' These titled appeals have been filed by the registered person against the Order-in-Appeals Nos. 636 and 637 of 2012 dated 28-3-2012 and Nos. 229 and 230 of 2011/540, 541 dated 16-1-2012 passed by the learned Commissioner Inland Revenue (Appeals-III) Karachi camp at Hyderabad, which are arising out of the Orders-in-Original Nos.1 and 2 of 2011 dated 13-5-2011 and 7 and 8 of 2011 dated 6-10-2011 passed by the Deputy Commissioner Inland Revenue, Audit-I, Zone-I, RTO, Sukkur. The appeals filed by the Registered Tax person/appellant were dismissed by the Commissioner Inland Revenue (Appeals).
2. The appellant Messrs Central Power Generation Company Limited having Sales Tax Registration No, 0304271600619 NTN No,3049718-3 is deriving income from manufacturing and sale of electricity.
Jurisdiction of the appellant has been transferred by FBR from Regional Tax Office, Sukkur to Regional Tax Office, Lahore.
3. Brief facts of the case for disposal of these appeals are that credit of input tax claimed by the registered person has been disallowed by the adjudicating officer for the period July to September, 2010 and April, 2011 and exemption claimed on account of capacity purchase price for the period July 2008 to June 2010 has also been disallowed.
4. These Appeals regarding above referred impugned Order-in-Appeals Nos.229 and 230 of 2011 (Order- in-Original 7 and 8 of 2011) have been contested on the basis of following common grounds:--
(3) That demand of sales tax is liable to be deleted as so called definite information regarding non- payment of sales tax by the suppliers was not provided to the appellant.
(4) That disallowance of input tax amounting to Rs,525,303,477 subject matter of Order-in-Original No,7 and Rs,279445808 of Order-in-Original No,8 of 2011 have wrongly been made and have wrongly been confirmed by the Commissioner Inland Revenue (Appeals) which is liable to be allowed.
(5) That proceedings had wrongly been initiated hence order-in-original has wrongly been confirmed by the Commissioner Inland Revenue (Appeals) which is liable to be cancelled.
(6) That claim of input tax have wrongly been rejected by the assessing officer and have wrongly been confirmed by the Commissioner Inland Revenue (Appeals) which is liable to be allowed.
(7) That Order-in-Originals Nos. 7 and 8 of 2011 dated 6-10-2011 passed by Deputy Commissioner Inland Revenue are without jurisdiction, hence liable to be cancelled.
(8) That demand of sales tax amounting to Rs,525,303,477 and Rs,279445808 and consequent imposition of penalty amounting to Rs,525,303,477 and Rs,279447808 are not maintainable and is liable to be deleted as payment of sales tax had been made by the suppliers.
(9) That penalty amounting to Rs,525,303,477 and Rs,279447808 under section 33(13) of Sales Tax Act, 1990 has wrongly been imposed hence liable to be deleted.
(10) That provisions of section 73 of Sales Tax Act, 1990 has wrongly been invoked as the same has not been confronted through show cause notice.
(11) That even otherwise allegedly hearing was fixed on 5-10-2011 whereas order has been passed on 6- 10-2011 which is not maintainable under the law.
(12) That without prejudice to the above grounds the Order-in-Originals Nos. 7 and 8 of 2011 dated 6-10- 2011 are without jurisdiction as demand of Rs,525,303,477 and 279447808 have been created which are beyond the pecuniary jurisdiction of Deputy Commissioner Inland Revenue.
5. While regarding Order-in-Original Nos. 1 and 2 of 2011 the following common grounds have been framed:--
(2) "That Commissioner Inland Revenue (Appeals) wrongly rejected the appeal on the basis of limitation as no objection in this respect was confronted to the appellant at the time of hearing of appeals.
(3) That Commissioner Inland Revenue (Appeals) is not justified to hold that appeals are time barred and appeals have wrongly been rejected which are liable to be accepted as appeal was filed within statutory time limit.
(4) That during the course of hearing of appeals no objection regarding that appeals are barred by time was raised by the D.R (Departmental Representative).
(5) That Order-in-Original Nos. 1/2 of 2011 dated 13-5-2011 are not maintainable as the same have been passed on the basis of Special Procedure Rules, 2007 whereas the same were not invoked in the show cause notice.
(6) That Order-in-Original Nos. 1/2 of 2011 dated 13-5-2011 are also liable to be cancelled as the same are beyond the show cause notice and in violation of law laid down by honourable Supreme Court and no limitation is applicable on order which is without jurisdiction.
(7) That section 36(2) of Sales Tax Act, 1990 has not been invoked. The orders are without jurisdiction, void hence liable to be cancelled.
(8) That Order-in-Original Nos. 1/2 of 2011 dated 13-5-2011 are also liable to be cancelled as the same has been passed by the Deputy Commissioner Inland Revenue whereas the show cause notice was issued by the Assistant Commissioner Inland Revenue. As there is not provision under the Sales Tax Act, 1990 like section 209(9) of Income Tax Ordinance, 2001. The orders are void on which no limitation is attracted.
(9) That Orders-in-Original Nos.1/2 of 2011 dated 13-5-2011 are void as the same have been passed for July 2008 to June, 2009 and July 2009 to June 2010 whereas in show cause notice tax year 2009/2010 respectably were confronted. The tax period has been defined in Sales Tax Act as under:-- Section 2(43)
"Tax period" means a period of one month or such other period as the Federal government may by notification in the official Gazette specify."
' As is evident from above period commencing from July, 2008 to June, 2009 and July 2009 to June 2010 have not been confronted in the show cause notice the orders are void on which no limitation is applicable.
(10) Without prejudice to the above ground, corrigendum dated 8th March, 2011 have wrongly been issued as no basis was shown/ confronted which justify the issuance of corrigendum.
(11) The Commissioner Inland Revenue (Appeals) is not justified by not adjudicating the ground regarding that the impugned notice as well as order-in-original is also beyond pecuniary jurisdiction of the assessing officer as he was not competent to adjudicate the instance case. The order-in-original is without jurisdiction and void on which no limitation is applicable.
(12) That the Sales Tax demand amounting to Rs,438,379,915 and Rs,464,480,056 respecting have wrongly been created on account of capacity purchase price.
(13) That the penalty amounting to Rs,438,379,915 and Rs,464,480,056 have wrongly been imposed which is liable to be deleted."
6. Regarding appeals against Orders-in-Original Nos. 7 and 8 the A.Rs, of the appellant argued that at the time of making the assessm ent the adjudicating officer decided the case on the facts which were not confronted to the appellant through show-cause notice. Relevant portion of the order reads as under:-- "That the sales tax record of the case available with this office was examined. I have come to the conclusion that the RP has failed to produce the proof of payment under section 73 of the Sales Tax Act, 1990, bank statement and other documents as required by the department. The sales tax return of Messrs Pakistan Petroleum Ltd., Messrs lttehad Chemicals Ltd., Messrs Crystal Corporation, Messrs Tariq Associates, Pak Arab Fertilizers and (Pvt.) Ltd., Crown Electric Store. Does not show the name of RP as buyer in respect of sales invoices under consideration. As per law no proof of filing of revised return by Messrs Pakistan Petroleum Ltd., Messrs Ittehad Chemicals Ltd, Messrs Crystal Corporation, Messrs Tariq Associates, Pak Arab Fertilizers and (Pvt.) Ltd., Crown Electric Store was produces, hence the effect of input tax claimed by the RP stands illegal and beyond the provision of law".
The A.Rs, of the appellant submitted comparison of show cause notice and order-in-original.
Show cause Notice dated 26-9-2011 Order-in-Original 7 and 8 dated 6-10-2011 Supplier has failed to deposit input tax into government treasury therefore the claim stands inadmissible under section 8(ca) of Sales Tax Act, 1990.(i) Failed to produce the proof of payment under section 73 of Sales Tax Act 1990. (ii) Sales invoices does not show the name of Registered person as buyer The A.Rs. of the appellant argued that as is evident from above the adjudicating officer decided the case on the facts which were not confronted to the appellant through show case notice. It was submitted by the A.Rs. of the appellant that order of the Assessing Officer is beyond the show cause and is not maintainable.
7. Regarding appeal against Order-in-Original Nos. 1 and 2 dated 13-5-2011 for the period July, 2008 to June 2009 and July 2009 to June 2010. The A.Rs submitted that order is beyond the show cause notice.The A.Rs of the appellant submitted comparison of show cause notice and order-in-original which is reproduced below:-- TAX YEAR 2009 Show cause Notice dated 17-2-2011Messrs Central Power Generation Company Limited had declared supplies in the Sales Tax monthly Returns cum Payment challans, for the Tax year 2009 at Rs.22,549,399,769. The scrutiny of Income Tax Return filed by the above said registered person shows supplies at Rs.29,584,398,000. Resultantly registered person has short declared supplies in the Sales Tax Returns cum payments challans, for the tax year 2009 at Rs.7,034,998,231 involving sales tax amounting to Rs.1,125,599,716 @ 16%.
Corrigendum dated 8-3- 2012In para-I the written sales value at Rs.22,549,399,769 may be read as Rs.26,844,523,534. In para-I the declared short supplies Rs.7,034,998,231 may be read as Rs.2,739,874,466 short paid sales tax at Rs.1,125,599,716 where ever written may be read as Rs.438,379,915 Order dated 13-5-2011(iii) In the light of Special Procedure Rules 2007, the registered person was liable to pay sales tax on the energy purchase price and capacity purchase price.
(iv) The Sales Tax Record of the RP was examined, exemption claimed by theregisteredpersonhasnotbeenestablished.RPisapubliccompanythereforedoesnotfall within the ambit of exemption as enjoyed by IPP, HUBCO, KAPCO. Hence the registered person is liable for payment of sales tax on the capacity purchase price (CPP).
(v) Charges framed in the show cause notice under section 11(2) of the Sales Tax Act, 1990 has been established.
TAX YEAR 2010 Show cause Notice dated 17-2-2011 Messrs Central Power Generation Company Limited had declared supplies in the Sales Tax monthly Returns cum Payment challans, for the Tax year 2010 at Rs.22,120,185,910. The scrutiny of Income Tax Return filed by the above said registered person shows supplies at Rs.29,236,555,000. Resultantly registered person has short declared supplies in the Sales Tax Returns cum payments challans, for the tax year 2010 at Rs.7,116,369,090 involving sales tax amounting to Rs.1,138,619,054 @ 16% Corrigendum dated 8-3-2012 In para-I the written sales value at Rs.22,120,185,910 may be read as Rs.26,333,554,654. In para-I the declared short supplies Rs.7,116,369,090 may be read as Rs.2,903,000,346 short paid sales tax at Rs.1,138,619,054 where ever written may be read as Rs.464,480,056 Order dated 13-5-2011(i) In the light of Special Procedure Rules 2007, the registered person was liable to pay sales tax on the energy purchase price and capacity purchase price.
(ii) The Sales Tax Record of the RP was examined, exemption claimed by theregisteredpersonhasnotbeenestablished.RPisapubliccompanythereforedoesnotfall within the ambit of exemption as enjoyed by IPP, HUBCO, KAPCO. Hence the registered person is liable for payment of sales tax on the capacity purchase price (CPP).
(iii) Charges framed in the show cause notice under section 11(2) of the Sales Tax Act, 1990 has been established.
' The A.Rs, of the appellant argued that orders being beyond the show cause notice hence liable to be cancelled.
' He has contended that as is evident from above that the adjudicating officer decided the case on the facts which were not confronted to the appellant through show cause notices, hence, orders of the officer being beyond the contents of show cause notices are not maintainable. Reliance was placed on case-law reported as
(i) 1987 SCMR 1840, (ii) 2010 PTD 451, (iii) 2011 PTD 1883 and (iv) 2011 PTD 2538 ' Wherein it has been held that the order based on ground not mentioned in the show cause notice was palpably illegal and void on the face of it.
' The learned A.Rs,(sic) that the order have been passed without pecuniary jurisdiction and are liable to be cancelled as the same have been passed by the Deputy Commissioner Inland Revenue creating a demand of Rs,279,455,808 and Rs,525,303,477, Rs,438,379,915 and Rs,464,480,056 which is beyond the pecuniary jurisdiction of the Deputy Commissioner as provided under S.R.O. 555(1)11996 dated 1-6-1996.
Reliance is placed on case-laws reported as under:-- 2012 PTD (Trib.) 105. wherein it has been held referring above said S.R.0.555(I)that:- the said notification issued by the Federal Board of Revenue in terms of section 36 of the Sales Tax Act, 1990, the Deputy Commissioner of Inland Revenue has been authorized to adjudicate the cases involving assessment of sales tax, charging of addition tax and imposition of penalty provided that the amount of tax, involved does not exceed Rs,1,000,000 whereas in the instant case, the Deputy Commissioner had adjudicated the case involving sales tax of more than Rs,10,00,000 in all the four appeals.
' Similar findings are in other case referred by the learned counsel which are S.T.A. No 849/LB/2011 dated 9-4-2012, in S.T.A. No, 530/LB/2011 in S.T.A. No, 578/LB/2011, case reported as 2011 PTD 467, 2011 PTD (Trib.)
1943 and PTD (Trib.) 2086", in S.T.A. No 42/LB/2011 dated 4-5-2012, in S. T.A. No 55/LB/2012 dated 6-4-2012 and in S.T.A. No,823/ LB/2011 dated 8-6-2012, in all these cases it is held that assistant commissioner cannot decide case over his Pecuniary Jurisdiction. Relevant portion reads as under:-- "The Assistant Commissioner Inland Revenue/Audit Officer in the subject case was not competent to issue the show cause notice and to adjudicate the matter in view of the provisions of S.R.O. 555(I)/1996 dated 1-6-1996 which S.R.O. Is still in the field. In terms of the said S.R.O., an Assistant Collector (now Assistant Commissioner could adjudicate the cases falling under subsection (2) of section 11 and section 36 of the Act provided that the amount of tax involved or the amount erroneously refund did not exceed Rs,500,000. The impugned adjudication by the adjudicating authority was, therefore, illegal and void ab initio. The counsel relied on the judgment of this Appellate Tribunal in S. T.A. No, 530/LB/2011 and S.T.A. No, 578/LB/2011 titled as Messrs Coslab (Pvt.) Ltd. And Messrs Intercos. Copy of the said judgment was also placed on record".
8. Regarding the Orders-in-Original Nos. 1 and 2 of 2011 dated 13-5-2011, the learned counsel has contended that the orders are liable to be cancelled as the show cause notices were issued on the basis of income tax record which is not permissible under the law. Reliance is placed on case-law reported as:-- 2009 PTD (Trib.) 1069 Relevant portion reads as under:-- "It is noticed that both the Income Tax law and Sales Tax Act are based upon different pattern and footing, therefore, one record of another department cannot be relied upon for determined the liability under the law. The income tax record can be looked into for the purposes of conducting investigations and if any difference is detected by the detecting agency then that itself should be substantiated with solid and convincing evidence by comparing that information with the records maintained under Sales Tax Act, 1990. In the circumstances the orders passed by both the lower forms call for the interference by this court and are declared null and void."
The learned AR of the appellant argued that Order-in-Original Nos. 1 and 2 of 2011 are not maintainable as the same have been passed for July 2008, to June, 2009 and July 2009 to June 2010 whereas in the show cause notices tax years 2009 and 2010 were confronted. According to him the Tax period has been defined in Sales Tax Act as under:-- Section 2(43)
"Tax period" means a period of one month or such other period as the Federal government may by notification in the official Gazette specify."
' He as contended that as is evident from above period commencing from July, 2008 to June, 2009 and July 2009 to June 2010 have not been confronted in the show cause notices. He has submitted that there is no concept of Tax Year in Sales Tax Act, 1990.
' He has argued- that without prejudice to other submissions the liability 1E has been determined on the ground that appellant does not enjoy exemption on account of capacity purchase price. According to him if this contention of the department is accepted then it will be a case of misconstruction/error falling under section 36(2) of Sales Tax Act, 1990 which has not been invoked hence order is not maintainable in the eye of law which is liable to be cancelled.
9. Regarding Orders-in-Original Nos. 1 and 2 of 2011 dated 13-5-2011 it is argued that the learned CIR(A) is not justified to say that during the course of hearing of appeal the departmental representative raised a legal objection that appeals have been filed late and are clearly time barred whereas during the course of hearing of appeal no objection regarding late filing of appeals has been raised by the learned DR. However he has argued that the order being void, against which no limitation runs as has been held in case-law reported as 2010 PTD (Trib.) 1174. Relevant Para reads as under:- 2010 PTD (Trib) 1174 "This Tribunal in its order reported as 2004 PTD (Trib.) 838 has also held that the limitation to file appeal against the order which has been passed without lawful jurisdiction would cease to run, meaning thereby that an appeal against such order can be instituted at any time". After considering the above case law, I ant of the view of that Taxation Officer has passed an order under section 121 without having jurisdiction and against the clear provision of law and the learned CIT(A) has dismissed the appeal filed by the assessee without any justification. In view of the above legal position the impugned order of the learned CIT(A) is vacated and the order passed by the Taxation Officer under section 121 is cancelled. The appeal filed by the assessee is allowed."
' On the basis of these arguments, learned counsel of the appellant has regretted to cancel the orders of the officer below.
10. On the other hand the learned DR supported the orders of the authorities below and submitted that input tax has rightly been disallowed by the taxation officer and exemption claimed on account of capacity purchase price has rightly been disallowed by the taxation officer as registered person could not substantiate his claim before the assessing officer. He has submitted that the learned CIR(A) after a detailed discussion and giving fully opportunity to the appellant has upheld the treatment meted out by the adjudicating authority which requires no interference. He is therefore requested to reject all the appeals.
11. We have considered the contentions made from both the sides and have also perused the impugned orders of the learned CIR(A), the adjudicating officer, the relevant provisions and the decisions of the honourable Supreme Court of Pakistan and Appellate Tribunal Inland Revenue. We find force in the contention made by the learned counsel for the appellant. That orders in original were passed beyond the show cause notice and beyond the pecuniary jurisdiction. Therefore, the same are without jurisdiction and hereby set-aside. The appeals filed by the appellant/taxpayer are allowed to the extent as indicate above.