This second appeal at the instance of registered person/appellant has been filed against the order of learned CIR(A) dated 18.09.2013 whereby appeal of the appellant was rejected.
2. Briefly stated the facts of the case as per record are that during scrutiny of tax profile of the appellant, the department observed that the appellant was required to file monthly returns under section 26(1) of the Sales Tax Act, 1990 but the appellant failed to file sales tax returns from June- 2009 to August-2009, October-2009 to February-2010, April-2010 to December-2012 (41-months), therefore, taxation officer was of the view that the appellant has violated the provisions of section 26(1), sections 3 and 6 punishable under sections 33 and 34 of the Sales Tax Act, 1990. Accordingly he issued show cause notice to the appellant but the appellant failed to make any reply to the show cause notice. Resultantly, taxation officer passed order wherein sales tax liability of Rs.825,945/- along with default surcharge and penalty of Rs.205,000/- was ordered to be recovered from the appellant. Feeling aggrieved, the appellant went in appeal before the learned CIR(A) who vide the impugned order rejected the same, hence this second appeal before us on the following grounds:
1. That show cause notice is erred both in law and facts, hence not sustainable in law, being misconceived, mala fide and based on conjectures and surmises.
2. That impugned order is ultra vires and coram non judice for being passed by the officer who was not authorized to pass any such order.
3. That impugned ex parte order is in violation of principle of audi alteram partem.
4. That non-filing of tax returns has not caused any losses to the govt. Exchequer, therefore, imposition of penalty is harsh and not sustainable.
5. That Federal Govt. Has exempted the registered persons from Payment of penalty upto June- 2010 and June-2011, respectively against whom there is no principle liability of sales tax in view of SROs 160, 648, 548, 563.
6. That imposition of minimum tax is also wrong.
7. , That imposition of penalty and surcharge is also wrong being against law.
3. We have heard arguments of the parties and have perused all the grounds of appeal as well as the impugned orders. In the case in hand two issues are involved, one in respect of the imposition of penalty of Rs .205,000/- for non-filing of returns for 41-months and the other is levy of minimum tax at Rs.825,945/- under section 11(5) of the Sales Tax Act read with Sales Tax General Order No.3 of 2004 dated 12.06.2004.
4. As far as the imposition of penalty is concerned, Admittedly, the appellant is a registered person and was required to file return quarterly under section 26(1) of the Sales Tax Act, 1990 but it failed to do so inspite of service of show cause notice dated 06.02.2013 as such, the original adjudicating authority passed order and imposed the penalty. It is also worth mentioning that appellant also failed to attend the office of the learned CIR(A) on the date fixed for hearing of the appeal filed by the appellant. This attitude of non-appearance of the appellant to defend his case seems to be violation of penal provisions of the Act, therefore, the taxation officer was justified to impose the penalty as well as confirmed by the learned CIR(A). The SROS quoted by the learned AR of the appellant are also of no help to the appellant because the condition for such exemption was that the outstanding principal amount of sales tax or federal excise duty is paid by or before the specified dates in the SROs. In the case in hand, the appellant failed even to file the required returns and what to say about the deposit of sales tax, etc. In this view of the matter, the imposition order of penalty is confirmed.
5. So far as imposition of minimum tax is concerned, the original adjudicating officer imposed minimum tax @ Rs.21,145/- per month for each month total of which comes to Rs.825,945/- under section 11(5) read with Sales Tax General Order No.03 of 2004 dated 12.06.2004. For the disposal of this issue, it would be beneficial to reproduce the provisions of section 11(5) and Sales Tax General Order of 2004 as under: "11. Assessm ent of Tax and recovery of tax not levied or short-levied or erroneously refunded.---(5)
No order under this section shall be made by an officer of Inland Revenue, unless a notice to show cause is given within five years, of the relevant date, to the person in default specifying the grounds on which it is intended to proceed against him and the officer of Sales Tax shall take into consideration the representation made by such person and provide him with an opportunity of being heard: Section 11 before the amendment: "11. Assessm ent of Tax.---If a registered person does not file a return or the amount of tax shown as payable in the return is not correct, an officer of the Sale Tax Department, not below the rank of Superintendent Sales Tax, shall make an assessment of the tax and the registered person shall, subject to any other liability under the Act, pay the amount so assessed within fourteen days of the communication of the assessm ent."
General Order No.3 of 2004
(1) DETERMINATION OF MINUMUM TAX LIABILITY:
21. Consequent upon the addition of section 11(5) in the Sales Tax Act, 1990, the Central Board of Revenue is pleased to specify the following conditions to determine minimum tax liability of a registered person who fails to file a return;
(a) the minimum tax liability of the registered person shall not be less than the highest amount of tax paid by the registered person in any of the previous twelve months.
(b) In case tax paid in the previous twelve months is Nil, the minimum tax liability shall be calculated on the basis of monthly average of the sales declared by the registered person to the income tax department for the last assessment year,
(c) in case minimum tax liability cannot be determined in the manner given above, it shall be determined taking into account three or more of the following factors.
(i) Location, of business;
(ii) Type of business (i.e. Retail etc);
(iii) Item produced/supplied or service provided;
(iv) No. Of persons employed;
(v) Capital employed in the business;
(vi) Amount of utility bills i.e. Phones, electricity, gas and water;
(vii) Production capacity of machinery installed."
6. As minimum tax has been imposed after the amendment, for the tax period July, 2009 to August, 2009, October, 2009 to February, 2010, April 2010 to December, 2012 at Rs.825,945/- despite of the fact that section 11(5) after the amendment vide Finance Act, 2012 as reproduced above, reveals nothing about the imposition of minimum tax, hence the original adjudicating officer is directed to impose sales tax under the new provisions of section 11(5) of the Act for the period July 2012 to December, 2012 strictly keeping in view the amended provision.
8. Furthermore, the original adjudicating authority has also not followed the condition and guideline as given in the General Sales Tax Order, 2004 ibid in its true spirit while levying minimum tax. For instance, as Per paragraph (b) of the General Order, if there is Nil return for the preceding 12-months, then in that case the declaration of sales in the income tax department for the same period be taken into account but the original adjudicating officer has not discussed this aspect. At all. In fact, in this case the default of the taxpayer for non-payment of sales tax is for 41 months tax periods and in view of this aspect the taxation officer was required to peruse the assessment record/declaration in.The relevant period on income tax side. In this view of the matter, the case is remanded to original adjudicating authority with the direction to strictly follow in its true spirit the Sales Tax General Order, 2004 read with relevant provisions of section 11(5) before and after the amendment dated 12.06.2004.
As a result, this appeal is disposed of as above.