QAMAR-UL-HAQ BHATTI, JUDICIAL MEMBER.---Vide this sales appeal, the appellant-registered person had assailed the order dated 21.12.2015 passed by the learned CIR (Appeals). Multan.
2. Facts leading for disposal of the instant case are, that during the period December 2009 to June 2014 after having scrutinized the relevant record, it is observed that the registered person had claimed/adjusted input tax amounting to Rs.11,850,939/- on the strength of fake/flying invoices issued by the blacklisted/suspended units. Consequently, on the basis of the above omissions/irregularities, the show-cause notice for violation of Sections 3, 4, 6, 7, 8, 8A, 22, 26 and 73 of the Sales Tax Act read with sections 2(14), 2(20), 2(33), 2(35), 2(37), 2(40) and 2(41) of the Sales Tax Act, and Refund Rules in terms of S.R.O. No.555(I)/2006 dated 05.06.2006 of the Sales Tax Rules was issued. On the due date of hearing, the registered person could not substantiate his version with any plausible reasoning, however the Deputy Commissioner Inland Revenue agreed with the contention of the registered person to the extent of payments amounting to Rs.2,093,860.
Accordingly, the balance amount of Rs.9,757,939/- inadmissible adjusted as input tax and claimed refund was rejected by the DCIR and directed the registered person to deposit the said amount vide Sales Tax Order-in-Original No.13/2015 dated 16.06.2015.
3.Being aggrieved with the order of the DCIR, the appellant-registered person preferred appeal before the learned CIR (Appeals), Multan who by virtue of his order dated supra confirmed the order in original passed by the DCIR. This dispensation had compelled the registered person to prefer appeal before the learned Appellate Tribunal Inland Revenue.
4.On his turn, the learned counsel for the registered person vehemently contended that when the appellant made purchases from its suppliers the status of the suppliers was at the material time were active and they have duly declared and paid output tax in their monthly sales tax returns for period in question under clause (ca) of subsection (1) of section 8 ibid therefore, appellant was eligible for input tax adjustment under section 7 of the Act. Further contended that the appellant's liability cannot be made 'joint and several' with his suppliers under section 8B of the Act in case and if any tax fraud is committed by the suppliers by not depositing tax collected from the buyer in the national exchequer under section 3(3)(a) of the Act, then buyer cannot be severally held responsible for the same. In support his contention he has also relied upon the unreported judgment of the Tribunal bearing S.T.A. No.885/LB/2013 dated 10.11.2015. On the other hand the learned DR strongly opposed the contentions of the learned counsel for the registered and supported the orders of the authorities below with the findings recorded therein.
5. After having heard the rival arguments and perusing the available record we have observed that the issue in hand has already authoritatively been dilated upon by the Honorable High Court in the judgment S.T.R. No.98/2014 re: CIR v. Messrs Tariq Poly Pack (Pvt.) Limited. In that judgment it is directed that the Tribunal should not feel shy to exercise its jurisdiction comprehensively by directing the Commissioner or Commissioner Appeals for production of relevant record and for making necessary further inquiries and investigations in the matter of tax fraud to determine the following:-- i)The registered person/purchaser who reclaimed or deducted input tax had actually paid the tax to the supplier or not? ii. If the input tax was paid by the registered person/purchaser but not deposited by the supplier, then for purpose of Section 8A of the Act, whether the registered person/purchaser was in knowledge or had reasonable ground to suspect that some or all of the tax payable in respect of supply would go unpaid ? iii. Whether particular invoice issued prior to blacklisting was fake and flying has direct nexus with the blacklisting?
6. Therefore, by strictly following the above mentioned directions of the Honorable Lahore High Court, we set aside the orders passed by both the authorities below and remand the matter to the Adjudicating Officer for fresh proceedings by complying with the above directions given in sub- paragraphs Nos.(i), (ii) and (iii) besides looking into the bank statement of the appellant that whether payments were routed through banking channel in accordance with Section 73 of the Act where able applicable.
7The appeal is disposed of in the manner as stated above.