Justice (R) Nadeem Azhar Siddiqi . This appeal has been filed by the appellant challenging the Order in appeal No. 95/2016 dated 18.07.2016 passed by the Commissioner (Appeals) in Appeal NO. 168/2015 filed against the Order in Original No. 369/2015 dated 06.07.2015 passed by the Assistant Commissioner (Muhammad Yousuf Bukhari), SRB, Karachi.
1. In short, the facts of the case as stated in the order in original are that the appellant provides and renders taxable services of Advertisement on Bill Boards liable to tax under Second Schedule of The Sindh sales Tax on Services Act, 2011 ( herein after referred to as the Act).
2. The allegation against the Appellant is that the appellant is the largest outdoor agency in Pakistan with nationwide sites spread along highways. It was further alleged that scrutiny of record reveals that the appellant has provided various taxable advertisement services but failed to pay sales tax and files sales tax returns for the period from July, 2011 to January, 2015.
3. The Respondent served show-cause notice dated 27.03.2015 upon the Appellant. In response to the Notice Mr. Ahmad Nawaz of appellant appears on 23.05.2015 and submitted copies of invoices and sought extension for declaration of further tax record. He had submitted that company had issued invoices to different companies on account of advertisement provided throughout Pakistan. Separate invoices were not issued with respect to Sindh therefore the returns were not filed in SRB.
4. The Assessing officer passed order in original only in respect of non-filing of tax returns under section 43 in the sum of Rs.540,000/=.
5. The said order of the Assessing Officer was challenged by way of filing appeal before the Commissioner (Appeals), who allowed the appeal and setaside the order in original, hence this appeal filed by the department.
6. On the date of hearing none was present on behalf of the appellant. The position was the same on the last date of hearing i.e. 30.06.2017. The respondent has come from Lahore, for this reason the case was heard in absence of the appellant with the right to argue in the meantime, but till the date of this order none appeared for the appellant to argue the appeal.
7. The appellant has challenged the order in appeal mainly on the ground that the Commissioner (Appeals) erred not to appreciate Section 30 of the Act read with rule 11, 12, 13, and 33 of the Rules wherein it is prescribed that every registered person (registered or liable to be registered under the Act) is required to file e-returns.
The learned representative of the respondent submits that the respondent was registered with DRB on 25:02.2015 and before that date the respondent was neither liable to files e-returns nor penalty can be imposed. He then submits that the Commissioner (Appeals) has based his findings on the earlier decision of this Tribunal in the case of National Asset Management Company Limited (Appeal No. 28/2014) in which it was held that penalty for non-filing of returns before the date of registration cannot be imposed. He then submits that the appellant after getting voluntarily registration is regularly depositing tax and filing e-returns. He then submits that the penalty was imposed upon the appellant without first establishing mens rea and that non filing of returns on the part of the appellant was intentional and deliberate and caused financial loss to the department or public exchequer.
9. We have heard the learned representatives of the parties, perused the record and the two orders passed by the two forums below.
10. The allegation against the appellant is violation of section 30 of the Act read with Rule 12 & 13 for not filing returns with in time specified by law. There is no allegation in the order in original on the part of the appellant that it has not deposited the tax with in time. The period of default was before the date of registration i.e. 25.02.2015 on which date the appellant was voluntarily registered. In the earlier decision a learned DB of this Tribunal held as under: "Section 30 of the Act provides for filing of returns by registered person and not by unregistered person or person liable to be registered. Rule 12 also speaks about filing of the return by the registered person in the manner as specified in rule 13 and not by unregiste red person or person liable to be registe red. Rule 13 provides electronic filing of return and sub rule (i) of Rule 13 provides the procedure for filing returns. The returns cannot be filed unless SRB provides unique user ID and password to the registered person. Penalty for not filing return before the date of registration cannot be imposed as the appellant was not' registered and was not liable to file returns.
Section 2(71) do not provides penalty before registration but provides that a person liable to be registered but not registered shall not be entitled to any benefit available to a registered person under any of the provisions of this Act or the Rules made thereunder . By stretching the provisions of Section 2(71) penalty cannot be imposed".
11. The learned Commissioner (Appeals) has not committed any error in basing its finding on the earlier decision of this Tribunal.
12. Regarding imposing the penalty this Tribunal in the same decision has held as under: "It is true that before imposing penalty the department has to establish that there was intentional and deliberate default on the part of appellant in filling return. It is also true that the language of clause 2 of section 43 of the Act gives discretion to adjudication officer to impose penalty or not. In the case of default to attract the penal provision, there should be element of inexcusable neglect or omission on the part of tax payer resulting loss to public exchequer is necessary .
13. In view of the above discussion the appeal is dismissed. The appeal is disposed of in the above terms. The copy of the order may be provided to the parties.
(Justice (R) Nadeem Azhar Siddiqi)
Chairman Karachi.
Dated. 26.09.2016 Copies Supplied to: The Appellant through Authorised Representative 1) The Assistant Commissioner SRB Copy for Information 2) The Commissioner Appeals, SRB 3) Guard File 4) Office File