CH. SHAHID IQBAL DHILLON (JUDICIAL MEMBER).---Titled appeal has been filed at instance of registered person calling in question the Order-in-Appeal No,612 of 2016 dated 17-10-2016 passed by the learned CIR (Appeals), R.T.O., Faislabad.
2. Brief facts of the instant case are that as a result of inquiry and investigation regarding input tax refund, it was observed that appellant has purportedly claimed/received refund of input tax during the tax periods of March-2011, May-2011, June-2011 and July-2011 on the strength of invoices issued by Messrs K.A. International, Lahore who has been declared blacklisted unit. In this way, appellant was served with a show-cause notice dated 28-04-2016 as to why refunded amount of sales tax may not be recovered under section 11(3) of the Act along with default surcharge and penalty under sections 34 and 33 ibid. Based on the said omission/irregularities, adjudication proceedings were initiated A by the taxation officer by way of issuance of show-cause notice dated 28-04-2016 for recovery of already refunded amount of sales tax asking him to pay back the amount of tax under section 11(3) of the Act against which explanation tendered by registered person was treated unsatisfactory. Resultantly, adjudication proceedings were culminated in passing order dated 19- 07-2016. The appellant challenged the order of the assessing officer before the learned CIR(A) who also upheld the liability against the appellant despite submission of relevant records. The appellant being discontented with treatment met out by both the authorities below, has filed the second appeal before this Tribunal assailing the treatment accorded by both the lower fora.
3. Learned counsel appearing on behalf of appellant has vehemently contested that impugned show-cause notice to the extent of Rs, 3,130,737/- for the tax periods of March-2011, May-2011 and June-2011 issued against invoices of M/s. K.A. International, Lahore is not only duplicate but also equivalent to impede the appellant with double taxation and double jeopardy as adjudication of the matter at hand has been concluded in its favour in the first round of litigation upto the level of CIR(A), Faisalabad and ATIR, Lahore against which departmental appeal as well as departmental Reference are pending adjudication. To support his contention, case laws reported as (2015 PTD (Trib.) 1839) and (2016 PTD 483) was referred to by the learned counsel for the appellant. Learned counsel further contented that impugned recovery of Rs, 56,851/- for the tax period of July-2011 on the strength of invoices of M/s. K.A. International, Lahore has already been recovered by the department through Refund Payment Order No, 8035015 dated 29-04-2014. Besides, it is awfully assailed that impugned order of learned CIR(A) is also self-contradictory as on one hand, it was admitted by him in Para No, 17(a) at Page No, 11 that appellant has produced copies of purchases invoices along with crossed cheques vis-a-vis bank statements and copies of show-cause notices, adjudication orders, appellate orders and departmental appeal filed at ATIR, Lahore and departmental reference filed before High Court, Lahore but on the other hand, he himself held that the appellant has failed to submit any documentary evidence. At the end, learned counsel felt it imperative to place on record that it is categorically provided in the Act that to pay sales tax is liability of the supplier, if supplier had defaulted, amount defaulted is to be recovered from him and not from the buyer/appellant. To strengthen his arguments, learned counsel placed reliance on (2011 PTD (Trib.) 2619), 2000 PD 399 and PLD 2001 SC 600 = 2001 PTD 1486.
Learned counsel on merits contented that he 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 supplier's sales registers and summary statements and his supplier has duly discharged his sales tax liabilities under section 7 of the Act in his monthly sales tax returns for the periods in question and payments against all the transactions were also made through banking channel as requisitioned under section 73 of the Act hence, the appellant was legally entitled for refund of input tax under section 10 of the Act and too, the alleged supplier at the time of making transactions was operative/active. Reliance was placed on a case law reported as 2016 PTD 1695.
On the other hand, when departmental representative confronted with the tax situation cited supra, in counter arguments, he has assailed the case on similar grounds and charges as leveled earlier in impugned show-cause notice as well as adjudged in consequent orders and nothing newel, except to reiterate earlier set of contentions, has been put forth by him and fully supported the orders passed by both the authorities below simply re-endorsing the basis evolved therein.
4.The arguments of the learned representatives of both the rival parties have been heard and orders of the authorities below as well as relevant record and case laws cited by the learned AR of the taxpayer have also been perused.
5. There is no need to hold anything on the factual infirmities as these are of least importance in view of legal flagrant infirmities pointed out by the legal counsel of the appellant which cannot be ignored. After examination of record, we have observed that impugned second show-cause notice dated 28-04-2016 in the presence of an earlier show-cause notices C.No,102 dated 16-08-2013 involving sales tax of Rs,1,654,100/- and C.No,45 dated 20-07-2012 involving sales tax of Rs,1,476,6371- inter alia including invoices of the same supplier namely M/s. K.A. International, Lahore, for the same tax periods of March-2011, May-2011 and June-2011, issued by the then learned ACIR (Audit-2, Zone-II), Faisalabad on the same charges, for the same amount of sales tax is not only duplicate but also equivalent to impede the appellant with double jeopardy as adjudication of the matter at hand has already been concluded vide Order-in-Original No, 30/2013 dated 30-10- 2013 and Order-in-Original No, 51/2012 dated 27-07-2012 and being aggrieved by the said adjudication orders, appellant had filed two separate appeals under section 45-B of the Sales Tax Act, 1990 before the learned CIR(A). Faisalabad. Resultantly, one of them was allowed vide Order- in-Appeal No, 326/2014 dated 07-05-2014 involving sales tax amounting to Rs,1 ,654,100/- on the ground that appellant made purchases when the supplier was operative and has also proved through record that the goods were actually purchased, payment was duly made, the goods were utilized in manufacturing and the same were later-on exported and also exonerated the appellant from the same charges as leveled in this case however, appeal filed against the order dated 30- 07-2012 involving sales tax amounting to Rs,1,476,637/- was rejected by the learned CIR(A) vide Order-in-Appeal No, 436/2012 dated 01-10-2012. As per section 46 of the Sales Tax Act, 1990, any person including an Officer of Inland Revenue aggrieved by any order passed by the CIR(A) in term of section 45-B of the Act may prefer an appeal to the ATIR, Lahore and accordingly, the department has filed an appeal against an appellate order dated 07-05-2014 before the Hon'ble ATIR, Lahore which is currently pending adjudication and the appellant has also filed an appeal before ATIR, Lahore against the second order dated 01-10- 2012 passed by the learned CIR(A) which was allowed in favour of the appellant and now, the department had filed Sales Tax Reference No, 113/2013 which is also pending adjudication before Hon'ble High Court, Lahore. After, the first show- cause notices, the impugned second show-cause notice dated 28-04-2016 for creating tax liabilities on similar grounds is not only illegal and unlawful but also stands without jurisdiction that is why issuance of multiple show-cause notices is always discouraged and crucified by the superior courts. Repeated issuance of show-cause notices on the same issue constitutes fishing enquiries not permitted under the fiscal laws. It is well-settled principle of law that re-agitating of the same issue by the tax functionaries is against all the principles of administration of justice and fair play. Reliance is placed on the judgment of this Tribunal in case of "M/s. Ahsan Enterprises, Faisalabad v. The CIR(A), Faisalabad and others" reported as (2015 PTD (Trib.) 1839).
6. The issuance of second show-cause notice is patently illegal and unlawful particularly when departmental appeal to the extent of Rs,1,654,100/- is currently pending at ATIR, Lahore and departmental reference application to the extent of Rs, 1,476,637/- is also pending adjudication before Hon'ble Lahore High Court and if any grievance that the department may have with respect to impugned recovery of sales tax which have already been adjudicated in favour of appellant, in the first round of litigation, should be raised before those Courts because issuance of multiple show-cause notices on the same cause of action involving same amount, for the , same tax periods, to the same person, would not only defeat rationality and logic but also "due process of law". It is an inalienable right of every citizen to have protection of law and to be treated in accordance with law, in terms of Article 4 of the Constitution of the Islamic Republic of Pakistan, 1973. In identical circumstances, Hon'ble High Court, Lahore has also set aside the second show- cause notice in case of "Messrs K.B. Enterprises, Faisalabad v. Federation of Pakistan and others" reported at 2016 PTD 483. The relevant excerpt of the said judgment is as under:-- "I have heard both the learned counsel and find that admittedly an appeal is pending on the same matter with respect to the same allegations and the same amount of Rs, 1,850,156/-. Since, the appeal of the Respondent Department is pending, there is no occasion to issue a fresh show- cause notice. Therefore, the impugned show-cause notice is set aside and the Respondents should pursue their appeal before the Appellate Tribunal Inland Revenue. Petition is allowed in the above terms."
7. It is wroth mentioning here that payments in respect of alleged transactions have admittedly been made through banking channel by complying with the provisions of section 73 of the Act, showing evidence of financial veracity of transactions and no doubt that alleged supplier namely Messrs K.A. International, Lahore was an operative person at the time of transactions, however, it was declared as a blacklisted unit subsequently on 10th October, 2013 as per computer profile dated 30-11-2016 and also available at e-portal of FBR therefore, it is reasonable to hold that any past liability of input tax cannot be created against a taxpayer upon subsequent inclusion of his supplier in that very list of blacklisted persons. Learned counsel in support of his contentions has produced copies of purchases invoices, crossed cheques vis--vis bank statements, refund payment order along with computer , profile of the alleged supplier and copies of show-cause notices adjudication orders, appellate orders, passed in first round of litigation and copies of departmental appeal filed at ATIR, Lahore and departmental reference filed before Hon'ble High Court, Lahore which are currently pending adjudication, were also placed on record. In this regard, it will suffice to refer to the recent judgment of Hon'ble High Court, Lahore in case of "The Commissioner Inland Revenue Faisalabad v. Messrs Amtex Limited, Faisalabad" reported as 2016 PTD 1695 wherein it has been laid down as under:-- "In the present case, as it is not disputed that hen the transaction was made, the suppliers were active and duly registered and further admittedly, the invoices in question had no direct nexus with the subsequent blacklisting and suspension of the supplier, therefore, the law laid down in aforesaid judgment is on all four to the facts and circumstances of this case and refund could not be denied to the respondent/assessee merely for the reason that supplier became blacklisted and suspended subsequently. The order passed by the learned Tribunal is well reasoned and grounded in correct principle of law relevant to the facts of the case".
8. The last but not the least that learned DR has not denied the fact that demand of sales tax worth Rs, 56,851/- for the tax period of July-2011 on the strength of invoices issued by Messrs K.A.
International, Lahore has already been recovered by the department through Refund Payment Order No,8035015 dated 29-04-2014 therefore, impugned notice to this extent also being illegal, immaterial in its substance and presumptive in its nature having no legal effect at all.
9.In view of what has been discussed hereinabove, instant appeal is accepted in the light of record and judgments quoted supra and all the controversies of legal significance are resolved in favour of the appellant/registered person by setting aside and impugned second show-cause notice as well as consequent orders of both the authorities below.
10.The titled appeal filed by the appellant is succeeded and disposed of in the manners as indicated above.