SYED MUHAMMAD JAMIL RAZA ZAIDI, JUDICIAL MEMBER - This order will dispose of appeals Nos.
462 to 465 & 476-K/2009, as all these appeals arise of of common facts and involve identical question of law.
2. These appeals have been preferred against the order of Collector (Appeals), who rejected the pleas of the appellant for the grant of their refund claim on the ground that the veracity of input tax paid could not be verified from the Centralized Data namely STARR, hence the present appeals.
3. The facts leading to these appeals are that the appellant did file all these refund claims for the year 2003. These claims were partially allowed and rest of the claims were rejected on the ground that computerized data namely, STARR, did not verify the input tax payments and hence parts of claim made by the applicant were not verifiable, hence that portion of the claim was rejected by the adjudicating officer. An appeal against his orders was also rejected and the appellate authority observed as under:- " I have examined the case record and given due consideration to the arguments made before me. The refund claim has not been validated by STARR. It is apparent from the record that the appellants failed to meet the requirements .Of law contained in Sections 7 and 10 of the Sales Tax Act, 1990 and Sales Tax Refund rules, 2000 notified vide notification SRO. 525(1)/2002 and, as such, the disputed amount of Rs. 313, 648/- was not admissible to them. I find that the adjudicating officer has rejected the refund claim on valid grounds and no new evidence or document has been brought on record at the appeal stage, Therefore, I have no reason to interfere with the impugned order. The appeal is accordingly rejected."
4. The said order has been challenged by way of this appeal. Heard the contesting parties at length. From the pleadings of the parties, following issues are framed for the disposal of these appeals:-
(i) Whether the alleged suppliers filed the monthly sales tax return of January-2003, July-2003 and invoice summaries of April-2005?
(ii) Whether the registration numbers of the suppliers M/s. Hussain Textile in January-2003 & M/s. Amafah Industries in August-2004 were correctly mentioned in STARR/RRAS?
(iii) Whether under Section 3(3) of the Sales Tax Act, 1990 the buyer can be held responsible for the wrong doings of the suppliers?
(iv) Whether the supplier was a taxpayer at the time of supply made to the appellant?
(v) Whether the appellant paid the due tax to the suppliers on the goods supplied to him according to Section 73 of the Sales Tax Act, 1990?
(vi) Whether a decision can be made outside the scope of show-cause notice?
5. As regards the first issue, it may be submitted that M/s. Kareem Textile and M/s. Ahmed Lace did file their monthly sales tax return for the month of January-2003 & July-2003. It is also evident from the record that the suppliers namely M/s. Decent International, M/s. Fateh Textile & M/s. Sattar Industries also did file their monthly return summaries for the month of April-2005. From the above facts, it is evident that suppliers were properly registered tax payers and were paying sales tax regularly, hence no element of doubt can be cast on their part.
6. As regard issue No. (ii), it is evident from the records that the sales tax registration numbers of the suppliers M/s. Hussain Towel in January-2003 and Amafah Industries in August-2004 were wrongly compared in the STARR/RRAS system. The actual registration numbers of the suppliers are 1100580202991 & 1200320006282, and the same are verifiable. Thus no allegation can be levelled on this count.
7. As regards the next issue, it is submitted that the respondent had made the payment in respect of invoice issued by the suppliers and the amount of tax is verifiable from the monthly return of the supplier who did pay the due tax. It is further observed that the suppliers did file their returns and were genuinely carrying on their business at the time of purchases made by the present applicant.
It may further be submitted that law has placed responsibility of payment of tax on the part of seller and the same cannot be shifted to buyer. According to the provisions of section 3(3)[a] and
[b] of the Sales Tax Act, 1990, the liability to pay the tax is explicitly on the person who makes supplies and this provision reads as under:- "The liability to pay the tax shall Be:--
(a) in the case of supply of goods in Pakistan of the person making supply, and
(b) in the case of good imported in Pakistan, of the person importing goods."
Hence, the charge framed by the respondent on this count is illegal.
8. As regards the issue relating to blacklisted or suspended suppliers, the appellant has placed reliance on the case of M/s. Awais Enterprises v. Collector of Sales Tax & Central Excise reported as 2004 PTD 2637, wherein their lordships observed as under:- "3... After hearing the learned counsel for the parties I will readily agree with the learned counsel for the petitioner that the impugned direction of the Revenue placing the petitioner company in suspected unit is not legal. My reasons for holding so are following:- Firstly, there was no provision in the statute at the relevant time to empower the Revenue to place registered person in the list of suspected/fake units. The provision to subsection (4) of Section 21 was added with effect from 1.7.2003 and, therefore, taking of any such action before that date was without jurisdiction; and Secondly, admittedly no notice what so ever was served upon the petitioner before placing it in the said list. Even the amended provision, as noted above, obliges the Collector to form an opinion before taking such action. In the present case no material has been brought on record if the Collector actually formed any opinion and the basis thereof that the petitioner engaged himself in any illegal activity or tax fraud.
4. In the present case no notice has been given even after placing the name of the petitioner in the negative list which means throwing him of of business without allowing him an chance to reply the allegations. The case with which the Revenue has taken the action is spectacular. Even a semblance of fairness was not considered necessary.
5. Therefore, this petition is allowed and the action of the respondent/Revenue of placing the name of the petitioner in the list of suspected/suspicious units is declared to be illegal and unlawful..."
9. In the light of said observations of the Hon'ble Lahore High Court, the charge framed on this count against the appellant is not maintainable.
10. As per records, it is evident that at the time of purchases the suppliers were operative. The sub- Para(iii) of Para 2 of the Sales Tax general order 06/2003, dated 20.12.2003 provides that unless the Collector specifies otherwise, orders of blacklisting shall have effect from the date of original order of concerned person, so that invoices issued by a supplier during the relevant period are acceptable. In the instant case, the suppliers were blacklisted after the purchases made by the respondent, hence it is evident that the suppliers were operative at the time of purchases and their documentation of the relevant time cannot be disregarded on flimsy grounds.
11. As regards the issue No. (v), it is evident from the records that the appellant made the payment through the banking channels to his suppliers and fulfilled the requirement of Section 73 of the Sales Tax Act, 1990.
12. As regards issue No. (vii), it mainly revolves around the fundamental objection raised by the learned counsel that the followings allegations adjudicated in para (4) of the impugned order-in- original dated 27.12.2006 have not been incorporated in the show-cause notice by the officer of the original jurisdiction:-
(i) Objection of STARR "Non Filer, Registration" suspended, Exceeds Declared Out Put & Black listed.
The claim of the learned counsel is borne of by a bare; reading of para (2) of the show-cause notice dated 3.5.2005, where only the allegation of Non-filer and blacklisted is mentioned. It is well- settled principle of law that grounds not mentioned in the charter of the show-cause notice cannot be subsequently taken up.
13. Having said that, the impugned orders are set aside as being illegal and passed in violation of the Sales Tax Law. The appeals stand allowed.