CH. SHAHID IQBAL DHILLON (JUDICIAL MEMBER).--- Titled appeal has been filed under section 46 of the Sales Tax Act, 1990 at instance of the assessee calling in question the impugned Order-in- Appeal No,165/2018 dated 21-05-2018 passed by the learned CIR (Appeals), Faisalabad.
2. Succinctly brief of the instant case are that during scrutiny of sales tax record of the appellant for the tax periods from July-2014 to June-2015, it was observed that the appellant has illegally claimed/ received sales tax refund in violation of provisions of section 73 of the Act by making late payments to its suppliers beyond specified period of 180 days from the date of issuance of tax invoice. Based on the said omission/irregularities, adjudication proceedings were initiated by the taxation officer by way of issuance of show-cause notice dated 17.07.2017 section 11(3) of the Sales Tax Act, 1990. Resultantly, adjudication proceedings were culminated in passing of an order dated 02-11-2017 adjudging recovery of sales tax which was challenged before the learned CIR(A) who also rejected the appeal and uphold recovery of Rs, 1,040,208/- vide its appellate order dated 21- 05-2018. The appellant being discontented and aggrieved by the said order has now filed the second appeal before this Tribunal. Learned counsel for the appellant has contended that the impugned order is erroneous in law and the same is based on misconceived facts. Learned counsel argued 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 however, payments though delayed yet fully met rationale behind enactment of the, provisions of section 73 for documentation of economy therefore;' the appellant was legally entitled for refund of input tax which is not questionable particularly when his suppliers have already deposited the output tax in the national exchequer. In support of his stance, learned counsel produced copies of sales tax returns for the period in questions filed by the alleged suppliers along with payment challans duly showing payment of output tax. Conversely, when the learned DR confronted with the tax situation cited supra, in counter arguments, he has assailed the case on similar grounds and charges as levelled 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.
3. The arguments of the learned representatives of both the rival parties have been heard, the 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 carefully.
4. After going through the case record, we have found 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. In the instant case, no revenue loss is involved particularly when the alleged suppliers have already paid output tax to the government in the relevant tax periods therefore, demanding refunded amount of input tax back from the buyer/appellant despite having it deposited by the suppliers 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. Reliance is placed on the judgment of this Appellate Tribunal Inland Revenue, Lahore in case of "The CIR (Zone-II), R.T.O., Faisalabad v. Messrs Chawala Enterprises, Faisalabad" reported as (2017 PTD 846).
5. No doubt, provisions of section 73 were incorporated in the Sales Tax Act, 1990 in order to promote documentation of economy and sit 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 been made to the suppliers within specified time period and were detayed beyond 180 days 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. C 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 "Messrs 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 appellant 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."
6. In view of what has been stated, particularly in the light of record and legal propositions discussed hereinabove, the impugned show-cause notice as well as consequent orders of both the authorities below are declared to be illegal, ab initio void and are thus hereby set aside. Appeal filed by the appellant is accepted as indicated above.