SHAHID MASOOD MANZAR, (CHAIRMAN).--- Through the titled appeal pertaining to tax period July, 2013 to March 2017, has been filed against impugned . Order-in-Original No,05/2017-18 dated 20.10.2017, passed by the learned CIR, Multan.
2. Briefly stated, essential facts of the case are that the appellant is registered under the Sales Tax Act, 1990 (hereinafter , "the Act") in the capacity of manufacturer and general order supplier engaged in making of taxable supplies of furniture etc., adjusting input tax credit under section 7 of the Act and has also paying sales tax in his monthly sales tax returns regularly and carrying out 'his mandated business within framework of law. That pivotal facts of the instant appeal case are that on e-scrutiny of abnormal tax profile having continuous carry forwards and evaded sales tax by the appellant for the tax periods from July 13 to March-2017 under section 2(37) of the Sales Tax Act, 1990 read with rule 12(a)(i)(c) of Sales Tax Rules, 2006 and observed that the appellant claimed credit of sales tax withheld without having invoice wise detail, resultantly short payment of sales tax. Second audit observation that there is discrepancy in sales/supplies declared by the registered person in sales tax returns with income tax returns and charged sales tax and further tax @ 1% and 2% without mentioning any section/SRO. Third audit observation that the appellant has not charged and paid further tax @ 1% on supplies made to unregistered persons and thus violated the provisions of sections 3(1A), (1)(18)(2), (5) and 6 of the Sales Tax Act, 1990 without mentioning any SRO. Therefore, sales tax on account of further tax is recoverable under section-48 of the Act along with default surcharge and penalty under sections 34(1) and 33(5) of the Act.
3. By referring to Article 117 of the Qanun-e-Shahadat Order , 1984, it was duty of the learned CIR to rebut the evidence produced and that if any contrary was alleged, to give reasons for it before making any adverse inference. That sales tax withheld by different institutions like education departm ent, health department etc. and can be verified by these departments. That income tax withheld on total sales and declared net sales, where as sales cannot be compared by the income tax return, that sales tax demand cannot be established to Govt. institutions, hence further tax @ 1% and 2% is not applicable in this case.
4. The learned counsel of the taxpayer contended that the impugned show cause notice is defective and deficient and subsequent adjudication order is not only illegal, non-speaking and non-judicial but also perfunctory order based on non-reading of relevant provisions of law and misreading of the documents available on record. Tax already paid or recovered under the impugned act, being past and closed transaction. In this regard reference was made to a reported judgment cited as 2008 PTD (T rib.) 541 wherein it has been held:- "Issuance of show-cause notice for levy of tax on suppressed sales detected on the basis of difference between the income tax returns. and sales tax returns-- Validity---Income tax record could not be made basis for adjudging the liability under Sales Tax Act, 1990---Orde r passed by both the lower forums were the result of non-appreciation of law---Appeal was accepted by setting aside the orders as a result of which the show-cause notice was set aside by the Appellate T ribunal"
5. It was argued by the learned AR that impugned adjudication order does not refer any reasoning for the rejection of the contentions raised by the appellant in its grounds and at the most, the impugned order apparently seem a clerical and verbatim reproduction of the show cause notices without applying independent judicious mind. The impugned order proceeds on palpably flawed construction of the law and facts applicable to the instant case and it has failed to advert to the true construction of the entire circumstances affecting the instant case. It is now settled law that any order which does not contain substantial reasons and does show that it is passed on objective considerations shall always be treated as an illegal and void order .
6. He contended that the impugned show cause notice proposing recovery of sales tax under section 48 of the Act and consequent adjudication order adjudging sales tax liability under sections 33 and 34 of the Act is illegal, unlawful and without jurisdiction as in case of any evasion of sales tax, recove ry can only be adjudged under section 11(3) of the Act however , any amount adjudged through a proper legal order there under can be recovered under section 48 of the Act. Recovery of sales tax can always be adjudged after adhering due process of adjudication under section 11(3) of the Act, where after, the amount of sales tax so adjudged can be recovered under section 48 ibid and in no case, recovery can be made without due process of adjudication under section 11(3) of the Act directly by invoking provisions of section 48 ibid.
7. He vehemently contended the appellant was neither asked to provide the relevant documents and records during the course of adjudication nor he was served with a single notice intimating production of records nor was his explanation sought on any aspect pertinent to subject issues however , the appellant have all the relevant documents which be produced even at this appellate stage for satisfaction of this Hon'ble Court.
8. He averred at the bar that the learned adjudicating authority has imposed pena lty and default surcharge under sections 33 and 34 of the Act but neither specified amount of penalty and default surcharge nor the extent of percentage of penalty in the impugned show-cause notice. Thus, penalty and default surcharge imposed against the appellant is otherwise not recoverable with the said specification until and unless a lump-sum amount or percentage thereof given in its subsection is not confronted in the show cause notice. It simply means that he did not apply his judicial mind while imposing penalty and default surcharge which rendered its whole exercise of adjudication as illegal and unlawful.
9. On the basis of above legal as well as factual premises as that no audit report/contravention report was issued by the Officer which is the basic requirem ent of the law, neither the case was selected for audit by the FBR, he prayed that issuance of show cause notice and super structure built on the same should fall flat and consequent adjudication order being biased, vindictive, mala fide, false, unfounded, illegal, void ab initio and ultra vires may be deleted on merits to meet the ends of justice. He submitted that the Tribunal in number of judgments held that show cause notice issued by the Revenue, without confronting the audit report was declared invalid. Reliance was placed on the judgment cited as S.T .A. No,166/LB/09.
10. Lastly , it was argued that since, stereotype, sketchy and non-speaking order is no order in the eye of law and the impugned order passed against the expressed provisions of law being illegal and void may kindly be quashed.
He further argued that since, no recovery of evaded amount of sales tax can be adjudged under sections 33, 34 and 48 of the Act without adhering due process of adjudication under section 11(3) of the Act therefore, any adjudication order for recovery of sales tax under section 48 of the Act is illegal and unlawful having no legal effect at all may be declared nullity in the eyes of law. He prayed that the impugned demand being unwarranted, illegal, unlawful and contrary to the provisions of law may kindly be vacated in the larger interest of justice. Imposition of default surcharge under section 34(1) of the Act and penalty under section 33(5) ibid without any specification of its amount in the show-cause notice being not only illegal and unlawful but also harsh and unjustified may also be remitted in the interest of natural justice, this can be applicable for section 2(37).
11. We have heard the arguments of the learned AR as well as DR to counter the arguments of the AR, as discussed hereinabove, we found that the show-cause notice as well as order-in-original proceedings have taken place on presumption basis confronting wrong facts tantamount to fishing enquiry , particularly in the light of law and record, being suffering from grave legal infirmities and substantive illegalities are declared to ab initio void, illegal, without jurisdiction and thus, are hereby set aside. In view of the above, we hereby hold that learned CIR failed to appreciate these facts in judicious manner . Therefore, order of the authority below is set aside.
12. Appeal filed by the registered person is accepted in the manner and to the extent and disposed of in the manner as dilated supra.