MUHAMMAD JAWED ZAKARIA, (JUDICIAL MEMBER).---The appeal has been filed by the Taxpayer / Appellant assailing the order No, ST/35-2016 dated 17.5.2012 passed by the learned CIR(A) Quetta.
We had already allowed the Miscellaneous Application (AG) vide order bearing M.A. (AG) No, 79/KB/2018 dated 6.2.2018 whereby the taxpayer has been allowed to raise the following additional grounds of appeal: Additional grounds of appeal "1. That without prejudice to the other grounds from 1 to 21, the learned Respondent DCIR is not competent, vested with the power and jurisdiction to issue a show-cause notice (impugned notice) under section 11 of the Sales Tax Act, 1990.
2. That without prejudice to the other grounds from 1 to 21, the learned Respondent DCIR is not competent, vested with the power and jurisdiction to pass the Order-in-Original No,02/2016 (impugned order) under section 11 of the Sales Tax Act, 1990."
OTHER MAIN GROUNDS OF APPEAL S.T.A. No, 201/KB/2018
2. The learned counsel for the Appellant has taken the following main grounds of appeal in S.T.A.
No, 201/KB/2017 which are reproduced as under:
1. That, Appellate Order No, ST/35-2016 of the Commissioner Inland Revenue (Appeals), Quetta and Order-in-Original No,02/ 2016 of the Deputy Commissioner Inland Revenue, Unit-I, Zone-I, RTO, Quetta are bad in law, contrary to the facts of the case and against the facts of the case.
2. That, the learned Commissioner Inland Revenue (Appeals), is, not justified to confirm the non- speaking and ex-party Order-inOriginal No, 02/2016 of the Deputy Commissioner Inland Revenue, RTO, Quetta.
3. That, the learned CIR (A) miserably failed to consider and acknowledge the copy of receipt of the written reply dated 01/12/2016 submitted with written arguments by the Appellant to CIR(A) having inward receipt/stamp of RTO, Quetta and totally ignored the fact that despite having in hand the written reply of the Appellant, the DCIR passed the order-in-original without considering and incorporating the written reply of the Appellant, therefore, the non-speaking order-in-original passed by the learned DCIR and Appellate order of the CIR (A),are liable to be set aside.
4. That, the learned CIR (A) miserably failed to consider the fact that the learned DCIR passed the order-in-original without considering the Appellant written reply, therefore DCIR did not have any fresh material/information in hand on the basis of which the Order-in-Original No, 02/2016 has been passed and CIR (A) also described this fact in Para No, 6 of Appellate order to presumed that the DCIR may have consider the written reply of the Respondent in other parallel and identical case on the basis of which the order-in-original was passed by the DCIR, therefore, the Appellate order of CIR(A) has been based on assumption liable to be set-aside.
5. That the learned CIR (A) miserably failed to apply his judicious mind to consider that the Order- in-Original No,02/2016 passed by the DCIR is without jurisdiction because the order has been passed on the basis of the duplication of the assessment proceeding initiated on 03/09/2014 and concluded on 13/10/2014, therefore, the order passed by the learned DCIR on 01/12/2016 is without jurisdiction and beyond the limitation of one hundred and twenty days allowed to pass the order under Section 11(5) of the Sales Tax Act, 1990.
6. That, the learned CIR (Appeal) is not justified to confirm the Order-in-Original No,02/2016 of DCIR based on the hearing notices Nos, 232 dated 29/09/2016 which is time barred and issued without having jurisdiction and lawful authority.
7. That, the learned CIR(A) is not justified to confirm the order-in-original of DCIR without considering the fact and relevant provisions of the Sales Tax Act, 1990, that after the remand back of appeal by Hon'ble ATIR on 18/08/2014 the hearing of remand back cases was initiated vide hearing notice No, 162 dated 03/09/2014, which was attended by the Respondent and written explanation of the show-cause notices was submitted on 13/10/2014, therefore, the Order-in- Original No, 02/2016 passed on 01/12/2016 are time barred assessment order, liable to be set aside.
8. That, the learned CIR (A) miserably failed to apply his judicious mind and confirmed the order- in-original without considering the fact that the Hon'ble ATIR remanded the appeals back for fresh consideration on 18/08/2014 and DCIR passed the order-in-original on 01/12/2016 without considering any limitation period for passing the assessment orders and also without having any lawful reason of delay of more than two years.
9. That, without prejudice to the above grounds, the learned CIR(A) is not justified to confirm Order-in-Original No, 02/2016 of DCIR and also declared that the DCIR hold the jurisdiction for passing the order without considering that the original assessment order which has been remand back by the Hon'ble ATIR was passed by the DCIR, (Withholding Unit-I, Zone-I), therefore, in remand back cases the order-in-original passed by the DCIR, Unit-I, Zone-I, instead of DCIR (Withholding) is a void order, liable to be set-aside forthwith.
10. That, the learned Commissioner Inland Revenue (Appeals) is not justified to confirm the Order- in-Original 02/2016, which is the single/combined order of the two separate remand back matters/cases of the Hon'ble ATIR, therefore, single order for two separate remanded appeal orders is unjustified, illegal, void order.
11. That, the learned Respondent C1R (A) is not justified to confirm the illegal Order-in-Original No, 02/2016 of the DCIR, RTO, Quetta which has been passed without stating any provision of Sales Tax Act, 1990 under which the order has been passed but the default surcharge and penalties has been imposed without assessment of the principal amount of tax, therefore, order-in-original not having any legal basis, liable to be set aside forthwith.
12. That, without prejudice to the above, the learned Respondent C1R(A) is not justified to confirm the order-in-original of DCIR, to make the appellant liable of not depositing tax of Rs,267,651,828 and Rs, 304,829,309/- collected from steel melters and re-rollers under Rule 58H of Sales Tax Special Procedures Rules, 2007, wrongly treating that it is a tax withheld by the appellant on behalf of the government which is to be deposited in the government treasury instead of adjusting it against the input tax ignoring the fact that under section 2(20)(a) any tax levied on supply of goods made by the appellant, is output tax and to determine tax liability of the appellant under section 7 the appellant is entitled to deduct input tax from the output tax which is due from the appellant for that tax period.
13. That, without prejudice to the above, the learned Respondent C1R (A) is not justified to declare that the Special Procedure for Payment of Sales Tax by Steel Melters, Re-Rollers and Ship breakers apply to the Appellant for payment and deposit of the Sales tax collected from the Steel melters and Re-rollers along with the electricity bill.
14. That, without prejudice to the above, the learned Respondent C1R(A) is not justified to declare that the penalty imposed on the basis of Sales Tax collected on all units sold as conveyed by the Finance Director of the appellant treating this action as covered under section 2(37) of the Sales Tax Act, 1990 instead of sales tax payable on these units if these units could be adopted as reduced by the Sales Tax payable on the basis of units declared by the appellant in the sales tax return as only units not declared in the sales tax returns, if any, could be treated tax fraud under section 2(37).
15. That, the learned CIR(A) is not justified to confirm the default charge of Rs,65,545,981/- without any default by the appellant.
16. That, the learned CIR(A) is not justified to confirm the penalty under section 33(5) amounting to Rs,28,624,056/- without any default by the appellant.
17. That, the learned CIR(A) is not justified to confirm penalty under section 33(6) amounting to Rs,17,174,434/- without any default by the appellant.
18. That, the learned CIR(A) is not justified to confirm the penalty under section 33(11) amounting to Rs,572,481,137/- without any default by the appellant.
19. That, the order of the Learned Commissioner Inland Revenue (Appeals), Quetta and Deputy Commissioner Inland Revenue, (Unit-I, Zone-I), RTO, Quetta are bad in law and contrary to the facts of the case due to some other reasons which may be adduced at the time of hearing.
20. That, the Appellate order passed by the Learned Commissioner Inland Revenue (Appeals)
Quetta and Deputy Commissioner Inland Revenue, (Unit-I, Zone-I), RTO, Quetta may kindly be vacated.
FACTS
2. Brief facts of the case as gleaned from the impugned orders are that the appellant is a registered person is an electricity distribution company engaged in making supplies of electric power to consumers. This is the 2nd round of litigation before the Honorable Appellate Tribunal Inland Revenue (ATIR). In the first round of litigation, the Honorable Division Bench of ATIR heard the three Sales Tax appeals of different periods (July 2007 to June 2009, July 2009 to March 2011 and April 2011 to June 2013) having common issues. On 18/08/2014 the ATIR vacated the orders of CIR (A) for all the three periods and remanded back all the three Order-in-Original for fresh consideration.
The original Show-Cause Notices Nos, 394 and 370 for the two tax periods under this appeal (July 2009 to March 2011 and April 2011 to June 2013) were issued on 10/12/2012 and 11/10/2013. After the receipt of the remand back order of the ATIR, the ACIR, RTO, Quetta issued the hearing Notice No, 162 dated 03/09/2014 for hearing of all the three remand back cases. In response to the hearing notice No, 162. the Appellant (QESCO) submitted/filed the written reply Nos, 01, 02 and 03 dated 13/10/2014 of all of the three periods. After the receipt of written replies of the Appellant (QESCO), the ADCIR, Unit-1, RTO, Quetta passed the Order-in-Original No, 02/2014 dated 20/10/2014 for one of the case (for the period from July 2007 to June 2008) of the three remand back cases and none of the order was passed for the other two remand back cases (for the periods from July, 2009 to March, 2001 and April, 2001 to June, 2013). Again on 29/09/2016, the DCIR, Unit-1, RTO Quetta issued hearing Notice No, 232 for two of the remand back cases (for the periods from July 2009 to March, 2011 and April, 2011 to June, 2013) without keeping into consideration the earlier proceeding which was initiated on 03/09/2014 by ADCIR, Unit 1, RTO, Quetta, in response of which the Appellant (QESCO) submitted the written replies on 13/10/2014 and the ADCIR did not issue any Orders for the above cited two tax periods. The Appellant (QESCO) on 01/12/2016 submitted/filed the written reply for hearing Notice No, 232 of DCIR and challenged the jurisdiction of the Respondent DCIR, Unit-1, RTO, Quetta for hearing the cases remanded back by the Honorable ATIR on 18/08/2014. The Respondent DCIR, without taking into consideration the written reply of the Appellant (QESCO) submitted on 01/12/2016, issued Order-in-Original No,02/2016 dated 01/12/2016 against which the appellant filed appeal before the learned CIR (A) who vide order mentioned supra, rejected the appeal of the taxpayer, hence the instant appeal before this Tribunal.
ARGUMENTS - TAXPAYER'S COUNSEL
3. The learned counsel exhaustively argued on the following points: JURISDICTION OF THE COMMISSIONER
4. The learned Authorised Representative (AR) of the appellant first argued on jurisdiction of the DCIR for passing the ONO and submitted that it is a well-settled principle of law that where a particular authority has exclusive vested with jurisdiction to proceed with a case, any attempt by any other authority to take cognizance of the matter or to institute or to initiate proceedings would render cognizance and proceeds illegal, void ab initio and of no legal effect. He further submitted that the Hon'ble Lahore High Court has not simply followed the judgment of Islamabad High Court but Hon'ble Lahore High Court has also given its own reasoning. The learned counsel, in support of his contentions, strongly placed reliance on the following judgments:
(a) 2018 PTD 1071 (Hamza Nasir Wire v. Federation of Pakistan); (b) 2018 PTD 1251 (Punjab Beverages Limited v. FBR); S.T.A. No, 994/LB/2017 dated 2.3.2018 Messrs Fatima Fert Limited) and (d) S.T.A. No 668/LB/2017 dated 18.01.2018 (Messrs Coca Cola Beverages (Pvt.) Ltd.
5. The learned DCIR has wrongly assumed jurisdiction to make out and to adjudicate upon the instant case under Section 11 read with sections 33 and 34 of the Act, whereas the statute directs that certain acts shall be done by a specified person, his performance by any other person is impliedly prohibited therefore whole exercise of issuance of SCN and passing of ONO by the learned DCIR should be declared illegal, void ab initio and without lawful jurisdiction.
6. On other factual as well as legal grounds the learned counsel submitted as under: A. Limitation Period a. The limitation period for passing of assessment order after the issuance of show-cause notice under Section 11 (5) of the Sales Tax Act, 1990. b. The limitation period for fresh consideration and issuance of the fresh/new assessment order under Sales Tax Act, 1990,in cases where the order-in-original of assessing officer remanded back for fresh consideration by the Appellate Tribunal Inland Revenue. c. Whether, the second hearing/show-cause notice for the same period can be issued when the hearing of the earlier hearing/ Show-cause notice has been completed and written reply has been filed by the Registered Person/Tax payer and none of the order has been passed by the assessing officer within the limitation period under Section 11(5) of S.T.A., 1990.
B. Penalty AND default surcharge without establishing mens rea on the part of QESCO: d. The objectivity and rationality of imposing penalty and default surcharge of 222% of the impugned principle amount of tax by the DCIR without any willful default and mens rea on the part of the QESCO.
The learned counsel also submitted following'table of calculation and working: a. Calculation of Impugned Short paid amount of Sales tax, Penalty and Default Surcharge: b. Tax periods (July 2009-March 2011) and (April 2011-June 2013) c. Impugned Short paid amount of Sales tax Rs, Million Short paid amount of Sales Tax (July 2009-Mar 2011) Rs, 267.652 Short paid amount of Sales Tax (April 2011 -June 2013) Rs, 304.829 Total Rs, 572.481 Sales tax amount not short paid but consider as short Paid by the assessing officerRs, 264.652 (There is no dispute by RTO on this amount, however the Assessing officer took wrong influence and considered this Amount as short paid amount of Sales tax because this Amount of Sales tax has already been paid along with the Regular Sales tax returns from Dec 2011 to June 2013)
Net Impugned Short paid amount of Safes tax Rs, 307.829 d. Penalty and Default Surcharge Penalty under section 33 (11) 100% of Impugned Short paid amountRs, 572.481 Penalty under section 33 (6) 3% of Impugned Short paid amountRs, 17.174 Penalty under section 33 (5) 5% of Impugned Short paid amountRs, 28.624 Total: 201% of principal Rs, 618.279 Default Surcharge/Additional Tax under section 34 Rs, 65.546 Total DS and Penalty (222% of Principal) Rs, 683.825 "
D. Ex-Parte and Non-Speaking Order: Ground 1, 2, 3 and 4:
7. It was submitted by the learned counsel that the learned CIR (A) did not apply his judicious mind to uphold the orders of the DCIR despite the written arguments and during hearing it has been conveyed by the appellant that the DCIR passed the Ex-Party Orders/Orders without considering the explanation and written reply submitted by the Appellant to DCIR. For this, it is submitted that: 1-aThe appellant attended the hearing before the DCIR on 30/11/2016 and argued the case. We have challenged the jurisdiction of the Respondent DCIR who after hearing, required us to file the written reply and fixed the final dated 01/12/2016 for filling of the written reply of the hearing notice.
1-bThat as required by Respondent DCIR, the written reply of the hearing notice was submitted on 01/12/2016 but it was not considered and incorporated by the learned DCIR and without deciding the basic objection of lack of Jurisdiction of the Respondent DCIR, orders has been passed which therefore, not the speaking orders.
E. Duplication of the proceedings and time barred assessment: Grounds 5, 6, 7 and 8:
8. On the above grounds it was submitted that the Learned CIR in his order failed to consider that impugned orders of the DCIR are without Jurisdiction as the original Show-Cause Notices issued on 10/12/2012 and 11/10/2013 and after remand back of the case the hearing notices issued on 03/09/2014 which were duly attended and heard and written reply submitted to the officer having jurisdiction who after the receipt of the notices, duly acknowledged and drop the allegation raised in show-cause notices and passed no adveise orders. The learned CIR failed to consider that DCIR issued the notice on 29/09/2016 in already finalized and closed proceedings without having any jurisdictions in past and closed transaction/proceeding on same issue and of the same period, which is illegal and not tenable under the law. Under Section 11(5) [(Old 11(4)] of the Sales Tax Act, 1990, the Second proviso "Provided that order under this section shall be made within one hundred and twenty days of the issuance of show-cause notice or within such extended period as the commissioner may, for the reasons to be recorded in writing, fix provided that such extended period shall in no case exceed ninety days." a. For order which show-cause notice should be considered for passing an order under the Second proviso of the Section 11(5) of STA, 1990. b. The time limit under Section 11(5) is mandatory: Settled Principal- Where the public functionary is empowered to create liability against a citizen the limitation is mandatory. c Mandatory settle principal of law "Where issue involved entails creation of liability against a taxpayer, the period of limitation is mandatory" d. That once a matter becomes barred by time then the subsequent enhancement in the period of limitation shall not have the effect of reopening the past and closed transaction. 2007 PTD 117 Ghandhara Nissan Diesel v. Collector of Customs). e. That, wherein notice was declared void and of no legal effect, being beyond time and all orders passed subsequently in pursuance thereto also were void. (1990 CLC 868 Pakistan International Airlines Corporation v. Central Board of Revenue, Islamabad). In support he placed reliance on: In support of his contentions the learned counsel for the appellant placed reliance on the following case laws: Case-law: High Court
(i) 2008 PTD 60 Super Asia Muhammad Din v. Collector of Sales Tax, (ii) 2008 PTD 758 Hani Straw Board v. Additional Collector, (iii) 2009 PTD 1978 Leo Enterprises v. President of Pakistan (iv) 2015 PTD 1068 (H.C. Lah.) Commissioner Inland Revenue v. Messrs Azgard Nine Ltd.
Tribunal
(i) 2015 PTD (Trib.) 1112, (ii) 2013 PTD (Trib.) 834, (iii) 2010 PTD (Trib.) 1522, (iv) 2010 PTCL 1134 (Trib.),
(v) 2009 PTD (Trib.). 1263, (vi) 2013 PTD (Trib.) 4 (vii) 2013 PTD (Trib.) 379, (viii) 2013 PTD (Trib.) 639,
(ix) 2015 PTD (Trib.) 1094, (x) 2015 PTD (Trib.) 1543 (xi) 2014 PTD (Trib.) 448, (xii) 2014 PTD (Trib.) 1233,
(xiii) 2013 PTD (Trib.) 537, (xiv) 2008 PTD (Trib.) 578 FBR Circular: No, 1(23) C (legal) 107 dated 06.02.2007 F. Single order for two remand back cases of different Periods without jurisdiction: Ground 10:
9. The learned counsel argued that the Honourable ATIR has remanded back the three appeals S.T.As. Nos, 41/KB/2014, 42/KB/2014 and 43/KB/2014 under Section 45(B) of the Sales Tax Act, 1990.
The learned Respondent DCIR without any lawful reason and justification has passed the combined order of the two separate remand back orders and having two separate Show-Cause Notices.
Therefore, the orders of the Respondent DCIR are without lawful authority and without Jurisdiction.
G. Penalty and Default Surcharge without wilful default and Mens rea: Grounds 11 and 15, 16, 17, 18:
10. That the impugned default of the non-payment of the withholding tax was not due to the deliberated effort of the appellant but it was due to the technical issues of the process of filling of the online Sales tax return by the Appellant. The Sales Tax collected from the Steel melters and Re- rollers was declared by the Appellant in the relevant columns of the ST Return and by default the FBR online portal/system adjusted the amount of Sales Tax collected from steel melters with the Input tax of the Appellant. Therefore, non-payment of the impugned withholding tax was due to the technical issues and defects of the online filling of Sales tax return of the FBR Portal and not the mela fide intention of the Appellant. a. That no one should be prejudiced by an act of the State/state functionaries. In this regard, reliance was placed on 1997 SCMR 209 The State v. Asif Adil, 2002 SCMR 134 Sajawal Khan v. Wali Muhammad and others. b. Penalty and Default Surcharge has been imposed as stereo type orders and without applying judicious mind and without any specific notice for imposition of penalty and without proof of the mala fide intention and Mens rea. c. Penalties -- No will full default and without the Mens rea -- Proof of --Mens rea is an essential ingredient in penalty proceedings taken against assessee Case-law: i. 2004 PTD 1179 (SC) = 2004 SCMR 456 D.G.Khan Cement Company Ltd. and others v. Federation of Pakistan and others ii. 2004 PTD 1048 (HC)
Bhola Waving Factory v. Customs, Excise and ST AT iii. 2002 PTD (Trib.) 300 Nestle Milk Pak Ltd. v. Addl. Coll. (Adj.), Multan. iv. 2006 PTD (Trib.) 195 Messrs Cherat Cement v. Collector of Customs, Sales Tax and Central Excise (Adjudication)
Rawalpindi. d. The penal action could not be taken in case where there is a difference of opinion. e. No penal action as default, if any, is not intentional. f. Penal provisions, being of criminal nature, can only be invoked where the default is intentional otherwise no penal action could be taken.
Case-laws:
1. Demand of additional tax and penalty is otherwise than in accordance with law such demand being made by an impatient department with a view to achieving the target of recovery of revenue was, therefore, mala fide 1999 PTD 1892 Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others. 2005 PTD 1850 Addl. Coll. (Adj.) Multan v. Nestle Milk Pak Ltd.
2. Where the petitioner did not act malafidely with the intention to evade the tax, the imposition of penalty of an additional tax and surcharge is not justified. 1995 PTCL 415 (HC Lah.)
Messrs Lone China (Pvt.) Ltd. v. Additional Secretary to the Government of Pakistan Ministry of Finance, CBR Custom. House, Karachi.
2009 PTD (Trib.) 500 Messrs Shahmurad Sugar Mills v. The Collector of Customs, Sales Tax and Federal Excise, Hyderabad.
3. No additional tax where failure to pay tax was not intentional or contumacious. 1997 PTCL 197 (CESTAT, Lah.)
Pakistan Services Limited v. Collector, Central Excise and Sales Tax, Lahore.
4. Imposition of penalty and additional tax/default surcharge. Where there is no tax evasion or tax fraud etc. 2010 PTD (Trib.) 601 Collector of Sales Tax and Federal Excise, Peshawar v. Messrs Associated Industries Ltd. Nowshera and others H. Withholding taxes and Special Procedure Rules: Grounds 12, 13 and 14: The learned counsel submitted that there is Special procedure for collection and payments of Sales Tax on electric power (Chapter-III). Special procedure for Steel melters, Re-Roller and Ship Breakers (Chapter-IX) Sales Tax Special Procedure (Withholding) Rules, 2007 58F Application dated 15.07.2007 to 28.04.2008. 58F Application dated 14.06.2014 to 04.06.2014. 58H Payment of tax.
The issue treating sales tax under Rule 58H as withholding tax and person collecting this tax as withholding agent is distinguished as under:- 1) PARTIES OF EACH SUPPLY In every sale transaction (supply) there are following two parties:- '(a) (a) Supplier of goods. (b) Buyer of goods.
2) ROLE OF SUPPLIER 2.1 To collect sales tax from the buyer.
Supplier of goods collects sales tax from the buyer on the basis of invoice issued by the supplier.
2.2 To deposit sales tax collected from buyer The supplier collects sales tax on behalf of the Government and deposits it with the govt. after adjustment of input tax admissible under the law as provided under section 7 of the Sales Tax Act 1990.
2.3 Tax collected on supply of goods is output tax of Supplier The sales tax collected by the supplier is "output tax" as defined under section 2(20)(a) being "Tax levied under this Act on supply of goods made by the person". Therefore, tax levied on goods supplied by a person is output tax.
3) ROLE OF BUYER 3.1 To Pay Sales Tax to Supplier Buyer makes the payment of sales tax to the supplier on the basis of invoice issued by the supplier.
3.2 Sales tax paid by buyer is Input Tax of Buyer The sales tax paid by buyer to supplier is identified as input tax as defined in Section 2(14)(a) i,e, (a) "tax levied under this Act on supply of good to the person" is input tax.
3.3. Entitlement of Buyer to claim Sales Tax paid as Input Tax.
The buyer claims tax paid as input tax, subject to restriction/ limitations under Sections 7, 8, 8B and 73 CONCEPT OF WITHHOLDING TAX AND WITHHOLDING AGENT IN SALES TAX 4.1. Concept of Withholding Tax introduced in 2007.
The concept of withholding tax and withholding agent was first time introduced in 2007 by addition of Section 3(7) vide Finance Act, 2007 4.2 Rule for Implementation of withholding tax regime.
The withholding tax regime was implemented vide Sales Tax Special Procedure (Withholding)
Rules, 2007 introduced vide SRO 660(1)/2007 dated 30-06-2007.
4.3 Parties in withholding Tax regime There are following two parties in withholding tax regime:-
(i) Buyer.
(ii) Supplier.
4.4 Buyer is withholding agent The withholding agent is identified/specified in Rule 1(2) which are certain BUYER specified in that Rule. It means the buyer is a withholding agent.
4.5-Responsibility of withholding agent The withholding agent, who is a buyer, "shall deduct an amount equal to one fifth of the total sales tax shown in the sales tax invoice issued by a registered person and make payment of the balance amount to him".
4.6. Supplier to Deposit reduced amount of Sales Tax collected from Buyer According to Rule 3 the supplier shall deposit sales tax collected from the buyer excluding amount withheld by the buyer.
4.7. Buyer has to deposit Sales Tax withheld from the Sales Tax payable to supplier.
The buyer shall deposit tax withheld from purchases made by him.
11.In view of the above exhaustive discussion the learned counsel submitted that the orders of the officers below may be vacated / set aside.
DR's ARGUMENTS 12.The DR on the other hand, supported' the orders of the officers below. In his view, a valid jurisdiction was assigned by CIR, and the order was passed as per law. That the DCIR has passed the impugned order in original, under Sections 33 and 34 of the Sales Tax Act, 1990 to recover the default Surcharge and Penalty and at the same times it is admitted by the Respondent that the impugned order has not been passed under Section 11 of the Sales Tax Act, 1990. The assessing officer issued Order-in-Originals for recovery of defaulted amount together with default surcharge and penalty. Furthermore, the Sales Tax principal amount of Rs, 267.652 million adjudged vide Order-in-Original No 03/2012 dated 03-01-2013 and Rs, 304.829 million vide Order-in- Original No 03/2013 dated 25-10-2013 (Aggregating To Rs, 572.481 million) had already been recovered through installments amounting to Rs, 311.708 million and adjustment of Rs, 260.772 million deposited through Sales Tax Returns. However, the appellant deposited the principal amount on installments and failed to deposit the amount of default surcharge and penalty. The cases were actually remanded back by ATIR Karachi and as per directions of Hon able ATIR the cases were fixed for hearing for recovery of default surcharge and penalty. Furthermore once it has been established that the registered person has failed to pay the correct amount of tax, the respective penalties under section 33 of the Sales Tax Act, 1990 and default surcharge under section 34 of the Act automatically attracted, without any discretion on the part of the assessing officer. He, therefore, contended that the orders of the officers below are in accordance with the law may be upheld.
OPINION / FINDINGS OF THE COURT 13.We have heard both the learned representatives and have also gone through the records of the case, impugned orders passed by the offices below as well as case laws cited at bar. The issues involved in this appeal are discussed and decided as under: 14.On the legal issue of jurisdiction raised by the AR of the appellant, we have perused the relevant provisions. The law is very well settled that the legal issues / jurisdictional issues have to be decided at first.
15. The perusal of the ONO shows that the remand proceedings were taken up by the DCIR against three Sales Tax Appeals bearing S.T.As. Nos, 41, 42 and 43/KB/2014 for three periods for fresh consideration. Further perusal of ONO shows that admittedly at page 11 that he initiated proceedings under section 11 by issuing notice under section 11(2) of the Sales Tax Act. It was as contended by the learned counsel, that the DCIR was not conferred any powers to issue show- cause notice under section 11 of the Act. It was further added that certain jurisdiction orders were passed by the Board delegating the powers to issue notices and made assessments under section 11 of the Act to the CIR, however, the CIR is not authorised to further delegate such powers to its subordinate officers including the DCIR, therefore any delegation of powers by the CIR to its subordinates is not permissible under the law. This issue stands settled by the following judgments: a) 2018 PTD 1071 [Hamza Nasir Wire v. Federation of Pakistan] His Lordship eloquently and vividly expounded enunciated, the following principles: "7. Section 32 relates to delegation of powers of the Board or the Chief Commissioner by an order and subject to such limitations or conditions as may be specified therein. This provision is not of any assistance in the controversy in hand. Of crucial importance is section 31 which clearly mentions that an officer of Inland Revenue appointed under Section 30 shall exercise said powers and discharge such duties as are conferred or imposed on him under the Act and that he shall also be competent to exercise all powers and discharge all duties conferred or imposed upon any officer subordinate to him. Therefore, it is very clear that the law intends for an officer of Inland Revenue to exercise only those powers and discharge such duties as are conferred or imposed under the provisions of the Act and none other. Thus the source of the powers of an officer of Inland Revenue flows from the various provisions of the Act, 1990 and have been conferred by the Parliament. It flows indubitably that neither FBR nor the Chief Commissioner or the Commissioner can confer any power on an officer of Inland Revenue which is not so conferred upon him by the letter of the law. This mandate of the law is at the heart of the provisions of the Act, 1990 and must be taken as the foundational principle in the resolution of any dispute regarding matters of construction of powers of an officer of Inland Revenue. What is conferred by section 30 on either FBR, the Chief Commissioner or the Commissioner is merely the power to prescribe the functions to be performed by them. For example, subsection (2A) of section 30 gives the power to the Board to direct that the Chief Commissioners Inland Revenue shall perform their functions in respect of such persons or classes of persons of such areas as the Board may direct. Therefore, what is being conferred on the Board is merely the power to delineate and prescribe the respective functions to be performed by the Chief Commissioners and that too in respect of certain category of persons or classes of persons and no more. Similarly, the Chief Commissioners have been conferred the power to direct the respective Commissioners of Inland Revenue to perform their functions in respect of such persons or classes of persons of such area as the Chief Commissioner may prescribe. The distinction that is being drawn here is of crucial and pivotal importance. By reading section 31 and section 30 together, the ineluctable conclusion is that the powers to be exercised by an officer of Inland Revenue is prescribed by law and cannot be conferred by the Board or the Chief Commissioner. However, for administrative purposes, the Board, Chief Commissioner or Inland Revenue or the Commissioners of Inland Revenue may prescribe and direct certain functions to be performed by officers subordinate to them in a certain manner and in respect of such persons or classes of persons of such areas as they may choose to prescribe. Therefore, the power is merely administrative and reserved for exigencies of functions of the various administrative zones set up by FBR for its convenience. The power that was exercised by the Commissioners which is now being used as delegated power by the various officers of Inland Revenue to issue the impugned, show-cause notices, has been derived through subsection (3) of section 30 of the Act, 1990 which has been brought forth above. However, subsection (3) does not, by any stretch of imagination, confer on the Commissioner a power to delegate to an officer subordinate to him such power at his whim that he deems fit to do so under the circumstances.
Those powers can only be conferred by law and not by the Commissioner Inland Revenue and the only authority that vests in the Commissioner Inland Revenue is to bifurcate the functions to be performed by offices subordinate to him and that too in respect of such persons or classes of persons as he may direct. I agree with the contentions raised by the learned counsel for the respondents that this is a primary administrative responsibility cast on the Board, Chief Commissioner and the Commissioner, for unless this authority is so conferred on these bodies and offices, chaos will reign and administratively it will be impossible to control the exercise of powers by an officer of Inland Revenue. This can be illustrated by a reference to section 11 itself which merely mentions that an officer of Inland Revenue may serve a show-cause notice on any person who has fallen foul of the various acts mentioned in section. The office of Inland Revenue includes a wide array of officers mentioned in section 30 and unless the power is conferred on the Board, the Chief Commissioner or the Commissioners to mark out and assign the functions of the officers subordinate to them, there will be complete uncertainty with regard to the powers to be exercised by the respective officers of Inland Revenue. It is precisely for this purpose that subsection (2A) to subsection (4) of section 30 have conferred administrative powers on the Board, Chief Commissioner and the Commissioners Inland Revenue to settle the various functions performed by offices of Inland Revenue subordinate to them. However, this does not include conferring on those officers the powers which are not so conferred by law.
8. The question however arises as to how the Notification-I and the orders issued by the various Commissioners Inland Revenue are to be reconciled. I have no doubt in my mind that if the Notification-I was not in the field and had not been issued by the FBR, the Commissioner Inland Revenue was perfectly within his right to exercise the powers conferred by subsection (3) to prescribe the functions to be performed by officers of Inland Revenue subordinate to him in respect of such persons or classes of persons or of such areas as the Commissioners would direct.
However, the fact remains that FBR has now issue a notification by which it has expressed its clear intent to confer on the Commissioners the functions to be exercised in respect of certain persons or classes of persons of such areas as specified in that notification. The tenor of Notification-I and Notification-II also shows that FBR intended for the Chief Commissioners and Commissioners of Inland Revenue to perform all administrative functions and coordination as given in the Column-4 of the Table in those notifications. Therefore to that extent the Commissioner's power to confer those functions on officers subordinate to him stood taken away and his power to do so in respect of the subject matter of Notification-I and Notification -II has been curtailed. This effectively means that in respect of the persons or classes of persons or cases or classes of cases as specified in Notification-I only the Commissioner of Inland Revenue mentioned in these Notifications will exercise the power and those functions cannot be delegated by those Commissioners of Inland Revenue. This is the most appropriate purposive interpretation which could be placed upon a holistic consideration of the Notifications I & II and the orders made by the Commissioners Inland Revenue. Unless this is done it will be tantamount to undermining the authority and the intent of the FBR and will throw into complete disarray the hierarchycal structure of the FBR. This is also evident from the use of the term "shall" in the Notification-I by which it has been specifically stat delegate on the Commissioners concerned and although the Notification-II refers to the Notification-I, it does not convey an impression that the act is being performed in the delegated exercise of powers.
9. A similar question arose before the Islamabad High Court in a case titled Zaver Petroleum Corporation Limited through Director, Islamabad v. Federal Board of Revenue through Chairman FBR, Islamabad and another (2016 PTD 2332), which dilated upon the issue involved in these petitions and concluded as follows:- "17. It is, therefore, obvious from the above definitions that the three expressions are distinct and separate. The power or jurisdiction conferred on an officer of Inland Revenue precedes the performance of functions. The conferment of power or jurisdiction is a precondition for the performance of functions. By no stretch of the imagination does sub-section (3) of section 30 empower the Commissioner to 4/28/2018 RahmatLaw.com-Law confer power or jurisdiction.
However, a Commissioner pursuant to sub-section (3) can assign persons or areas in respect of the officers specified therein for the purpose of the performance of functions with regard to the scope of the power and jurisdiction already conferred on such officers. Such officers, in order to perform their respective functions, have to be vested with power or jurisdiction. In the instant case the learned counsel appearing on behalf of the Department have not been able to show any provision of the Act of 1990 which empowers the Commissioner in issue the order dated 23.01.2014 and further delegate the powers and jurisdiction conferred upon him or her by the Board pursuant to the order dated 21.01.2014. The reliance of the Commissioners on the notification dated 01-07- 2010 is misplaced as the same does not confer the power of adjudication under section 11 of the Act of 1990.
18. It is settled law that a delegate cannot further delegate its powers unless expressly authorized under the law. It is also settled law that in order to enable a person to -delegate the powers or functions, there' must be an authority, expressed or implied, to delegate. When power is conferred on a particular person, then that person alone has to exercise the powers and cannot transfer its exercise to another person. The august Supreme Court in the case titled 'Muhammad Ashraf Tiwana and others v. Pakistan and others' [2013 SCMR 1159] while examining he power of appointment of Commissioners vested in the Federal Government under the Securities and Exchange Commission of Pakistan Act, 1997, observed and held that it was well settled law that a statutory delegate could not sub-delegate his or her powers...
19. In the light of the above, the order dated 23-012014 issued by the Commissioner Inland Revenue was without lawful authority and jurisdiction. The Board had expressly conferred the power of adjudication under the Act of 1990 on the Commissioner vide order dated 21-01-2014. The latter had no authority or jurisdiction to further delegate the power and jurisdiction of adjudication conferred by the Board vide order dated 21.01.2014. It is settled law that if the basic order is void, then any, superstructure built thereon is also illegal and liable to fall. The Inland Revenue Officer was, therefore, not vested with power nor had the jurisdiction to issue a show-cause notice under section 11 of the Act of 1990. The Commissioner alone was vested with power and jurisdiction under section 11 of the Act of 1990, pursuant to the Board's order dated 21-01-2014."
10. I have no reason to disagree with the judgment rendered by the Islamabad High Court and for my own reasons given above concur with that judgment.
It is "worth mention in herein that His Lordship while agreeing with the judgment of Islamabad High Court recorded his own reasoning.). b) W.P. No, 22028 of 2017 now reported as -[Punjab Beverages Limited v. FBR] Now reported as --- The relevant extract is reproduced hereunder: "....7. This Court has gone to the said order and is in respectful agreement with the reasoning of the learned Single Judge in setting aside the show-cause notices issued to the Petitioners. Since the issue raised in the Writ Petition and connected Writ Petitions had already been decided by the Single Bench of this Court as stated above, this Court is bound to follow the said order. In the circumstances, this Writ Petition and connected Writ Petitions are allowed in the same terms as mentioned in Order dated 8.12.2018 passed in Writ Petition No, 37295 of 2016. Consequently, the show-cause notices impugned in this Writ Petition and connected Writ Petitions are set aside."
S . T . A . No, 994/LB/2017 dated 2.3.2018 [Messrs Fatima Fert. Limited] The relevant extract from the judgment of the Division Bench is reproduced hereunder: "6. We have gone through the orders of the authorities below as well as the judgment of the Honourable Lahore High Court relied upon by the AR of the appellant. Be that as it may, it is an admitted fact that the assessm ent proceedings were conducted and finalized by the learned DCIR under section 11 of the Act. The findings given by Honourable Court (which also inter-alia rely on a judgment of the Islamabad High Court on similar issue), as reproduced supra are clear and unambiguous, viz. the Board has only conferred the power of adjudication under section 11 of the Act to the relevant Commissioner Inland Revenue and, under the law he is not empowered to further delegate the powers relating to adjudication under these provisions, and thus any proceedings conducted through exercise of these provisions by an officer below the rank of Commissioner are prima facie a nullity in the eyes of law. Accordingly, without going into any other aspect of the case, since in the instant case also adjudication powers under section 11 of the Act were exercised by learned DCIR, by respectfully following the dictum laid down by Honourable Lahore High Court, we hereby annul the orders of the authorities below and direct that demand raised against the appellant on the account is deleted. However, the Department is at liberty to take action disallowed by the Honourable Lahore High Court, Lahore in Para 11 of the judgment in W.P. No, 37295 of 2016 reproduced in Para 3 of this order.
7.Since, the orders of authorities below have been vacated on jurisdictional grounds, there is no need to adjudicate the other grounds taken by the appellant.
8.The appeal stands decided in the manner and to the extent stated above."
S.T.A. No, 668/LB/2017 dated 18.01.2018 [Messrs Coca Cola Beverages (Pvt.) Ltd.] The relevant extract from the order of the Division Bench of this Tribunal is reproduced hereunder: "..It is an admitted position and evident from the record that assessment proceedings in the present case were conducted and finalized by learned DCIR under section 11 of the ST Act, thus, without going into any other aspect, by respectfully following the dictum laid down by Honourable LHC, we hereby annul the orders of the authorities below and accept the appeal filed by the registered person. Since, the orders of authorities below are being vacated on jurisdictional grounds, there is no need to adjudicate the other grounds taken by the registered person."
16.Respectfully following the binding judgments we vacate the show-cause notice and ONO passed by the DCIR and consequently appellate order also on this jurisdictional issue.
17.On merit of the case, the orders of the officers below are not maintainable for the reasons discussed herein below. First we have ventured to peruse the order-in-original. The relevant extract from the order of the DCIR is reproduced below: "Being aggrieved with the aforesaid Orders-in-Original the R/p has filed appeal before CIR (Appeals-Ill), Karachi @ Quetta under section 45-B of the Sales Tax Act, 1990, and the said for a had dismissed the said appeal vide Order-in-Appeal No,634 dated 25-03-2014 and Order-in- Appeal of the No,632 dated 25.3.2014. Again being aggrieved by the said Order-in-Appeal of the CIR (Appeals-Ill), Karachi @ Quetta, the R/p had filed appeal before the Appellate Tribunal Inland Revenue, Karachi through Mr. Muhammad Younus Ghazi, FCA and Mr. Muhammad Muneer, FCMA, Aaims Consultants, Quetta (Authorized Representative). The Hon'ble Tribunal Inland Revenue, Karachi had remanded back the case for fresh consideration with direction to pass fresh order in accordance with law after affording reasonable opportunity of being heard to the registered person.
On the basis of aforesaid facts, this office has issued hearing memo. of even number 232 dated 29.6.2016, fixing the date of hearing as on 6.10.2016 whereas the R/p vide letter No, 516/ FD/QESCO/Comp dated 5.10.2016 has requested adjournment for ten days which was allowed vide letter C. No, DCIR/UNIT-I/ Zone-1/RTO/QTA/2016-2017/692 dated 27.10.2016. This office again issued hearing memo after termination of adjourned period vide number 378 dated 17.10.2016, for compliance on 20.10.2016 whereas R/p vide letter No, 2262/FD/QESCO/Comp dated 27.10.2016 had again requested for adjournment for fifteen days which was allowed and next date of hearing was fixed on 30.11.2016 vide letter No, 741 dated 28.11.2016. The Rip again intimated vide letter of even No 741 dated 28.11.2016 about the date of hearing fixed on 30.11.2016. on the said date i,e, 30.11.2016 Mr. Muhammad Muneeb Aaims Consultant appeared as the authorised representative (A.R) of the R/p and assured compliance on 1.12.2016 but on 1.12.2016, R/P again failed to furnish any reply or documents in support of its contention.
Upon examination of case record along with documents available on record, the undersigned has come to conclude that the charges framed in the Show-Cause Notice No, 394 dated 10.12.2012 and Show-Cause Notice No, 370 dated 11-10-2013 stands established. Furthermore, the aforesaid sales tax principal amount of Rs,267.652 (million) adjudged vide Order-in-Original 03/2012 dated 3.1.2013 and Rs,304.829 (million) vide Order-in-Original No, 03/2013 dated 25.10.2013 (Aggregating Rs,572.481 (million) had already been recovered through installment amounting to Rs, 311.708 (million) and adjustment of Rs,260.772 (million) deposited through sales tax returns.
I, therefore, order the R/p to deposit the default surcharge amounting to Rs,65,545,981/- under section 34 of the Sales Tax Act, 1990 and penalty as adjudged vide aforesaid order-in-original of Rs,28,624,056/- (Rs,10,000/= or 5% of tax involved whichever is higher), Rs,17,174,434/ = (Rs,5,000/= or 3% of tax involved whichever is higher)) and Rs,572,481,137/- (Rs,25,000/- or 100% of tax involved whichever is higher) under sections 33(5), 33(6) and 33(11) of the Sales Tax Act, 1990 respectively within seven days of receipt of this order, failing which recovery action shall be initiated against the Rip under the law."
18. After perusal of the above extract, we have arrived at the following findings: The ATIR remanded back the cases for fresh consideration after affording reasonable opportunity of being heard to the registered person, resultantly the original orders as well as the show-cause notices have also been cancelled and set aside by the Tribunal. In order to initiate the fresh consideration for the tax periods under Section 11 of the Sales Tax Act, 1990 the learned assessing officer has to issue the fresh show-cause notices and after affording reasonable opportunity of being heard has to finalize the proceeding after fulfilling the conditions lay out-under the provisions of Section 11 of the Sales Tax Act, 1990. A The Respondent assessing officer after the remand back of cases did not imitate the proceeding under Section 11 of the Sales Tax Act, 1990 and instead of issuing the fresh show-cause notices only issued the hearing notice of even number dated 29/09/2016. The impugned order passed by the assessing officer under sections 33 and 34 of the Sales Tax Act, 1990 without assessment of principal amount of tax and at the same time based on the earlier set aside Show-Cause Notices No, 394 dated 10/12/2012 and No, 370 dated 11/10/2013 is not maintainable in the eye of law being without jurisdiction is hereby annulled.
The impugned default of the non-payment of the withholding sales tax collected from the steel melters with the Sales Tax Return of the relevant periods was due to the technical issues and miscalculation of data entries in the online Sales tax return of the web portal of FBR. The Sales Tax collected from the Steel melters and Re-rollers was entered in the relevant columns of the ST Return and in the automated online Sales tax return of the FBR online portal/system adjusted the amount of Sales Tax entered in the relevant column of sales tax collected from steel melters with the Input tax on the purchases of the appellant. In view of the unavoidable circumstances it has been established that non-payment of the impugned withholding tax was due to the technical issues and defects of the online filling of Sales tax return of the FBR Portal and not the mela fide intention of the Appellant. The reliance following case laws: I 2004 PTD 1179 (S.C.) = 2004 SCMR 456 D.G. Khan Cement Company Ltd. and others v. Federation of Pakistan and others II 2004 PTD 1048 (H. C)
Bhola Waving Factory v. Customs, Excise and ST AT.
III. 2002 PTD 300 (Trib.)
Nestle Milk Pak Ltd. v. Addl. Coll. (Adj.), Multan.
IV.2006 PTD 195 (Trib.)
Messrs Cherat Cement v. Collector of Customs, Sales Tax and Central Excise (Adjudication)
Rawalpindi.
V. 1999 PTD 1892 Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others.
Addl. Coil. (Adj.) Multan v. Nestle Milk Pak Ltd.
VI. 1995 PTCL 415 (HC Lah.)
Messrs Lone China (Pvt.) Ltd. v. Additional Secretary to the Government of Pakistan Ministry of Finance, CBR Custom House, Karachi.
VII. 2009 PTD (Trib.) 500 Messrs Shahmurad Sugar Mills v. The Collector of Customs, Sales Tax and Federal Excise, Hyderabad.
VIII. 1997 PTCL 197 (CESTAT, Lah)
Pakistan Services Limited v. Collector, Central Excise and Sales Tax, Lahore IX. 2010 PTD (Trib.) 601 Collector of Sales Tax and Federal Excise, Peshawar v. Messrs Associated Industries Ltd. Nowshera and others 18(sic) It has been held by the superior courts of Pakistan that no one should be prejudiced by an act of the. State/state functionaries, reliance has been placed on 1997 SCMR 209 - The State v. Asif Adil, 2002 SCMR 134 Sajawal Khan v. Wali Muhammad and others. Therefore, the imposition of penalty and default surcharge without the mela fide intention is not maintainable in the eye of law and penalty and default surcharge imposed is hereby deleted.
Conclusion / Summary
19. The upshot of the above discussion the findings / conclusion of the judgment may be summarized and appeal is disposed in the following terms: Jurisdiction of the Commissioner That there is no provisions of delegation of powers enforced to Commissioner like section 210 in Income Tax Ordinance, 2001. Delegetee cannot further delegate his powers, only the Commissioner is competent and empowered to undertake the assessment proceedings under section 11 of the Sales Tax Act, 1990 and not by any other officer. The show-cause notice issued under section 11 by the officer is of no legal effect. The DCIR and /or Additional Commissioner is not empowered to issue notice and passed the order. Such powers exclusively vests with the Commissioner. That order in original in this case passed by the Addl. CIR is without jurisdiction or in excess of jurisdiction and without any legal effect. Penalty and default without mala fide intention is not maintainable in the eye of law and penalty and default surcharge imposed is hereby deleted.
On merit and other legal grounds our summerised findings are as under: Status of appellant is of Supplier. In this case the appellant is a supplier of electricity.
Responsibility of appellant as Supplier Supplier has to collect sales tax on the basis of supplies made by him.
Status of Sales Tax collected under Rule 58H is out put tax being tax on supply of goods.
Tax collected by the appellant under Rule 58H on supply of electricity to the Steel Melters and re- roller mills and is an out put tax of the appellant being a supplier because as per Section 2(20) (a) tax levied under the Sales Tax Act, 1990 on supply of goods made by the person is Output tax.
Buyer of electricity is a withholding agent.
The withholding agent is buyer of goods, the appellant, being supplier of electricity, could not be treated as withholding agent and as such tax collected under Rule 58H cannot be treated as tax withheld rather it is a tax collected.
Input tax could be adjusted against output tax i,e, against Tax collected under Rule 58H.
As tax collected under Rule 58H is output tax, then as per Section 7 of the Sales Tax Act; 1990 the appellant is entitled to adjust input tax against the output tax. i. Appellant is not a withholding agent. ii. Tax collected under Rule 58H is output tax of the appellant. iii. Appellant is authorized/entitled to claim input tax against this output tax for determination of tax liability under section 7 of the Sales Tax Act, 1990.
That the appellant has collected fixed tax from the Steel melters and the FBR has clarified vide letter C.No, 3/13- STB/98 dated 13/08/2007 that the sales tax paid by the Steel Melters and Re- rollers is inclusive of their liability of sales tax on electricity. In this regard, we relied on FBR's order C.No, 3(15) STJ/09/ 33608 dated 20.08.2009 wherein the FBR has allowed KESC adjustment of sales tax collected from Steel Melters.
That the Federal Board of Revenue vide order C.No, 3(15) STJ/09/33608 dated 20.08.2009 on the subject of "Reopening of the Order-in-Original dated 21.07.2009 in respect of Messrs Karachi Electric Supply Company Ltd. Karachi passed by the Additional Collector Large Taxpayer Unit, Karachi" issued under section 45A (I) of the Sales Tax Act, 1990 has allowed the KESC adjustment of total Sales Tax collected including the amount calculated under Rule 58H from the Steel Melters in Karachi. In this case the KESC has also adjusted Sales Tax collected at fixed rate from the Steel Melters during the fiscal years 2007-2008 and 2008-2009. The relevant part of the order is reproduced below: "The order has been examined. The sales tax collected from steel sector through electricity bills has been allowed by FBR for inclusion in input tax of electric supplying companies in monthly Sales Tax/Federal Excise Return. Unless this is changed, action taken by Messrs KESC is legal one and Order in Original No, 41/2009 dated 21.07.2009 in the instant case is liable for reopening."
To deny the same adjustment to QESCO would amount to discrimination between KESC and QESCO, which is not permissible under Article 25 of the Constitution of the Islamic Republic of Pakistan, 1973. It is settled principle of law that among equals the law should be equal and should be equally administered and that the like should be treated alike. Reliance is placed on 2000 SCMR 1956; PLD 2005 Lah. 428.
Reliance is placed by this court on 2017 PTD 1091 (Messrs Peshawar Electric Supply Co., Peshawar v.
The CIR, RTO, Peshawar)
20. In view of the above discussion, the order in appeal is not sustainable both on legal issue of jurisdiction and on merit of the case, we have already vacated the orders of the officers below and accept the appeal filed by the registered person by following the dictum laid down by the higher appellate fora as well as by this Tribunal.
21. Consequently, the appeal of the taxpayer is hereby allowed.