ORDER: MR. MASOOD AKHT AR SHAHEEDI (ACCOUNT ANT MEMBER).--( 1). The titled cross Sales Tax Appeals have been filed by the taxpayer and the Depa rtment calling in question the impugned Order-in-Appeal No. 680/2013 dated 04-1 1-2013 passed by the learned CIR(A), Faisalabad.
2. Succinct facts leading to the instant appeal cases are that the taxpayer has adjusted inadmissible input tax worth Rs. 937,937/- during the tax periods from July-2007 to July-2008 on the strength of invoices issued by M/s. Pak Oil Traders and has failed to give any plausible reason of his purchases shown to have been made from alleged supplier . Based on the said omission/ irregularities, adjudication proceedings were initiated by the taxation officer by way of issuance of show cause notice dated 201 1-2012 under section 11(2) of the Sales Tax Act, 1990.
Resultantly , adjudication proceedings were culminated in passing of an order dated 26-02-2013 wherein it was admitted that principal amount of sales tax stood paid but hundred percent penalty under section 33(13) of the Act alongwith default surcharge under section 34 ibid were ordered to be recovered from the appellant which was challenged before the learned CIR(A) who modify the order of the adjudicating authority to the extent that since appellant/taxpayer has deposited principa l amount of sales tax before issuance of show cause notice dated 20-11- 2012 therefore, he is required to pay 25% of penalty imposed against him alongwith default surcharge vide its order dated 04-11-2013. Now both the taxpayer as well as the department being discontented and aggrieved by the said appellate order has filed these second appeals before this Tribunal.
3. The learned counsel for the taxpayer has vehemently argued that having already voluntarily deposit the whole of amount of sales tax of Rs. 937,937/-, instant case was covered under the amnesty S.R.O. No. 606(1)/2012, dated 1st June, 2012 however , the department refused to extend the benefit on the groun d that principal amount of sales tax having been deposited by the taxpayer before the issuance of the said amnesty S.R.O. dated 01-06-2012, he was not entitled to amnesty from payment of penalty and default surcharge contemplated in that SRO. Learned counsel vociferously contented that the appellant/taxpayer is fully entitled to the benefits of amnesty granted by the FBR vide SRO dated 01-06-2012 whereby it exempted whole amount of penalty and default surcharge payable by a person against whom an amount of sales tax is outstanding on account of illegally adjusted input tax was to be paid by 25th June, 2012. In support of his contention, he placed reliance on judgme nts reported as (PTCL 2014 CL 226), (PTCL 2014 CL 231) and (2016 PTD 824). At the end, learned counsel assailed that appellant/taxpayer has already deposited principal amount of sales tax before issuance of show cause notice which clearly shows that there was no intension of tax evasion in the mind of appellant hence, there is no justification for imposition of default surcharge and penalty . On the other hand, when the learned DR confronted with the tax situation cited supra, in counter arguments, he has contended that the notification was applicable only to such persons who had paid the principal amount after the issuance of the said notification i.e. 1st June, 2012 but the taxpayer had deposited the principal amount during November-1 1, December-1 1, and April-2012 much before issuance of the notification therefore, he is not entitled to the benefit under the notification as the notification cannot be given retrospective effect and fully supported the order passed by the adjudicating authority below simply re-endorsing the basis evolved therein.
4. After having heard the arguments of both the rival parties and from the bare perusal of the relevant orders as well as amnesty notification and material made available before me, I have found that the amnesty notification extended benefit to such taxpayers against whom there was an outstanding amount of sales tax and the said amount was paid by 25th June, 2012. The language of the notification does not manifestly or otherwise bar such a person who has paid the principal amount of sales tax before the date of issuance and the said notification is in the nature of conferring a benefit, therefore, it would operate retrospectively . If the interpretation of that SRO as made by the revenue authorities is accepted then it is likely to create an anomalous situation. It is that whereas the persons who had already paid the amount due will be deprived of the amnesty while those who will pay that amount after the issuance of notification will be spared of the default surcharge and penalty . In other words, a person who had already paid the due tax to the national exchequer will be burde ned with default surcharge and penalty while the one who does so after issuance of that notification and having withheld the amount of the tax due from meanwhile will be rewarded by allowing exemption from penalty and levy of default surcharge. This could never be the intention of any superior or subordinate legislation. A person placed in similar factual situation cannot be discriminated against merely for the reason that he has first to be a continuous defaulter on a particular date of grant of amnesty in order to avail the same. The taxpayer having paid the principal amount of sales tax before the issuance of the said SRO and even before issuance of show cause notice was clearly entitled to the benefit of the amnesty contemplated in the SRO. To hold otherwise would be negation of justice and equal protection of law.
Since, the taxpayer has admittedly paid the principal amount of sales tax and was therefore entitled to the benefit of remission of penalty and default surcharge under the said notification and refusal on the part of department to extend the same was arbitrary and illegal.
5. In view of the above discussion, the appeal filed by the taxpayer is accepted whereas appeal filed at the behest of revenue-department being devoid of merits stands rejected. Resultantly , impugned show cause notice and orders of both the authorities below to the extent of penalty and default surcharge, being devoid of legal substance are hereby set aside.