Justice Nadeem Azhar Siddiqi: This appeal has been filed by the appellant challenging the Order-in- Appear No.70/2016 dated 31.05.2016 passed by the Commissioner (Appeals) in Appeal NO. 183/2014 filed against Order in Original No. 647/2014 dated 14.1112014passed by the Assistant Commissioner (Mr. Muhammad Yousuf Bukhari) SRB, Karachi.
1. The facts of the case as mentioned in the Order-in-Original are that the Appellant has provided taxable service of advertisement chargeable to Sindh Sales Tax under section 8 of Sindh Sales Tax on Services Act, 2011 (hereinafter referred to as the Act) and has declared Sindh Sales Tax of Rs.9,263,072/= as withheld by the service recipients, during the tax periods from May, 2012 upto February, 2014.
2. The allegation against the appellant is that during reconciliation, it was found that the aforesaid amounts of with held Sindh sales tax were not deposited in the SRB's head of account. The department reconciled the amount of Sindh sales tax and an amount of Rs.1,370,573/= was reconciled being deposited by the service recipients.
3. A show-cause dated 28.08.2014 was issued to explain as to why short paid/non paid amount of Sindh sales tax of Rs.7,846,872/= may not be assessed and recovered from the registered person along with default surcharge and penalties.
4. The appellant neither appeared before the Assessing Officer nor filed any written reply, hence the Assessing Officer passed ex-parte assessment order in the sum of Rs.7,846,872/= along with default surcharge and penalty of Rs.302,343/=.
5. The said order of the Assessing Officer was challenged by appellant by way of filing appeal before the Commissioner (Appeals), who after reconciliation of t,he amount of sales tax setaside the order in original to the extent of Rs:67,513,056i= and uphold the order in original to the extent of Rs.1,333,814/= along with default surcharge and penalty of Rs.66,691/=.
6. The appellant has challenged the said order in appeal before this tribunal. Under the order of Tribunal the Assessing Officer has again reconciled the matter and submitted his report dated 15.08.2017 according to which the non-reconciled amount comes to Rs.322,106/=.
7. The learned advocate for the appellant submits that the appellant had charged the tax and the service recipients have withheld the entire tax amount and it is their responsibility to pay the tax. He further submits that the invoices were produced to show that tax has been charged on the invoices and the copies of cheques were also provided to show that payment has been received without tax. He also referred to sub-rule (4) of rule 3 of the Sindh Sales Tax Special procedure (Withholding) Rules, 2011 (herein after referred to as the withholding rules).
8. Mr. Zain Manzoor the learned Ac submits that the non-reconciled amount of Rs.4,000/= is against the services provided to M/s SEFAM, Rs.116,416/=is against M/s Port Grand and Rs.201,600/= is against M/s Pakistan Mobile Communication. Mr. Zain Manzoor submits that M/s Port Grand has withheld tax amount of Rs.116,416/= and deposited the same with FBR and the appellant is liable to deposit Rs.205,600/= as the appellant failed to produce the withholding certificates from the service recipients.
I have heard the learned representatives and perused the record made available before us.
9. This is the case of providing or rendering Advertising Services. The case pertains to withholding of tax.
The Assessing officer has failed to mention the Tariff Heading from the Second Schedule of the Act under which the service provided or rendered by the appellant is falling. The Commissioner (Appeals) has mentioned Tariff Heading 9802-5000 (Advertisement on cable T.V. Network). The Assessing Officer has issued show-cause notice in the sum of Rs.7,846,872/= and passed the order in original in the sum of Rs.7,846,872/= along with default surcharge and penalty of Rs.302,343/=. The Commissioner (Appeals) after reconciliation reduced the amount to Rs.1,333,814/= along with default surcharge and penalty of Rs.66,691/=. Mr. Vicky Dhingra in the Reconciliation Report dated 14.112016 submitted that before commissioner (Appeals) two reports were submitted. According to Report dated 14.11.2015 the payable amount was Rs.984,668/= and according to other Report the reconciled amount was Rs.1,333,814/=. Mr. Vickey in his report further submits that the Commissioner (Appeals) ignored the earlier report dated 14.11.2015 and considered the other report and established that Rs.1,333,814/= was determined and credit notes submitted before the Commissioner (Appeals) were not considered. Mr. Vickey in his report established that an amount of Rs.952,668/= is not reconciled.
10. Mr. Amir All DC filed another Report dated 21.03.2017 which shows un reconciled amount of Rs.431,312/=. Another Report dated 11.08.2017 was filed by Mr. Zain Manzoor which shows total amount of Rs.1,013,654/= out of which Rs.322,016/= was shown as not reconciled. Again Mr. Zain Manzoor has filed another report dated 15.08.2017 which shows non-reconciled amount of Rs.322,016/=.
11. Now the dispute remains for non-reconciled amount of Rs.4,000/= against the services provided to M/s SEFAM and Rs.201,600/= against M/s Pakistan Mobile Communication. M/s Port Grand after withholding the tax of Rs.116,416/= has deposited the same with FBR.
12. According to sub-rule (4) of rule 3 of the Withholding rules the responsibility to withhold and deposit the tax is upon the recipient of service of advertisement and not upon the service provider. None of the forum below has taken into consideration this aspect of the case and passed assessment order against the service provider in ignorance of Withholding Rul6S1. The appellant has submitted the invoice sent to Pakistan Mobile Communication to show that tax has been charged as well as copy of cheque to show that the payment was received after deduction of tax. Since the tax was withheld by the service recipient i.e. M/s Pakistan Mobile Communication it was its responsibility to pay the tax to SRB. As far as SEFAM is concerned nothing has been placed on record by the appellant to show whether the tax has been charged or not hence the appellant is liable to deposit the tax with SRB. M/s Port Grand has withheld the tax and instead of paying the same to SRB has deposited the same with FBR and is liable to pay the tax to SRB. Furthermore the jurisdiction to decide this case lies with the Officer who at that time was dealing with the cases of withholding and not the AC who had passed the assessment order as per Notification No. SRB-3 4/10/2013 dated 15ht July, 2013.
13. Since there is no default on the part of the appellant no default surcharge and penalty is payable by the appellant.
14. In view of the above the appeal is allowed. Both the order in original and order in appeal are setaside except to the extent of Rs.4,000/=. The appellant is directed to deposit Rs.4,000/= with SRB within fifteen days from the receipt of copy of this order. The department is at liberty to recover tax from M/s Port Grand and M/s Pakistan Mobile Communication Ltd.
15. The appeal is disposed of in the above terms. The copy of the order may be provided to the learned representatives of the parties.
Karachi. (Justice Nadeem Azhar Siddiqi)
Dated: 25.09.2017 CHAIRMAN Copies supplied to:-
1. The Appellant through Authorized Representative.
2. The Assistant Commissioner, SRB, Karachi.
Copy for information to:- 3) The Commissioner (Appeals), SRB, Karachi.
4) Office copy 5) Guard file.