Through a written request the learned counsel for the appellant has shown in ability to appear today due to aliment however a request is made to decide this appeal in the light of grounds agitated in this appeal, let the arguments form the side of respondent be heard.
2. Arguments heard, record perused.
3. This appeal under section 66 of the Punjab Sales Tax on Services Act, 2012 has been preferred by Messrs Al- Bashir Cold Storage feeling aggrieved of order dated 24-09-2018 passed by learne d Commissioner (Appeals) PRA Lahore where by order-in-original dated 02-05-2018 of Enforcement Officer unit 04 Multan has been modified by deleting penalty of Rs. 50,000/- and reducing penalty to the tune of Rs. 40,000/-.
4. Briefly the facts of case are that appellant was registered compulsorily with principle activity of providing "cold storage" service listed at Sr. No. 61 of the 2nd Schedule of Punjab Sales Tax on Service Act, 2012 and liable to charge sale tax and file returns but failed to do so which was in violation of section 35 of the Act of 2102, therefore a show-cause notice dated 09-03-2018 was issued to appellant
5. The Enforcement Unit-04 vide order dated 02.05.2018 observed that the appe llant was engaged in providing taxable service listed at serial No. 61 of the 2nd schedule provided in the Act, 2012 and as appellant violated law therefore, a penalty amounting to Rs.50000/- was levied under serial No. 01 (Non-Registration) and Rs.80,000/- under serial No. 02 (Non-Filing of Returns) of section 48 of the Act, 2012 and imposed penalty amounting to Rs.130,000/- under serial Nos. 01 and 02 of section 48 read with section 21 and section 60 of the Act, 2012, however , the learned Commissioner (Appeals) PRA Lahore vide order dated 24.02. 2018 observed that show-cause notice was received by appellant on 12.04.2018 but prior to that the appellant had got it registered on 28.03.2018 therefore, mens rea, for non-registration was missing and thus penalty of Rs.50,0 00/- was deleted. However , the learned Commissioner (Appeals) PRA Lahore by referring to rule 12 of the Punjab Sales Tax on Services (Adjudication and. Appeals) Rules, 2015 reduced penalty to Rs. 40,000/- for late filing of returns.
6.. Section 48 of the Punjab Sales Tax On Services Act, 2012 provides that if a person commits any offence described in column 2 of the table shall in addition to and not in derogation of any punishment to which he may be liable under any other law be liable to the penalty mentioned against that offence in column No. 3. It has also been provided that the sections referred to column No. 4 of the table shall be deem ed to be meant for illustrative purposes only and the correspondence offence described in column No. 2 may fall and be prosecuted under other sections of the Act 2012 as well.
TABLE Sr.No Offences Penalties Section
(1) (2) ( 3 ) (4)
1. Any person who is required to apply for registration under this Act fails to make an application for registration before providing any taxable servicesSuch person shall be liable to pay a penalty of [fifty thousand] rupees or five per cent of the amount of the tax he would have been liable to pay had he been registered, whichever is higher .
In the case of non- compliance of compulsory registration, the minimum penalty '[for a company shall be one hundred thousand rupees and for a person, other than a company , shall be fifty thousand rupees]: If such person who is required to get himself registered under this Act, fails to get registered within ninety days of providing taxable services, he shall be further liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to one year , or with fine which may extend to the amount of the tax he would have been liable to pay had he been registered, or with both.[25 and 27] 12
2. Where any person fails to furnish a return within the due date.Such person shall be liable to pay a penalty of
[ten] thousand rupees provide if a return is not filled within, fifteen days of the due day , a penalty of '[two hundred] rupees for each day of default shall be levied.35
7. Section 14 of the Punjab Sales Tax on Services Act, 2012 allows the authority to prescribe a special procedure for the payment of tax, registration, book keeping, invoicing, or billing requirem ents, returns and other related matters in respect of any service or class of services as may be specified while the Punjab Sales Tax on Services (Registration and De-registration) Rules, 2012 explain the requirement of registration and the mode and manner under which a person is acquired to be registered. Sections 35 of the Act, 2012 provides an exhaustive procedure for submission of returns according to which every registered person shall furnish, not later than the due date, a true and correct, and properly filled up return in the prescribed form indicating tax due and paid during the tax period and such other information or particular as may be prescribed by the authority . Under section 48 of the Punjab Sales Tax on Services Act, 2012 the act of a person who is required to apply for registration but fails to make an application for a registration before providing taxable services and the act of any person who fails to furnish a return within due date are offences and in case of violation taxpayer may be penalized with appropriate fines. Section 60 of the Punjab Sales tax on Services Act, 2012 provides the jurisdiction and power of adjudication in respect of cases involving determination of tax liability , assessment of tax, charging of default surcharge, imposition of penalty and recovery of an amount erroneously refunded and any other contravention including tax fraud. While the Sales Tax on Services (Adjudication and Appeals) Rules, 2012 provide a mechanism in respect to adjudication proceedings according to which all the relevant provisions of law relating to jurisdiction; competence, vires of the show-cause notice, time limitation, provisions alleged to have contravened, grounds for refusal to accept any right, claimed or un-discharged tax liability and provisions relating to fines or penalties shall be quoted in show-cause notice however; it has been noticed that appellant was only show caused to explain as to why he shall not be proceeded against for violation of offence of non-submission of returns along with offence relating to non-registration. However, it has not been clearly explained in show-cause notice that since when the appellant failed to submit returns rather in a general manner show-cause notice was issued by ignoring that principles of natural justice fairness, reasonableness, and neutrality, is to be strictly observed in adjudication proceedings. The particular feature of this case is also that it was observed by learned Commissioner (Appeals) that appellant had already been registered before receipt of show-cause notice therefore, there was no mens rea or wilful default on the part of appellant.
8. It is now the settle principle of law that in case of statutory offence the presumption is that mens rea is an essential ingredient unless the statute creating the offence by express terms or by necessary implication rules it out. The penalty can only be imposed where there is a willful evasion of tax. Reliance is plated on 2017 PTD 2380 Lahore 2004 SCMR 456 and 2004 PTD 1179 when analyzed the case of appellant on the touch stone of the principles laid down by Superior Courts it has been noticed that before the receipt of notice on 12.04.2018 the appellant had got itself registered on 26.03.2018 therefore, no mens rea was found on the part of the appellant and it was the reason and ground on account of which penalty of Rs.50,000/- was deleted by the learned Commissioner (Appeals) PRA and to this 'extent the observations of learned Additional Commissioner (Appeals) PRA Lahore is final as having not been challenged by PRA.
9. Under the law penalty proceedings are criminal in nature and standard to proof which is required in a criminal case is also required to sustain the, order imposing penalty and the bona fide belief on part of assessee on the point of fact or law entitles him to the benefit of doubt. Nothing has come on record to establish that tax liability was due against the appellant. In this case penalty for non-registration has been deleted by the learned Commissioner3 (Appeals) PRA Lahore by finding that there was no mens rea on the part of the appellant. The intention of legislature has ever been is that purpose of levying penalty is to deter assessee from repeating the default in future but it cannot be made as a resource mobilization/revenue generation measure. However , this aspect of matter has been ignored by the forum below and in view of discussion above the impugned order dated 24.09.2018 of Additional Commissioner PRA Lahore is liable to be set aside.
For what has been discussed above this appeal is accepted and the orders dated 02.05.2018 of Enforcement Officer, Enforcement Unit-4 and dated 24.09.2018 of the learned Commissioner (Appeals) PRA Lahore are set- aside .