MUHAMMAD SAJID MEHMOOD SETHI, J. Through instant Reference Application under Section 47 of the Sales Tax Act, 1990 ("the Act of 1990 "), the following question of law, asserted to have arisen out of the impugned order dated 16.11.2018, passed by learned Appellate Tribunal Inland Revenue, Lahore Bench, Lahore ("Appellate Tribunal "), has been pressed and argued for our opinion:- "Whether the Appellate Tribunal Inland Revenue was justified to cancel the orders of lower forums when Section 8(1)(ca) of the Sales Tax Act, 1990 clearly envisages that an amount not deposited in government exchequer cannot be adjusted against or remitted to the registered person at any stage in supply chain?"
2. Brief facts of the case are that during cross-matching of sales tax returns for the period July 2011, to January 2012, it was observed by the adjudicating officer that input tax claimed by the registered person was not declared as output tax by its suppliers to the tune of Rs. 8,207,968/-. Resultantly , show-cause notice was issued to respondent-taxpayer , which culminated in passing of Order-in-Original dated 29.01.2013. Feeling aggrieved, respondent-taxpayer challenged the said order in appeal before CIR (Appeals), which was allowed vide order dated 14.05.2013. Feeling dissatisfied, applicant-department filed appeal before learned Appellate Tribunal, which was dismissed and order passed by learned CIR (Appeals) was upheld. Hence, this Reference Application.
3. Learned counsel for applicant-department, at the very outset, were confronted with the fact that no question of law is arising out of impugned Appellate Tribunal's order , which is even otherwise based on findings of facts.
However , despite ef fort, he could not give any satisfactory reply .
4. Arguments heard. Available record perused.
5. Perusal of record reveals that learned Appellate Tribunal, after appreciating the available record, has upheld the findings of CIR (Appeals), with the observation that Order-in-Original was based on a defective notice bearing false figures of input tax never claimed by the registered person and decision by CIR (Appeals) was found in conformity with the law laid down on the subject. The relevant part of impugned findings is reproduced hereunder:- "5. Arguments heard and record perused. We do not find ourselves in agreement with the stance taken by learned.
DR but are persuaded by the line of arguments adopted by learned counsel being supported by reported judgments. We are also of the considered opinion that since, the taxpayer of the instant case has not been alleged to be involved in collusion or tax fraud, therefore, question regarding applicability of Section 8(1)(ca) of the Act, does arise in the light of reported judgment cited as 108 Tax 226, wherein it has been held as under:- "Chief Tax Policy , FBR categorically stated before the Court that Section 8(1)(ca) is attracted in case of collusion and tax fraud and does not cover an arm's-length transaction, as in the present case. The learned Standing Counsel for the Federal Government supported this position. The frank submis sions of the respondents even though absolve the petitioner of its liability under the impugned show-cause notice, it amounts to reading 'collusion' and 'tax fraud' into Section 8(1)(ca) which was not the intention of the legislature. Hence, constitutionality of Section 8(1)(ca) requires to be considered."
6. Similarly , ONO being based on a defective notice bearing false figures of input tax never claimed by the registered person is also not sustainable under the law in the light of reported judgment cited as 2005 PTD 1974 , wherein it has been held as under:- "In view of the above, we dispose of these petitions with the observation that the proceedings initiated by the respondents on the basis of impugned notices/letters are defective therefore, not further action shall follow against the petitioners, on the basis of such defective notices. However , it will open to Respondents No. 2 and 3 to initiate fresh proceedings of audit against the petitioners, but strictly in terms of Section 177 of the Income Tax Ordinance, 2001."
7. In view of the above legal flaws, pin-pointed by learned counsel, in our considered Opinion, the ONO in the instant case was rightly set aside by the CIR (Appeals) as per impugned order-in-a ppeal, which is upheld by way of dismissal of instant departmental appeal. W e order accordingly ."
(emphasis supplied)
6. Under the law, only substantial legal questions can be examined, which may arise from an order passed by the Appellate Tribunal, whereas questions which require no interpretation of any provision of law, rules or regulations, or its application on undisputed facts of a case, do not constitute a question of law to be decided by this Court under the reference jurisdiction. Reference is made to Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax (2014 SCMR 907), Commissioner Inland Revenue, Zone-I v. Messrs Industrial Chemicals (Pvt.)
Ltd. (2017 PTD 756), Commissioner of Income Tax v. Ghee Corporation of Pakistan (Pvt.) Ltd. (2017 PTD 1167); Commissioner Inland Revenue v. Messrs' Adeel Brothers (2017 PTD 1579 ) and Commissioner Inland Revenue, Zone-II v . Al-Hamad International Container T erminal (Pvt) Ltd. (2017 PTD 2212 ).
7. Since the decision by learned Appellate Tribunal is based on findings of facts, recorded by CIR (Appeals), therefore, we decline to exercise advisory jurisdiction.
This Reference Application is decided against applicant department.
8. Office shall send a copy of this order under seal of the Court to learned Appellate Tribunal as per Section 47(5) of the Act of 1990.