1. The above captioned appeal has been referred on behalf of the registered person Messrs Swat Ceramics (Pvt) Ltd. Shaidu. G.T. Road. Nowshera against Order-in-Appeal No.517- of 2010 dated 25- 3-2011 on the ground that the impugned order is against law and facts, the show-cause notice is misconceived, that at the time of supply neither the suppliers were black listed nor their registration was suspended. The appellant complied with the entire legal and statutory requirements. Hence taxpayer is entitled to relief, asked by him through vacating the SCN. 0.N.0 and the impugned order.
2. The facts emerging from the record necessary for disposal of this appeal in brief are that during course of audit of the tax record for financial year 2008-2009 it was found that supplier namely Messrs IM Packages Lahore bearing STRN 0305630503246 is blacklisted as per eF.B.R. Portal system.
3. Input tax and special excise duty under section 3(a) of the Federal Excise Act, 2005 involved in purchases made from the said supplier (as per details given below) were termed inadmissible in terms of sections 8(1)(d), 8(1)(c)(a) and 21(2) of the Sales Tax Act, 1990 read with Rule 12(5) of the Sales Tax Rules, 2006 and section 3A of Federal Excise Act, 2005 and consequential inadmissible input tax adjustments worked out in the following table:-- S. No. Tax Period No. Of InvoicesValue Tax Involved (In Rupees)SED 1 2 3 4 5 6 1 March 2009 2 233200 37312 2332 2 April 2009 13 1550325 248052 15503 3 May 2009 3 382200 61152 3822 Total 2165725 346516 21657 This way it was alleged the registered person violated provisions of sections 8(1)(d), 8(1)(c)(a) and 21(2) of the Sales Tax Act, 1990 read with Rule 12(5) of the Sales Tax Rules, 2006 and Section 3A of Federal Excise Act, 2005 and the amount mentioned at columns Nos.(5) and (6) of the above table is recoverable from the taxpayer under sections 11(2) and 36(1) of the Sales Tax Act, 1990 attracting penalty and default surcharge (to be calculated at the time of deposit) under sections 33 and 34 of the Sales Tax Act, 1990 read with sections 8, 14, and 19 of the Federal Excise Act, 2005.
4. The respondent department decided the case vide Order-inOriginal No.1 of 2010 dated 26-10-2010 and uphold the whole observation mentioned at Paras 13 to 15 of the order passed by the Assistant Commissioner Inland Revenue (Audit-Unit-I) RTO. Peshawar. Being aggrieved from the above order, the appellant filed appeal before the L/CIR(A), who decided the appeal vide the impugned conclusion, appellant being dissatisfied from the treatment of L/C/R(A) has filed the instant appeal before this forum.
5. The L/AR of the taxpayer reiterated his contentions as per grounds of appeal and referred to the judgments cited as 2011 PTD (Trib) 2090 and 2619 in the cases of Messrs Shama Export.(Pvt.) Ltd. , Faisalabad v. Collector of Sales Tax Faisalabad and Zahid G. Taxpayer Mills Ltd. Faisalabad v.
6. Collector (Appeals), Faisalabad. While L/DR supported the impugned order and contended that the suppliers were either blacklisted or their registration was suspended and despite of fact that the suppliers were blacklisted after the supplies were effected even then the buyer is not entitled to adjustment of input tax.
7. We have considered the argunients of the parties, have perused the relevant order and cases-law on the subject. It has been seen that appellant claimed adjustment of input tax credit on the basis of supplies against invoices issued by blacklisted persons. As per departmental view in such like situation the registered person is not entitled to any adjustment. However keeping in view the cases-law referred by the L/AR cited above, the issue has been decided in favour of registered person and against the revenue wherein it has been held that the rejection of refund against invoices of blacklisted and registration suspended units is not justified. The liability to pay sales tax was on the suppliers under section 3(3)(a) of Sales Tax Act, 1990 and it could be extended to buyer only by a notification under section 3(a) of Sales Tax Act, 1990 which provides shifting of tax liability to the person receiving the supply of specific goods and in taxpayer's case no such notification was issued by the Federal Government as such defaulted amount should have been recovered from the defaulter' instead of buyer. Order of blacklisted or suspension of registration would take effect from the date of its issuance and invoices issued by the suppliers during the intervening period were acceptable. Purchases of the taxpayer to the period when the alleged suppliers were not included in the list of blacklisted registration suspended units and their subsequent inclusion in the list of blacklisted units prior to blacklisted period could not operate retrespectively.
8. Keeping the above facts and position of the matter in view, we are inclined to accept the appeal on behalf of the appellant and to vacate the order passed by the authorities below, as the suppliers at the time of supplies were neither blacklisted nor their registration were suspended. Thus we vacate the order passed by the officer below.
9. This appeal stands disposed of as indicated above. .