' RAJA LEHRASSAB KHAN (JUDICIAL MEMBER).---By this order, I intend to dispose of above captioned appeal in which a refund claim for the tax period January, 2005, amounting to Rs,153,003 is involved.
2. The relevant facts in brief are that the appellant in this case is a manufacturer-cum-exporter of textile products. The taxpayer claimed refund of input tax under section 10 of the Sales Tax Act, 1990, for the tax period January 2005, amounting to Rs,153,003 which was deferred by the STARR computer system for the reason that invoice summary was not submitted by Messrs Asghar Sizing Industries and that wrong feeding of Reg. No, in RCPS. A show-cause notice was issued and after affording opportunity of being heard, the Assistant Collector (Refund), rejected the refund claim vide Order-in-Original No,1753 of 2007, dated 3-7-2007. On appeal filed by the taxpayer, the learned Collector (Appeals) also rejected the appeal.
3. Heard both the sides at length and perused the record. The learned AR of the taxpayer has submitted that refund of the taxpayer was rejected on the ground that Messrs Asghar Sizing Industries has not filed invoice summary, but the fact of the matter is that the invoice summary was duly submitted by the taxpayer which was duly receipted by the department. In this regard, the learned Counsel has duly produced photocopy of the invoice summary during the course of hearing which is placed on appeal file. With regard to second objection i,e, wrong feeding of Registration No, it is contended by the AR that refund claim for Rs,126,000 was rejected against Reg.
No,0801511101282, but the taxpayer has no link whatsoever with that registration number. It is further contended that the said registration number was never confronted in the impugned Order-in- Original Furthermore, the learned AR of the taxpayer contended that rejection of refund claim pertaining to January, 2005, under STARR computer system was illegal void ab initio being not applicable to the relevant period.
4. I find myself to be in conformity with the arguments advanced by the Advocate, so also law in support thereof. Perusal of impugned orders in question vis-a-vis the grounds of appeals coupled with law referred to by the appellant Advocate I do not find myself persuaded with the finding and its basis incorporated in both, the impugned orders. The refund claim pertaining to January, 2005, was not subject to scrutiny under STARR as the same was made applicable w,e,f, Ist July, 2006 in term of S.R.O.555(I)/2006 dated 5-6-2006 thus, appellant's case with regard to refund claim for the period January, 2005 should have been scrutinized under Sales Tax Refund Rules 2002 being notified vide S.R.O.575(I)/2002 dated 31-8-2002 and not under STARR system which was introduced for the first time in Sales Tax Rules 2004, notified vide S.R.O. 485(1)/2004, dated 12-6-2004.
Recapitulated history of these facts further transpires that Sales Tax Rules 2004, were come into force on 01-7-2004 by excluding its Chapter-V (Refund Rules) (Rules 25-37) which was required to be come into force on such date as to be notified by the C.B.R. Through in official Gazette Notification. The same position was also with Sales Tax Rules, 2005, but the same (both items) were never notified by the C.B.R. Till he Sales Tax Refund Rules, 2002, were rescinded through S.R.O.
554(1)/2006 dated 5-6-2006 and Sales Tax Rules, 2006 came into vogue. This situation leads to unambiguous inference that Sales Tax Rules 2004 and 2005 were intact and remained applicable till 1st July, 2006, without giving retrospective in effect. Under the present situation, I am inclined to share view of the AR that rejection of refund claims filed against invoices issued prior to 1st July, 2006 on the objection pointed out by the STARR computer system was illegal, void ab natio. In this regard, I feel advantage to refer a judgment of Division Bench of Customs, Excise an Sales Tax Appellate Tribunal, Lahore, reported as 2010 PTD Trib 1636 in the case of Messrs A.T. Fabrics, Faisalabad v. Collector Sales Tax, Faisalabad. The operative para is being, reproduced herein under:-- "Lastly the learned counsel for the appellant contended that the appellant filed refund claim, for the period 12 of 2004 and 2 of 2005, which was rejected on the basis of STARR objections. The learned Counsel for the appellant vehemently contended that the "STARR System" was introduced in the Year-2006, it cannot be implemented retrospectively. After perusal of record, we find the plea of the appellant correct."
5. In another case like the present one titled Collector of Sales Tax v. Messrs Salem Textile Company, Faisalabad, reported as S.T.A. No,191/LB/2008, dated 9-6-2008, in which Customs, Excise and Sales Tax Appellate Tribunal, Lahore, has held as under:- "The appeal has confounded the Sales Tax Refund Rules, 2002, notified by S.R.O. 575(1)/2002, dated 31-8-2002, and the Sales Tax Refund Rules, 2005, notified by S.R.O. 533(1)12005, dated 6-6-2005.
There is no concept of STARR in the Sales Tax Refund Rules, 2002 and the Sales Tax Automated Refund Repository (STARR) Computer System had been introduced in the Sales Tax Refund Rules, 2005. It is a controversial issue whether Sales Tax Refund Rules, 2005, Chapter- IV (Refund) had been enforced or not. It is provided under Rule 1 of the Sales Tax Refund Rules, 2005 that these rules shall come into force on 1-7-2005 and shall apply to such persons or class of persons as are specified in the respective Chapters. However, under Rule 26, Chapter-IV (Refund), it is provided that provisions of this Refund Chapter shall come into force with effect from such date as may be notified by the Board provided that in case of registered persons who have already been notified by the Board, the refund of such registered persons shall be dealt with under this Chapter. Keeping in view Rule 1, it is a non-obstante clause."
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6. Under the foregoing reasons and circumstances I am also of the considered view that the refund claim by the appellant in this case stand for the period January 2005, while STARR system was introduced in 1st July, 2006, which' cannot be implied retrospectively.
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7. In view of legal as well as factual position, the impugned Order in Appeal for the period January 2005, is hereby set aside and appeal of the taxpayer is accepted in the manner as dilated supra.