the office of the department despite the fact that the demand notice dated 21-5-2003 has been issued by the Deputy Collector against the same order-in-original bearing No, 569/ST/2003 dated 30-4-2003. In view of these facts, circumstances and the legal position. I find no justification for the impugned order-in-appeal which having been passed without any legal footing is, therefore, vacated and the appeal is allowed.