' JAWAID MASOOD TAHIR BHATTI, CHAIRMAN.---The subject appeals, preferred by private limited companies, engaged in the business of manufacture and sale, including exports, textile products, impugns the appellate order No. 12A-II and 11-A-II, dated 24.12.2013 passed by the learned Commissioner of Inland Revenue (Appeals), Lahore in respect of taxpayer's appeals against Order- In-Original No. 47/2013, dated 26.09.2013, and Order-In-Original No. 50/2013 dated 26.09.2013 issued by the learned Assistant Commissioner Inland Revenue, Unit-04, Zone-III, Regional Tax Office-I, Lahore.
2. The facts leading to the appeals involved are that the appellants are engaged in the manufacturing of textile products. It remained subjected to zero rating of sales tax from 06.06.2005 to 31.03.2011 through various notifications including SRO 535(1)/2005, dated 06.06.2005, SRO 621(I)/2005, dated 17.06.2005, SRO 525(1)/2006, dated 05.06.2006 and SRO 509(1)/2007, dated 09.06.2007. From 06.06.2005 to 31.03.2011, zero rating of sales tax remained available on textile, irrespective of the fact whether sold to persons registered or not registered under the Act.
' Through SRO 283(1)/2011, dated 01.04.2011 the Federal Government restricted the regime of zero rating sales tax only when the goods of the above-referred five sectors were sold to persons registered under the Sales Tax Act, 1990 whereas the goods sold to unregistered persons was subjected to sales tax at the reduced rate of 6% and 4% when sold to persons not registered under the Act. The benefit of zero rating of sales tax and reduced rates of sales tax of 4% and 6% was granted subject to certain conditions inter alia including that the benefit of the said notification would be available only to persons if they were shown in the Active Taxpayers List [ATL] given on FBR website.
' Through S.R.O. 283(1)/2011, dated 01.04.2011, S.R.O. 1012(1)/2011, dated 04.11.2011, S.R.O. 1058(1)/2011, dated 23.11.2011 and S.R.O 1125(1)/2011, dated 31.12.2011 the rates of sales tax on textile products remained the same i.e. Zero percent when sold to registered and 6% when sold to unregistered persons subject to similar conditions as had been prescribed in SRO 283(1)/2011, dated 1.4:2011 subject to similar conditions including that persons should be shown as . Active in ATL given on FBR website.
' The Taxation Officer/DCIR issued a show-cause notice dated 08.06.2013 through which it was alleged that on analysis of data provided by Computerized Risk-based Evaluation of Sales Tax (CREST], system it was found that the appellant has contravened sections 3, 4, 6, 7. 8, 11, 22, 23 and 26 of the Sales Tax Act, 1990 read with SRO 283(1)/2011, dated 01.04.2011, SRO 1012(1)/2011, dated 04.11.2011, SRO 1058(1)/2011, dated 23.11.2011 and SRO 1125(1)/2011, dated 31.12.2011 and it was further alleged that the appellant failed to avail the amnesty scheme issued vide SRO 179(1)/2013, dated 7th March, 2013 wherein the registered person was given option to pay sales tax at the rate of 2% of the value of the supplies who claimed zero rating on supplies made by him in violation of the above-referred SROs during the period from July, 2011 to February, 2013. The appellants were called upon to show cause as to why sales tax due should not be recovered from them under Section 11(2) of the Sales Tax Act, 1990.
' The said show-cause notice was duly replied by the taxpayers however, the adjudicating authority vide its orders * dated 26.09.2013 vacated the show-cause notice partially and enforced the show- cause notices to the extent of payments made under amnesty SRO 179(1)/2013. Against the orders- in original, the taxpayer filed first appeals before the learned CIR Appeals Lahore. The learned first appellate authority upheld the orders passed by the adjudicating authority hence the Registered persons titled above have filed the instant appeals.
3. During the course of hearing, the learned AR not only reiterated the arguments taken in the memo. Of appeals, he has laid special emphasis in the following contentions and argued that the fundamental rights of the registered person guaranteed by the Constitution of the Islamic Republic of Pakistan, 1973 have been violated. The appellant has been discriminated for no apparent reasons and the vested rights have been infringed. In this respect he has made reference to recently inserted provisions of Article-10-A of the Constitution of the Islamic Republic of Pakistan, 1973 titled "Right to fair trial".
' It is contended that availing the concession, exemption under the amnesty SRO do not preclude the registered person from agitating its rights and perusing their cases/appeals respectively before the available/provided forums. That the said rights are duly available to the registered persons to the extent that if adjudged taxes are paid under some relief granting amnesty scheme or exempting SRO even then the right of appeal etc. Is still available to the taxpayer within the parameters of law. The appellant's precise contention is that the SRO merely states that if for all supplies made during the period from 1st April, 2011 to 28th of February, 2013 on which due tax has not been paid and irrespective of the past or present registration status of the buyers, the suppliers pays sales tax @ 2% of the value of such supplies through a special sales tax return alongwith details of all such sales tax invoices etc. He may do so without any default surcharge & penalty. The appellant, in order to avoid any liability whatsoever made a deposit of sales tax @ 2% in respect of certain supplies without determination of any liability towards them. The show-cause notice dated 08.06.2013 listed out the price and declaration of the buyer, the declaration of the supplier and the difference between the two and the sales tax that was being demanded. The Show-Cause Notice clearly asked the Appellant to show cause as to why the alleged amount in the Show-Cause Notice of Rs. 59,558,685/- should not be recovered from them under section 11(2) of the Sales Tax Act, 1990 alongwith default surcharge under section 34 ibid and as to why penalty may not be imposed upon them under section 33(17) ibid. It is in respect of Show-Cause Notice. The appellant provided details of all supplies that it had made to various person, who were duly registered by the department under the Sales Tax Act, 1990 and stated that they had not been blacklisted at the time when the supplies was made to them. As such these supplies were valid supplies. The learned AR contended that the Respondent No. 1 or the Respondent No. 2 did not consider the facts placed before them and enforced the Show-Cause Notice on the sole ground that since the Appellant had made a deposit in terms of the concession given in SRO No. 179(1)/2013, therefore, the reply in respect of those supplies could not be considered by then. According to the respondent No. 1 having taken benefit of an amnesty scheme, the Appellant was not therefore, entitled to any benefit and had forfeited his right to any defence in respect of such supplies even if they were made to registered persons. This finding has been challenged by the Appellant. He relied upon the judgments reported as 2006 PTD 120 wherein it has been, held that: ' From the above provisions it is clear that availing the concession under the S.R.O. Would neither affect the adjudication proceedings nor any appeal filed from the order of the adjudicating officer and the same shall still (sic)"
' The learned AR for the appellant in this respect has also relied upon the judgments reported as 2005 PTD 2377 wherein it has been held that:--- "We are thus of the opinion that despite payments of the amount of the claimed sales tax by the appellant under the amnesty scheme, it was entitled to a decision on legality, payability and validity of the claimed sales tax. The learned Tribunal and the adjudicating authority thus failed to exercise jurisdiction vesting in them. The question should have been decided as to whether the amount of the sales tax of Rs. 964,159 was due from and payable by the appellant or not and as to whether the appellant was entitled to the refund of the sales tax amount paid under the Amnesty Scheme."
' He has contended that the refund of the amount should not be disallowed due to technical reasons. He has in this respect relied upon the, judgment of Hon'able Supreme Court of Pakistan reported as PTCL 1998 CL 354 wherein it has been held that:--- "If one party under a mistake, whether of fact or law, paid some money to another party (which include a Government department), which was not due by law or contract or otherwise, that must be repaid in view of section 72 of the Contract Act, 1872.... "
' Where some money is received by the Government not lawfully due, the plea of limitation by its departments was violative of the principles of morality and justice...."
"The money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority was prima facie recoverable by a an-en as right. The retention of "moneys known to have been paid under mistake at law although it was a course permitted to all ordinary litigant was not regarded as a high-minded thing, to do, but rather as a shabby thing, or a dirty trick ' It is argued that the executive order or notifications which confer rights and are beneficial would be given retrospective effect and those which adversely affect or invade upon the vested right cannot be applied with retrospective effect. He relied upon the judgments reported as 2005 .SCMR 492, 2012 SCM R 864, PTCL 2001 CL. 277, 2013 PTD 581, 2004 PTD 819 and 2006 PTD 1375.
' He has also referred the judgment reported as 2012 SCM R 864 wherein it has been held that:--- "Notification and/or executive order could opera* prospectively and not retrospectively and the same principle was equally applicable to a statute'in the absence of any express or implied intendment contrary to it."
' The other judgments reported as 2005 SCM R 492 has been referred wherein it has been held that:--- "Executive orders or notification which confer rights and are beneficial would be given retrospective effect and those which adversely affect or invade upon vested right cannot be applied with retrospective effect."'
' It is argued that the appellant cannot be penalized for fault on the part of the buyers, if any: who have not shown purchases made from the registered persons or have not declared the correct quantity/value of goods purchased from the Registered Persons. According to him, it is a settled law that no one would suffer for the act of 'another. That if at all. The buyers had failed to declare correct quantity/value of goods purchased from the Registered persons in their record, it does not impose any liability on the Registered persons. He relied upon the judgments reported as 2003 YLR 1130 and judgment of the Honourable Lahore High Court passed in W. P. No. 3515/2012 the relevant portion in this respect is reproduced hereunder:- ' It is assumed, unless proven otherwise, that there is free competition in the market. Buyers and sellers in a market are separate unrelated and independent players, transacting with each other at arm-length. The buyer has no control over the supplier. Once the payment is made to the supplier through proper banking channel, as provider/ under the. Act, the buyer has no control over the supplier. Buyer has no means to police the supplier to ensure that the payment made is also duly deposited in the government exchequer. Supplier is not a puppet of the buyer and does not dance to his tune. Any such expectation or obligation cast upon the buyer in a market where there is free and fair competition defies reasonability and logic."
' It is contended that the status of the buyer existing at the time of the supply of goods' by the Registered persons shall be considered while deciding the case of the Registered persons and not the status attained by the buyer subsequently. In this regard he relied upon judgment of the Honourable Lahore High Court, passed in Writ Petition No 17237/2013, dated 12. 07 .2013 titled M/s. Nimra Textile Mills Limited v. Federation of Pakistan the relevant portion in this respect is reproduced hereunder:---
(i) "An opportunity will be given to the petitioner to lead evidence in support of supply of goods made by the petitioner and thereafter the overall evidence brought on the record shall be weighed and evaluated strictly in accordance with law.
(ii) The status of the buyer existing at the time of supply of the goods by the petitioner shall be considered while deciding the show-cause notice and not the status attained by the buyer subsequently."
' According to the learned counsel the Registered person had supplied goods to the persons who were registered under the Act and were shown as active on ATL as was available on FBR website at the time when supplies were made to them. All the buyers were holding valid National Tax Numbers and Sales Tax Registration Numbers as were allotted to them by the Federal Board of Revenue itself: None of the buyers was non-active, nil filer or null tiller, at the time when the appellant supplied goods to them. No discrepancy whatsoever was available against any of the buyers at the particular time when supplies were made to them by the Registered persons. He has, therefore, requested to allow the appeals filed by the registered persons.
4. On his turn, learned DR has supported the impugned orders of the learned CIR (Appeals) in their cases wherein the appeals were filed by the registered persons and argued that the registered persons cannot be allowed to contest the amount paid under the amnesty scheme. The main contention of the learned DR is that having availed the amnesty scheme given under SRO 179(1)12013, dated 07.03.2013, the Appellant stands precluded from seeking adjudication with respect to supplies on which 2% sales tax had been paid under the said SRO. The learned DR prayed for dismissal of appeals filed by the appellants against order of the learned CIR Appeals.
5. We have heard the learned counsel appearing on behalf of the Registered persons as well as the learned DR and have also taken into account the impugned orders of the learned CIR (A), the orders-in-original, the relevant provisions of law the relevant orders as well as case-laws quoted in the memo. Of appeal and referred to during the arguments.
We have found that in this case the Registered persons company had deposited the partial amount under the concessionary S.R.O. 179(1)/2013, dated 07.03.2013 before the issuance of the show-cause notice. The learned AR pointed out the letter dated March 30, 2013 which clearly states that the letter is being issued "without prejudice" and the subject-matter thereof says: "without prejudice to our right to ask for actual determination of our liability and to seek refund and/or adjustment against deposit of sales tax of Rs. 19,493,948/-against themselves special sales tax return under SRO 179(1)/ 2013, dated 07.03.2013. This letter clearly states that the deposit was being made without prejudice to ask for actual determination of the Appellant's liability and thereafter obtaining full refund and/or adjustment at a later stage of the amount so deposited if any Court of law, competent authority or if FBR declares, rules and/or determines their case or in similar case or cases that the provision of Sales Tax Act, were complied with on the date of actual sales and therefore 2% sales tax paid by the Appellant or part thereof was actually not payable. The learned AR appearing for the taxpayer submitted that availing concession under S.R.O. 179(1)/2013, dated 07.03.2013 does not bar the taxpayer from contesting the liability on merits. The very Show-Cause Notice asks the Appellant to show-cause as to why the amount of sales tax mentioned therein should not be recovered from them alongwith default surcharge and why penalty may not be imposed upon them under section 33(17) of the Sales Tax Act, 1990. This means that the Appellant has been given an opportunity to show that its supplies were made in accordance with law and there was no violation thereof. According to him availing of the amnesty scheme by the taxpayer meant that on an adverse decision in the adjudication proceedings and/or the appeals arising therefrom, the Registered person would not be subjected to the additional tax and penalties. He is of the view that the taxpayer presumed that its defence against the show-cause notice would neither be compromised nor be given up on payment of the sales tax under the amnesty scheme.
He has also pointed out that the learned Adjudicating Officer vacated the show-cause notice to the extent of the other charges levelled in the show-cause notice but the amount paid under the amnesty scheme has not been decided on merits and he has held the said amount payable only for the reason that the said amount has been paid under amnesty scheme. He has in this respect referred to the cases decided by the Honourable High Courts which have been discussed in the above paras of the order. After considering these judgments we find force in the contention of the learned AR that availing the concession under the S.R.O. 179(1)/2013, dated 07.3.2013 would neither affect the adjudication proceedings nor any appeal filed from the order of the adjudicating officer and the taxpayers still have a right that their cases shall be decided on merits. Respectfully following the ratio laid down by superior Courts, in the case reported as 2006 PTD 120 and 2005 PTD 2377, we are of the view that despite the payment of the amount under the amnesty S.R.O.
179(1)/2013, dated 07.03.2013, the taxpayer was entitled to a decision on legality, payability and validity of the amount paid under the said SRO. It has been contended by the learned AR that the SRO 283(1)/2011, dated 01.4.2011 was superseded through SRO 1012(1)/2011, dated 4.11.2011 which was again superseded through SRO 1058(1)/ 2011, dated 23.11.2011 and SRO 1125(1)12011, dated 31.12.2011 however, the rates of sales tax on textile products remained the same i.e. Zero percent when sold to registered persons subject to condition and that persons should be available as active, in ATL given on FBR website. He has argued that the taxpayers in the instant cases had supplied goods to the persons who were registered under the Act and were shown as active on ATL as was available on FBR website at the time when supplies were made to them and the taxpayers cannot be penalized for fault on the part of the buyers, if any, who have not shown purchases made from the taxpayers or have not declared the correct quantity/value of goods purchased from the taxpayer. He further argued that if at all, the buyers had failed to declare correct quantity/value of goods purchased or services obtained from the taxpayers in their record, it does not impose any liability on the taxpayers. It is a settled law that no one would suffer for the act of another. In this respect has referred to the cases decided by the Hon'able superior Courts of the country have been referred which have been discussed in the above paras of the order. We are of the view that it is settled principle of law as pronounced by the Honourable Supreme Court of Pakistan in its judgment reported at 2005 SCM R. 492 that executive orders or notifications, which confer rights and are beneficial, would be given retrospective effect and those which adversely affect or invade upon vested right, cannot be applied with retrospective effect.
' We have further noted that in identical case including one of the taxpayers in the above-referred appeals the Honourable Lahore High Court in writ petition No. 17237/2013, dated 12.07.2013 titled M/s. Nimra Textile Mills Limited v. Federation of Pakistan has held that the status of the buyer existing at the time of supply of the goods by the petitioner shall be considered while deciding the show- cause notice and not the status attained by the buyer subsequently. Keeping in view of the above facts, the judgments of the Hon'able Superior Courts and the record produced by the learned AR, showing supplies to the persons who were registered under the Sales Tax Act & were shown as Active on ATL as was available on FBR website at the time when supplies were made to them and it was not disputed by the department. Accordingly, we have no hesitation in holding that appellant is entitled to claim the refund of the amount paid under protest. The orders of the authorities below are modified to this extent.
6. Both the appeals stand disposed of in the manner as indicated above.