' CH. SHAHID IQBAL DHILLON (JUDICIAL MEMBER).---(1). Titled appeal has been filed under section 46 of the Sales Tax Act, 1990 at instance of the revenue/department calling in question the impugned Order-in-Appeal No, 333/2013 dated 22-04-2013 passed by the learned CIR (Appeals), Faisalabad.
2. Succinctly stated, relevant facts for disposal of the instant cases are that as audit of the assessee records for the periods from July-2008 to June-2012 was conducted and it was observed that the assessee has made late payments beyond one hundred and eighty days to his supplier namely Messrs S.M. Traders and too purportedly received refund of input tax on the strength of invoices issued by Messrs Zaid Corporation, Messrs S.R. Trading, Messrs Indigo Moon and Messrs Oryx Printers who were blacklisted subsequently. Based on the said omission/irregularities, adjudication proceedings were initiated by the taxation officer by way of issuance of show cause notice dated 27-08-2012 under section 11(3) of the Sales Tax Act, 1990. Resultantly, adjudication proceedings were culminated in passing of an order dated 26-11-2012 which was challenged before the learned CIR(A) who vacated whole liability of sales tax worth Rs, 2,468,997/-. Now the revenue/department being discontented with treatment met out by the learned CIR(A), has filed the second appeal before this Tribunal assailing the treatment accorded by the first appellate authority.
3.During the course of hearing, learned DR reiterated the contentions already made in the grounds of appeal and nothing newel, has been put forth by him whereas on the other hand, learned AR opposed the departmental appeal mainly on the ground that due to certain financial constraints and pecuniary hardships, payments could not be made effected within specified time period and were delayed beyond 180 days against the certain transactions. Learned counsel further assailed that payments though delayed yet fully met rationale behind enactment of the provisions of section 73 for documentation of economy therefore; entitlement for refund of input tax is not questionable particularly when the supplier has already deposited the output tax in the national exchequer. Learned counsel contented that the assessee procured the alleged goods under the coverage of proper sales tax invoices issued in terms of section 23 of the Sales Tax Act, 1990 duly incorporated in suppliers' sales tax returns, registers and summary statements and his suppliers have duly discharged their sales tax liabilities under section 7 of the Act in their monthly sales tax returns for the periods in question therefore, the assessee was legally entitled for refund of input tax under section 10 of the Act and too the alleged suppliers at the time of making transactions were operative/active and all the payments against those transactions were also made through banking channel by complying with the provisions of section 73 of the Act. Learned AR further stated that the assessee has produced all the relevant record before the CIR(A) and points raised by the learned DR have already been elaborately discussed and the learned DR has not been able to rebut the observations/findings of the first appellate authority.
After having heard both the rival parties and carefully examining the relevant record as well as the case law cited at the bar, we find that there is no controversy in the manner of payments having been transacted through prescribed banking mode, but its time is delayed over one hundred and eighty days beyond date of tax invoice. No doubt, provisions of section 73 were incorporated in the Sales Tax Act, 1990 in order to promote documentation of economy and it imposes an obligation on the buyer to arrange payments to the seller by means of crossed cheque, bank draft, pay-order or any other banking instrument within 180 days of the tax invoice. In this case, payments have admittedly been transacted by means of specified banking instruments as requisitioned under section 73 of the Act but due to certain financial constraints and pecuniary hardships, payments have not been made within specified time period and were delayed beyond 180 days against the alleged transactions and this act, on part of the assessee is not deliberate and contumacious being caused for financial problems always beyond control of humanity therefore, this procedural lapse and technical omission, entailing no revenue loss at all, is condoned to maintain his inalienable right of input tax and the assessee cannot be deprived of from his statutory right of input tax due to any procedural omissions whatsoever because neither any procedural mistake affect legal entitlement nor this lapse of procedural in nature has caused any prejudice to the department. It is now well-settled principle of law that acts of inadvertence on the part of an assessee due to any procedural mistake would not create demand of sales tax. The judgment of Hon'ble Supreme Court of Pakistan in case of "M/s. Pfizer Laboratories Ltd. v. Federation of Pakistan and others" reported as PLD 1998 SC 64 is also on all fours to the case of the assessee wherein it was laid down as under:-- "That there may not be legal liability on the part of a Government functionary to refund any amount received by it as a tax or other levy by virtue of certain special provision under the special law but keeping in view that we are living in a democratic society governed by the rule of law and every moral values, must do what is fair and just to the citizen regardless of legal technicalities."
5. Suffice it to say, liability to pay sales tax is on the supplier under section 3(3)(a) of the Act, which is independent to the provisions of section 73 of the Act as the supplier has to make payment of sales tax at time of filing of sales tax return for a tax period and sales tax has to be paid even in cases of credit transaction as well. It is established beyond any shadow of doubt that deposit of sales tax is independent to that payment under section 73 of the Act hence, in cases of delayed payments, no revenue loss is involved particularly when the supplier has already paid output tax to the government therefore, demanding refunded amount of input tax back from the buyer despite having it deposited by the supplier in the national exchequer would definitely amount to double taxation not permissible under any law of the land. In nutshell, it is acknowledged that refund of input tax is a substantive right of the assessee which cannot be taken away or withheld on mere some technicalities and procedural lapses whatsoever.
6. The perusal of the learned CIR(A)'s order shows that finding of facts has been recorded to the effect that the assessee has submitted all the relevant record/documents inter alia including purchase invoices, party ledger, sales tax returns along with summary statements, inward gate passes and delivery note and returns along with summary statements of the supplier verifying the amount of input tax claimed by the assessee and too payment proof along with bank statements showing payment through banking channel as required under section 73 of the Act as a proof for physical transfer of goods and evidence of financial veracity of the transactions which was admitted by the learned CIR(A). The learned CIR(A) further categorically held that all the alleged suppliers were also found operative having normal behavior at e-portal of FBR's Website at that juncture of time. There is no dispute between the parties that refund of the assessee was denied only for the reason that all the suppliers were declared blacklisted subsequently. The only claim of the department in show cause notice was that since the suppliers of the assessee were blacklisted therefore, the invoices become inadmissible for input tax refund. In this regard, reliance is placed on landmark judgment of Hon'ble Supreme Court of Pakistan in a case of "Government of Pakistan v. Messrs Village Development Organization" as reported at 2005 SCM R 492 wherein it has been laid down that it is well settled principle of law that the executive orders or notifications, which confer right and are beneficial, would be given retrospective effect and those which adversely affect or invade upon vested right cannot be applied with retrospective effect.
7. Learned AR, in support of his stance, has placed on record the computer profiles all dated 12-11- 2015 in case of Messrs Zaid Corporation (blacklisted on 03-07-2013), Messrs S. R. Trading (blacklisted on 03-07-2013), Messrs Indigo Moon (blacklisted on 03-07-2013) and Messrs Oryx Printers (blacklisted on 03-07-2013). We are therefore of the firm opinion that subsequent blacklisting will not disentitle the buyer from his lawful right of input tax in respect of invoices issued when the supplier was a registered and active person unless those invoices are specifically declared fake and have direct nexus with blacklisting and admittedly, the invoices in question had no direct nexus with the subsequent blacklisting of the alleged suppliers. The ratio decidendi by the Hon'ble Lahore High Court in case of "Commissioner Inland Revenue v. Messrs Tariq Poly Pack (Pvt.)
Ltd." reported as (2015 PTD 2256) is the most relevant in all fours to the case at instance of the assessee. The relevant extract of the said judgment is reproduced as under:-- "In our view, it will be a fallacy to hold that mere blacklisting will automatically reject claims of input tax and refund against all validly issued previous invoices, when the supplier was not blacklisted rather was duly registered and active on FBR website and said invoices having not been declared fake specifically, have no nexus with blacklisting. No doubt ambiguity abounds Rule 12(5) but it will be unreasonable to hold that merely because supplier has become blacklisted, the entire series of invoices issued by him before blacklisting will be rejected. It will also infringe the accrued vested rights of the registered person/purchaser who held valid invoices when the supplier was not blacklisted rather active and duly registered."
8. In view of what has been discussed hereinabove, we hold that the order impugned by the department being based on facts and strictly in accordance with law do not call for any interference which is upheld and the titled appeal filed by the department being devoid of any merit is hereby dismissed.