' Through this sales tax appeal appellant/taxpayer has challenged the Order-in-Appeal No,19/2013 dated 31-7-2013 passed by the learned Commissioner Inland Revenue (Appeals), Peshawar relating to tax period 2009-2010, whereby he confirmed the demand established vide assessment order dated 18.04.2013. Besides taxpayer filed a Misc. Application No,11 (Amended Appeal) for rectification of certain clerical mistakes.
Brief facts of the case are that Appellant, a Wedding Hall, was issued a Show Cause Notice No, ST&FE(Audit-DS.Areena/2013/224 dated 13.03.2013 under section 11(2) of the Sales Tax Act, 1990 by the learned Deputy Commissioner I.R (Audit-I) for recovery of Rs,6,200,064/- as a short paid sales tax during the tax period 2009-2010. The aforesaid short levy was an outcome of 17 days monitoring carried out from 25th May to 10th June, 2012 of the Appellant premises. The monitoring team reported that Appellant in the Wedding Hall was providing foods and as well as services. Food items were supplied by various persons which were served by the Appellant amongst the guests.
Accordingly a short levy for the tax period 2009-10 calculated as under: "Total No, of days of Monitoring: 17 days.
' No, of days during which booking were made/functions held: 10 days.
' Percentage of total booked days: 50%.
' Total No, of working days during the year (365-60): 305 days.
' No, of days during which bookings made in accordance with 59%: 180 days.
' Average No, of persons per day: 260 persons. Charges per person: Rs, 826.-.
' Annual value of supply suppressed: 180 x 260 x 828 = Rs,38,750,400/-.
' Sales Tax recoverable 016% for the suppressed value of supply = Rs, 6.200.064/-."
2. The 'Appellant submitted reply to the show cause notice and denied the allegations inter alia on the ground that being a Wedding Hall its activities during 2009-10 were exempt from sales tax under the North West Frontier (Khyber Pakhtunkhwa) Sales Tax Ordinance, 2000 as amended by N.W.F.P Finance Act, 2005. Further the Federal Board of Revenue vide its Circular No,105(2)54R- III/2011 dated 25.08.2011 had clarified that after 2005 amendment Wedding Halls activities were exempt from sales tax. For the reasons Appellant also denied the registration under the Sales Tax Act, 1990 for lack of knowledge and on merit as well. The Appellant plea failed to find favour and by Assessm ent Order No, 09/2013 dated 18.04.2013, relying on the Ministry of Law and Justice Government of Pakistan Memorandum No,330/2009-law-I dated 27.07.2012, the learned Assessing Officer besides ordering recovery of principal amount, held the Appellant liable for default surcharge under section 34 ibid and was further imposed penalty under section 3(5) ibid equivalent to 5% of the tax involved. The appeal before Commissioner Appeals I.R. Failed, hence, the instant appeal.
3. The learned counsel for the Appellant submitted that during the period the proceedings against the Appellant were void ab initio for being coram non judice as supplies of services of the Wedding Hall were exempt from sales tax both under the Provincial and Federal Statutes. He submitted that on this score alone both registration and demands were not legally sustainable. He attributed great mala fide to the proceedings leading to the impugned orders. He categorically stated that the Audit Report and subsequent show cause notice were hit by sections 72 and 45(A) of the Sales Tax Act, 1990 for non-compliance of the Board instructions and for acting without lawful authority, He further stressed that Appellant had discriminately being treated as none of the Wedding Hall rendering services within the Respondents jurisdiction had been taxed during that period. On the other hand, DR vehemently defended the impugned orders and relied upon Ministry of Law and Justice Government of Pakistan Memorandum No, 530/2009-law-I dated 27.07.2012.
4. Parties heard. Record perused. Initially marriage halls and lawns" were brought in the sales tax net by virtue of Entry Nos.1 and 1(b) of "THE SCHEDULE" to the then North West Frontier Province Sales Tax Ordinance, 2000, however, by NWFP Finance Act, 2005, the words "marriage halls, lawns" were omitted from Entry No,
1. Ibid and sub-entry (b) was also omitted which at the time of omission was read as "Services provided or rendered by marriage halls and lawns". It appears that thereafter certain attempts were made to bring certain activities of the marriage hall etc. In the tax net; however, Federal Board of Revenue stepped in and had resolved the issue by issuing Circular No,105(2)S-IR-III/2011 dated 25.08.2011 wherein FBR has clarified that When services provided by marriage halls are exempt from sales tax, it would mean that all services, which a marriage hall provides ia the normal course of business, are exempt from sales tax. Provision of food/drinks in a marriage hall is rather an essential service provided by it in the normal course of business and, therefore, cannot be subject to tax separately. "
5. Despite of the aforesaid legal position, the Respondent off and on was issuing notices to the Appellant Wedding Hall, which were replied by the Appellant wherein explained their position as being exempt from Sales Tax.
(i) Notice No, ST/(Audit-X)Shiraz Arena/2010/129 dated 13.12.2011 issued and Appellant in response vide letter No,SHIRAZ/DCIT/2011 dated 27.12,2011 explained their position being exempt from Sales Tax.
(ii) Notice No, ST(Audit-X)/Shiraz Arena/2010/129 dated 13.12.2011 replied by the Appellant vide letter No, To/1/2012 dated 09.05.2012 in detail submits its position.
(iii) Vide Notice No, ST&FE/E&C-I/Shiraz Arena/2012/1232 dated 18.06.2012. Petitioner was quoted as a Sales Tax Registered person, however, vide Reply No, Ref, To/6/2012 dated 25.06.2012, Appellant denied any Sales Tax Registration.
(iv) That finally a Show Cause Notice, Show Cause Notice C.No,ST&FE(Audit-1)S.Areena/2013/284 dated 13.03.2013 was issued to the Appellant on the ground that it carrying catering and supplying foods (i.e, goods) in the Wedding Hall which were taxable.
6. The aforesaid controversy forced us to look more deep in the issue. By virtue of sections 2 and 3 of the NWFP Sales Tax Ordinance, 2000, the Federal Board of Revenue is on the highest pedestal of authorities both on enforcement and interpretation of the provisions of Sales Tax Act, 1990 and then NWFP Sales Tax Ordinance, 2006. As a ready reference provisions of sections 2 and 3 ibid are reproduced as under: "2. Interpretation.---In this Ordinance, 'unless there is anything repugnant in the subject or context'
The words and expression used but not defined shall have the same meaning as in the Sales Tax Act, 1990.
3. Scope of tax.---(1) Subject to the provisions of this Ordinance, there shall be charged, levied arid paid a tax known as sales tax at the rate of [sixteen percent] of the value of the taxable services rendered or provided in the Province of North-West Frontier Province.
(2) The tax shall be charged and levied on the services specified in the Schedule to this Ordinance in the same manner and at the same time, as if it were a sales tax leviable under sections 3, 3A or 3AA, as the case may be, of the Sales Tax Act, 1990.
(3) All the provisions of the Sales Tax Act, 1990, and rules made and notifications, orders and instructions issued there under shall mutatis mutandis, applying to the collection ' and payment of tax under this Ordinance in so far as they relate to-
(a) manner time and mode of payment:
(b) registration and de-registration:
(c) keeping of records and audit;
(d) enforcement and adjudication;
(e) penalties and prosecution: and (0 all other allied and ancillary matters."
7. The FBR Circular C.No, 105(2)S-IR-111/2011 dated 25.08.2011 is the order/instruction/direction of the Board under section 72 of the Sales Tax Act, 1990, which is binding upon the officer of sales tax and by virtue of section 45A ibid not an officer of sales tax but only the Board can review its Order/direction/instructions. As the show cause was issued on 13.03.2013, therefore, against the FBR Circular dated 25.08.2011, no refuge can be taken behind the proviso to section 72 ibid as at the time of issuance of FBR Circular, the issue was not pending for adjudication before him i.e, by virtue of the FBR Circular dated 25.08.2011, the Assessing Officer was precluded to issue the show cause notice for a controversy which had already been resolved by the FBR. Under the law sub ordinate officer cannot be allowed to sit as revisionary or appellate authority on the order/instruction/direction of FBR. Summing up after the omission of "Wedding Halls and Lawns" by NWFP Finance Act, 2005, and particularly after issuance of Board's instruction dated 25.08.2011, the Assessing Officer or auditors on his D instruction had no lawful authority to carry out an audit of the exempted activity and raise any demand, this renders the entire exercise void ab initio.
8. It has been noticed that in show cause notice, neither any SRO was relied upon nor any reference was made to KPK Sales Tax Ordinance, 2000, hence, for failure to show authority under which on this score along, show cause notice was issue make it is liable to be vacated, however, in the impugned Assessm ent Order reliance was placed on "Rules 54 to 59 of Chapter IX of Sales Tax Special Procedure Rules, 2006 and SRO 484(1)/2004 dated 12.06.2004" and in the Parawise comments before the Commissioner Appeals, the Respondent have relied upon the definition of Chapter provided. In "rule (e), of Chapter XI of SRO 484(1)/2004". It has been found that prior to the period of appeal 2009 - 2010 both of the aforesaid SR0s/Special Rules were repealed. It is pertinent to mention that SRO 484(1)/2004 was superseded by SRO 522(1)/2005 dated 06.06.2005 which SRO itself was repealed by Sales Tax Special Procedure Rules 2006 notified vide SRO 560(1)/2006 dated 05.06.2006 which SRO again had final been repealed by Sales Tax Special Procedure Rules, 2007 Notified vide SRO 480(1)/2007 dated 09.06.2007, thus, rendering the whole exercise and super structure built on repealed laws was not sustainable as it is a trite law that repealed law/dead law cannot be revived and enforced by any cannon of construction of law. It is further noticed that Sales Tax Special Procedure Rules, 2007 prevalent in 2009-10 does not contain either definition of "marriage halls and lawns" nor of "caterer", in line with the NWFP Sales Tax Ordinance, 2000 as was amended vide NWFP Finance Act, 2005. Though, Sales Tax Special Procedure Rules, 2004 is not relevant and applicable to the cause of 2009-10, however, for the sake of argument, it can be looked that in the said Rules, not only "caterer" was defined, but also "marriage halls and lawns"
Were defined and dealt as separate category in Rule 73(1)(1) ibid as "marriage halls and lawns" means a Premises or a portion thereof, not being part of a sales tax paying hotel, restaurant or club or the premises or precincts thereof, where parties and social functions, more particularly, relating to matrimonial ceremonies and other related functions are held. In view of the above definition, the wedding hall is different from hotel, club, restaurant and alike but it is a premises where matrimonial and related ceremonies and functions are held which premises i.e, "marriage hall" has been exempted by virtue of amendments brought through NWFP Finance Act, 2005 in NWFP Sales Tax Ordinance, 2000, and above all after FBR's Circular C.No,105(2)SIR-III/2011 dated -25.08.2011, none of the activity of the Sales Tax Ordinance, 2000.
9. The Reliance and resorting to Ministry of Law and Justice, Government of Pakistan Memorandum No,530/2009-Law-I dated 27.07.2012 is highly misconceived and not sustainable in view of the candid and sunshine legal position in view of the statute and relevant authority as Appellant is solely a service provider. Despite of 17 days of surveillance, neither an iota of evidence has been collected nor if any was proved from where it can be proved that Appellant was not manufacturing food items rather is void ab initio as the Respondent-Deputy Commissioner had no authority under section 25 of the Sales Tax Act, 1990 to carry out an audit of an exempted activity.
Hence, this appeal succeeds and impugned order is set aside.