' MUNSIF KHAN MINHAS (JUDICIAL MEMBER).---These appeals have been filed by the Registered Person against the orders in appeal passed by the learned CIR(Appeals), Faisalabad, dated 28-2- 2012 for the Tax Period March to May 2011 on the following common grounds:--
(1) That contrary to the jurisdiction order bearing No,ZoneII/RTO/SG/200 dated 15-4-2011 the Order in Original has been passed without jurisdiction by the Inland Revenue Audit Officer, Enforcement- Ill, RTO, Sargodha.
(2) That the learned CIR(A) has altogether ignored the facts of the case, documents, copies of Sales Tax Return of the seller/purchaser which was produced before him at the time of hearing.
(3) 6 STRNs have been issued to Messrs Coca Cola under same NTN: 0709120-6.
(4) That the Input tax has rightly been claimed by the appellant against invoices issued by Messrs Coca Cola under STRN 0803220200191, which has been reflected as Output tax under STRN 1103220200282 by Messrs Coca Cola.
(5) That the Registered Person has been over burdened with heavy demand for the default he has not committed.
2. Brief facts leading to these appeals are that during the reconciliation of purchases (input tax) with supplier's (output tax) from the period March-May 2011, it was observed that Messrs Niazi Brothers, Bhakkar bearing STR No,0880220215346 claimed/adjusted input tax which was not reflected in the supplier's supplies. It means that the Registered Person claimed/adjusted inadmissible input tax. M/s Niazi Brothers were alleged to have contravened the provisions of section 3, 6, 7, 8(A), 22 and 26 of the Sales Tax Act, 1990 read with section 2(14) of the Sales Tax Act, 1990 and were called upon to show cause as to why sales tax amounting to Rs,591,949 may not be recovered from them along with default surcharge under section 36(1) and 34 of the Sales Tax Act, 1990. Imposition of penalty under section 33 of the act ibid was also proposed. The adjudication proceedings culminated in passing of three Sales Tax Assessment Orders No,8 of 2011 dated 12-10- 2011, No,11 of 2011 dated 25-10-2011 and Order No,13 of 2011 dated 25-10-2011, wherein the amounts of Sales Tax of Rs,591,949, Rs,892,072 and Rs,950,452 were ordered to be recoverable from the appellant under section 36(3) along with default surcharge under section 34 of the Sales Tax Act, 1990. A penalty Rs,10,000 was also imposed upon the appellant under section 33(5)(2) of the act ibid. Being dissatisfied with the treatment given by the Inland Revenue Audit Officer (Enf-III), Zone-II, RTO, Sargodha, the Registered Person preferred appeal before learned CIR(A), Faisalabad, who dismissed the appeal filed by the Registered Person with the following remarks:- "After due consideration, I find that the appellant claimed/ adjusted inadmissible input tax which were not declared in the supplies of the suppliers in the relevant tax periods. The appellant is entitled to claim input tax adjustment if he holds a valid tax invoice issued under section 23 of the Sales Tax Act, 1990 in respect of such supply, wherein the supplier has filed true and correct return on due date. That portion of input tax is admissible for adjustment/refund which has been deposited into national exchequer and same is also verifiable from the sales tax record maintained under section 22 of the Sales Tax Act, 1990. The appellant failed to submit valid documentary in support of his appeal. In view of above, I find that input tax claimed by the appellant is not admissible under the law. On the other hand the appeal being devoid of any merit which is dismissed accordingly. The appeal is disposed of as above."
3. The first appeals filed by the taxpayer were dismissed by the CIR(Appeals), Faisalabad vide orders passed in the case under consideration on 28-2-2012. The taxpayer being dissatisfied with the findings of the learned CIR(A) has come up in second appeal before this Tribunal on the grounds raised supra.
4. Mr. Khurshid Ali Rana, Advocate/AR present on behalf of appellant in the above mentioned case while Mr. Muhammad jawad, DR, present on behalf of the revenue who have been heard.
5. During court proceedings learned DR contends that the sales tax registration number of supplier is different on invoices and on the return/ summary filed by the supplier. He further contends that Registered Person claimed/adjusted input tax which was not reflected in the supplier's supplies and the input tax claimed/adjusted is recoverable under the law, hence the impugned orders passed by the adjudicating officer and CIR(A) are as per law, which may please be maintained.
6. I have considered the facts of the case and the contentions of both the parties. Registered Person has produced a record of taxpayer online verification which shows that Coca Cola Beverages Pakistan Ltd. Has one NTN 0709120-6, but its different branches have different sales tax registration numbers, as the table below explains this position.
NTN 0709120-6 Sr.
No.Branch Name STRN
1. Coca Cola Beverages Pakistan Ltd. 0301220201155
2. Coca Cola Beverages Pakistan Ltd.- Karachi 0407220205891 3 Coca Cola Beverages Pakistan Ltd.-Rahim Yar Khan0408220201664
4. Coca Cola Beverages Pakistan Ltd. 0904220200173
5. Coca Cola Beverages Pakistan Ltd.-Karachi. 110322020028
6. Coca Cola Beverages Pakistan Ltd. 0803220200191 ' As per Registered Person when he files STR online, all of the Sales Tax Returns Numbers are open.
E-port folio has specific software and Registered Person does not know that against which STRN its input is shown by the software. Learned AR argues that notice issued by the revenue was replied properly with the request that the input tax claimed by registered person has sufficient proof in the shape of invoices issued by the supplier for the tax period. Copies of invoices issued by the principal company were produced with reply, thus registered person has not committed any default. He further argues that amount of input tax is truly reflected by the principal company in its STR. He also argues that Registered Person has rightly claimed adjustment of input tax, which is duly supported with the invoices issued by the active registered Person.
7. I feel that the raising of the impugned demands under such circumstances when the issues are of such mysterious nature i,e, casting doubt and suspicions over transactions verification is to be made. Both the authorities below have exhibited narrow reading and application of law. In order to let due process of law unfold, it is necessary that before raising any demand interface with affected party has to be conducted, also in this case outreach to supplier's record has to be made so as to prove and establish the fact of fraud. This view is strengthened by the following case- laws:-- * 2010 PTD (Trib.) 1631 S.T.A. No,1334-LB of 2009 dated 25-2-2010. * 2010 PTD (Trib.) 162 S.T.A. No,555-LB of 2009 dated 20-7-2010 .
' In view of the above scenario I deem it appropriate to set aside the orders of the authorities below and remand the case back to the Inland Revenue department for re-adjudication on the lines indicated above ensuring attendance of the appellant and inquiry of the suppliers ad after invoking necessary provisions of the law.