' The appellant has filed appeal before this Tribunal against Order-in-Appeal No,ST-374 of 2011 dated 15-11-2012 passed by the Commissioner Inland Revenue (Appeals-II), Islamabad on the following grounds:--
(1) That the order of the learned Commissioner Inland Revenue (Appeals-II), Islamabad is bad in law and against the fact of the case.
(2) That the learned Commissioner Inland Revenue (Appeal-ID has legally erred disallowing input tax adjustment of Rupees 3,445,640 claimed by the appellant in the sales tax returns submitted for the tax period November 2011 to January 2012. His action on the basis of month wise consolidated amount of discrepancies and contradiction given in the show cause notice and by ignoring the legal provisions as well as written submissions of the appellant is unsustainable being illegal and void.
(3) That the learned Commissioner Inland Revenue (Appeal-II) was not justified to hold the appellant at fault for non deposit of sales tax by the supplier of goods when payment against supply of goods including sales tax was made by the appellant to the supplier through proper banking channel. Hence refusal of input tax adjustment tantamount to double taxation which is not permitted under the scheme of law.
(4) That the distinctive invoice numbers of invoices issued by the suppliers who allegedly not reported sales to Pakistan Television Corporation were not given in the order.
(5) That the amount of Rs,3,445,640 ordered to be recovered from the appellant under section 11(2) along with default surcharge under section 34 (to be calculated at the time of payment) and penalty under section 33(5) of the Sales Tax Act, 1990 which is not applicable in the instant case, is unjustified and unsustainable under the law.
(6) That the learned Commissioner Inland Revenue (Appeal-II) has no jurisdiction over the appellant in respect of sales tax matters is evident by the order of Honorable Tribunal Inland Revenue, Islamabad dated 30th August, 2012.
(7) That it is earnestly prayed that Order-in-Original No,3 of 2011 dated 6th August, 2012 for the tax period from November 2011 to January 2012 may kindly be vacated to meet the ends of justice.
(8) That the appellant craves permission to add, delete or amend any ground of appeal at the time hearing,
2. Brief facts of the case are that the registered person claimed input tax credit amounting to Rs,3,445,640 during the period 11/2011 to 1/2012 which was not reported by the respective suppliers.
Therefore, the officer confronted the issue to the registered person through show cause notices and after considering the reply of the registered person officer passed Order-in-Original No,32011 dated 6-8-2012 for the recovery of the principal amount along with default surcharge and penalty under sections 34 and 33 of the Sales Tax Act, 1990 and this order is subject matter of this appeal.
3. This appeal came up for hearing on 14-3-2013. The appellant case is that certain input tax amounting to Rs,3,445,640 pertaining to the period November 2001 to January 2012, found missing in the supplier's sale summary was denied by the respondent. The appellant claims that non deposit of the sales tax by its supplier is not her fault. The appellant's claim that she can prove the payment of sales tax in respect of the relevant invoices and non deposit of sales tax by the appellant's suppliers calls for initiation of recovery proceedings from the appellant's suppliers and not punishing the appellant who lawfully discharged his onus of payment of sales tax. We think that there is a merit in the appellant's view point. Therefore, we remand this case to the assessing officer for figuring out the veracity of the appellant's contention. In case the appellant is able to put forth a credible evidence of payment of sales tax corresponding tothis input tax claim, such claim may be allowed and simultaneously recovery proceedings may be initiated against the delinquent suppliers who failed to deposit the sales tax. We find hard to understand why the FBR does not change the current mechanism relating to deposit of sales tax, which is full of loopholes and induces massive tax frauds. The privatization of collection of sales tax from the suppliers is absolutely bizarre as State money is left at the mercy of traders, who sometime, never deposit it.
We have repeatedly suggested that no person other than the taxpayer should be responsible for payment and deposit of sales tax. How this responsibility can be assigned to a non State person.
This is a point to be contemplated by the FBR. The appeal is accepted to the extent mentioned above. As a result, the appellant's input tax claim shall be approved in case she can credibly demonstrate that the output tax was duly paid by her.