MUHAMMAD SAJID MEIIMOOD SETHI, J. Through instant Reference Application under Section 47 of the Sales Tax Act, 1990 ("the Act of 1990"), order dated 06.04.2016; passed by Appellate Tribunal Inland Revenue, Lahore Bench, Lahore (" Appellate T ribunal ") has been assailed.
2. At. the Very outset, learned counsel for respondent taxpayer submits that issue involved in this case has already been dealt' with and decided by another learned Division Bench of this Court vide judgment dated 26.09,2018, passed in STR No. 121 of 2016 titled Commissioner- Inland Revenue v. M/s. Nagra Spinning Mills Pvt. Ltd. and this Reference Application is liable to be decided in the light of said decision.
3. When confronted, learned counsel for applicant-department, despite arguing the case at some length, could not rebut the above submission with any satisfactory reply .
4. Arguments heard. Record perused.
5. In the case of M/s. Nagra Spinning Mills Pvt. Ltd. supra , learned Division Bench of this Court has observed as under:- "8. Finally in STR No. 123 of 2016, the main allegation against the respondent was that it made zero rated supplies of textile goods to the registered persons, however , according to matching of sales tax returns with his buyers revealed certain discrepancies and in some cases, the buyers were also not active and were suspended/blacklisted. The relevant part of learned Tribunal's impugned order relating to above allegations is reproduced as under:- "We have no hesitation in our mind to hold that supply of goods being notified textile goods squarely falling in five major zero-rated sectors, was chargeable to sales tax at zero percent under impugned notifications dated 01.04.201 1 and 31.12.201 1 as it was found made to registered persons only particularly when payments in its respect had also been received through banking channel as required under Secti on 73 of the Act. The benefit of Notification No. SRO 1125(1)/201 1, dated 31.12.201 1 applicable w.e.f 1st January , 2012, was available to the persons "doing business in textiles and articles thereof (including jute), carpets, leather , sports and surgical goods sectors" (and are registered as manufacturer , importer , exporter or wholesaler under the Sales Tax Act, 1990" and "appear on Active T axpayer List (A TL) on the website of Federal Board of Revenue".
As such, pre-requisite for availing benefit of zero-rating under the said notification , three conditions for qualifying person to be fulfilled are (i) doing business in five major zero-rated sectors, (ii) registered under the Act as manufacturer , imported, exported or wholesales, (iii) appearing as an active person at 'ATL'. All these conditions as mentioned supra have duly been met with by the appellant as the persons whom supplies had been made, were obviously doing business in five notified major zero-rated sectors inter alia including textiles and textile articles thereof and where registered under the Act and both the appellant and its buyer at the time of transactions were also appearing as active persons at ATL and any default whatsoever on the part of the buyers cannot be made basis for creating huge liability on account of output tax against the appellant."
9. It is admitted position between the parties that respondent is in the business of textile, hence was entitled for zero rating of sales tax under SRO 1125(1)/201 1, dated 31.12.201 1. The supplies made by the respondent were of zero rating under the aforesaid SRO and the learned Tribunal as a matter of fact held the buyers of respondent were also active at the time of transaction s. In the circumstances, the zero rating facility could not be denied to the respondent. These findings of the learned Tribunal are based on law and also justified in the circumstances of the present case.
10. In view of above discussion, all questions raised above are answered against the applicant department and in favour of the respondent. Resultantly , these reference applications are dismissed with no order as to cost."
7. Learned counsel for applicant-department has failed to distinguish the instant case from the findings recorded by learned Division Bench of this Court in the case of M/s. Nagra Spinning Mills Pvt. Ltd supra , which is applicable to the proposition in hand on all fours.
8. Since the above reproduced findings, undeniably , are applicable to the facts of this case, hence following the ratio settled therein, this Reference Application is decided against the applicant-department.
9. Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per Section 47(5) of the Sales Tax Act, 1990.