Mr. Agha Kafeel Barik: This departmental appeal has been filed before us by the Assistant Commissioner (Unit-16), SRB against order in appeal of the Commissioner (Appeals) dated 10.12.2015. The facts of the case briefly are as under:
2. The appellant is a private limited company, rendering services as "Tour Operator" which are taxable under tariff heading 9805.5100, with effect form 01.07.2014. However, the Assistant Commissioner (Unit-14), 51113 found that it failed to file returns nor paid tax for the months of July, August, September 2014, and therefore he issued show cause notice on 21.01.2015. But it was not responded. However, the A.C. 11515 found that the returns for the said period were filed on 11.02.2015. Thus he passed an order in original under section 43(2) on 21.04.2015 imposing penalty from the due dates till the date of filing returns on 11.12.2015.
3. On appeal the Commissioner (Appeals) vide his order in appeal No.201/2015 dated 10.12.2015, while confirmed the action under section 43(2), reduced the total amount of penalty should be imposed from the date of registration, which in this case was 15.11.2014, and not from the due dates which fell before the date of registration. In short he held that the returns would not be due before the date of registration. For his decision the Commissioner (Appeals) has relied upon a judgment of this Tribunal in National Asset Management Company Limited passed on 09.04.2015. The relevant past of Commissioner's order and the cited judgment of the Tribunal arc reproduced blow .
"However , it will seen that whether the penalty could be imposed against the period for which the appellant remained unregistered. In this regard the Honorable Appellate Tribunal of SRB has given a judgment dated 09.04.2015 in the case of M/s National Asset Management Co. Ltd. v/s Commissioner (Appeals), SRB and another. In this Judgment the Honorable Appellate Tribunal has established the principle that if a person is not registered, the provisions of clause (71) of Section 2 cannot be stretched to consider him a registered person for the purpose of imposing a penalty against the Offence No. 2 of table of Section 43 i.e. failure to file a returns within due date. Relevant portion of such Order Is reproduced hereunder:- "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 unregistered person or person liable to be registered. Rule 13 provides electronic filing of return and sub-rule (it 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 non-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 provide penalty before registration but provides that a person liable to be registered but not registered shall not be entitled to any benefit availab le to a registered person under any of the provisions of this Act or the Rules mode thereunder . By stretching the provisions of Section 2(71) penalty cannot be imposed".
"Therefore, ratio decidendi of the above Order shall apply and such penalty shall be calculated from the date of registration because it enabled the Appellant to file returns,"
4. While Mr. Iftikhar Ahmed Shamsi, Advocate attended the responded, Mr. Sarmad Ali, A.C. attended for SRB. Written arguments have also been filed with the grounds of appeal which is not a normal practice. Mr. Sarmad All proceeded with the same arguments as filed before the hearing of appeal.
5. The main controversy raised in this appeal is created by interpreting definition of "registered person" vide sub-section 2(71) of the Act. In the said provision of law 'a person liable to be registered' is given a certain status. In the first part such a person Is at the equal footing with a registered person, whereas by the proviso added to the said sub-section an exception is made to the said definition in as much as 'a person liable to be registered' will not be entitled to any benefit available to a registered person. Since in the instant case the respondent M/s Target TMC was liable to be registered w.e.f. 07.07.2014, the date from which tour operators services were made taxable by adding code 9805.5100 in the 2 schedule but was actually registered on 15.11.2014, the department is of view that returns were due since 07.07.2014 whereas the Commissioner (Appeals) as well as the Appellate Tribunal in its judgment in the case of National Asset Management, cited above, are of the opinion that the default of non / late filing of returns prior to the date of registration does not render a person liable to penal action.
6. In the written arguments, paras 7 and 8, the A.C. has argued that the Tribunal in the cited judgment of National Asset Management "has reduced the scope of Section 2(71) in relation to Section 30 of SSToS Act, 2011". However, for the sake of clarification it is placed on record that the Tribunal has only interpreted It and has not In any way reduced its scope. It should also be kept in mind that sub-section 2(71) is not a charging provision and It is only a definition provision in two parts. The first part provides a definition whereas in the second part, with a proviso, an exception is made to the first part of definition. The mere fact that it is not held liable to penalty before the date of registration does not mean that any benefit has been allowed to it. It is simply holding that until a person has entered the domain of SSToS, he cannot be penalized for an act of not doing what he would do as a person already entered in the domainof the Act. However, all the liabilities would accrue from the date he is registered as held by the Appellate Tribunal, the decision which has rightly been followed by the Commissioner (Appeals) in his impugned order.
7. As a result of the above discussion I do not find any reason to interfere in the order of the Commissioner (Appeals) which is upheld and the appeal is rejected.
(Agha kafeel Barik)
TECHNICAL MEMBER Karachi Dated :26.01.2017 Copies supplied for compliance:-
1. The Appellant through authorized Representative.
2. The Assistant Commissioner (Unit-), SRB, Karachi.
Copy for information to :
3. The Commissioner (Appeals), SRB, Karachi
4. Office Copy.- nd -