' CH. ANWAAR UL HAQ (JUDICIAL MEMBER).---The titled sales tax appeal has been preferred at the instant of Revenue, against Order-in-Appeal No,02/A-11/2011, dated 12.01.2012, passed by the .Learned CIR(A), Zone-II, Lahore.
2. In response to the call notice dated 15.04.2016 served through registered post on the respondent, Mr. Adnan Goraya, Advocate, appeared on 19.04.2016 without any power of attorney and requested for adjournment. The matter was adjourned for 21.04.2016, again the said Advocate appeared without power of attorney and the matter was again adjourned for submission of power of attorney for 22.04.2016. Today, on 22.04.2016, Mr. Adnan Goraya and Mr. M. Ahmed Kamal, Advocates, appeared and submitted power of attorney and at the very outset requested that the case may be transferred to some other Bench.
3. Perusal of the power of attorney submitted reveals that the respondent / registered person has not executed the same in favour of the present counsels in as much as no signature of the registered person is appearing on the power of attorney. Since, the power of attorney presented is without any authorization from the registered person, the same cannot be accepted as a valid document for the purposes of representation on behalf of a respondent registered person, in terms of Rules 17(1)(2) and 18(1) of the ATIR Rules, 2010 which reads as under:-- "17. Power of attorney etc. By authorized representative. ---
(I) Where a memorandum of appeal is also signed by an authorized representative, such representative shall annex with the memorandum, the document showing his authority and his acceptance thereof, which shall be signed and dated by the representative and shall also specify his capacity in which he acting as such: ' Provided that in case of an appeal by the Commissioner Inland Revenue the memorandum of appeal need not be accompanied by a letter of authority.
(2) In case of appearance of an authorized representative on behalf of respondent, the authorized representative shall abide by the provisions of sub-rule (I) with regard to power of attorney constituting his authority as such.
(3) ...........
18. Authorization to be filed.---(1) Air authorized representative appearing at the hearing of an appeal, shall unless the document referred to in rule 17 has already been appended, file such document before the commencement of the hearing".
' Accordingly, Mr. Adnan Goraya and M. Ahmed Kamal. Advocates, are not entitled to argue or represent the instant registered person. Hence, the power of attorney is rejected being invalid.
4. In view of the above, present departmental appeal is decided in the absence of respondent registered person on merits after hearing the arguments of the learned DR, in terms of Rule 22 of ATIR Rules, 2010.
5 . The relevant facts are that during the course of scrutiny of sales tax returns and sale summaries pertaining to the tax periods February, 2008 and June 2009, it was observed that the registered person had claimed/adjusted illegal input tax of Rs,622,480/- on invoices issued by blacklisted units, which was not admissible to the registered person under the law. On the basis of aforesaid facts, the registered person was .Called upon to show cause as to why input tax referred supra along with default surcharge and penalties may not be recovered under A sections 11(2) and 36(1) of the Sales Tax Act, 1990. Since the registered persons had failed to appear before the assessing authority, therefore, an ex parte order dated 28.10.2011 was passed whereby said amount was ordered to be recovered along with default surcharge and penalty. The appellant preferred the appeal before the learned CIR(A) who after considering the submission of the learned AR disposed of the same with the observation that the department is at liberty to verify as to whether or not the appellant has fulfilled the conditions as laid down under section 73 of the Sales Tax Act, 1990.
6. It is the submission of the learned DR before me that the CIR(A) was not justified to hold that the proof of payments/bank statement provided by the registered person regarding transaction to its supplier Messrs United Petroleum to substantiate that the payments were made in accordance with the provisions of section 73 of the whereas status of the said supplier is blocked till to date. It is also the submission of the learned DR before me that the CIR(A) ignored the provisions of sections 8A, 8(1)(d) and Rule 12(5) of the Sales Tax Rules, 2006 as the registered person was not entitled to claim tax credit against the invoices of blacklisted supplier.
7. I have looked into the matter and after due consideration, I find that the respondent had failed to provide requisite documentary evidences before the authorities below such as proof of payment in terms of section 73, physical transfer of goods, genuine of purchase invoices etc. The issue of claim of input tax on the strength of fake/flying invoices issued by fake/blacklisted units, stands already decided by the Hon'ble Lahore High Court in a judgment recorded in S.T.R. No,98/2014 dated 12.03.2015, re: CIR v. Messrs Tariq Poly Pack (Pvt). Ltd. Wherein the Hon'ble High Court after a detailed deliberation remanded the matter for verification as per guidelines given below:-- i) The registered person/purchaser who reclaimed or deducted input tax had actually paid the tax to the supplier or not. Ii) If the input tax was paid by the registered person/purchaser but not deposited by the supplier, then for purpose of section 8A of the Act, whether the registered person/purchaser was in knowledge or had reasonable ground to suspect that some or all of the tax payable in respect of supply would go unpaid? iii) Whether, particular invoices issued prior to blacklisting was fake and flying has direct nexus with the blacklisting?"
8. By respectfully following the guidelines reproduced supra drawn by the Honourable Lahore High Court, we set-aside the orders passed by both authorities below and remand the matter to the concerned assessing authority for afresh proceedings. He is directed to complete the proceedings in the light of Hon'ble Lahore High Court's directions/ guidelines reproduced above. Order accordingly.
9. Appeal filed by the department is disposed of in the above manner.