DR. MUHAMMAD NAEEM, ACCOUNT ANT MEMBER.---- The appeal has been filed at instance of the registered person against Order-in-Appeal No.481/2017 dated 21-12-2017 passed by the learned CIR (Appeals), Faisalabad whereby he while maintaining the Order-in-Original No.33/2017, dated 24-05-2017, dismissed the appeal.
2. Brief facts of the instant case are that during desk audit of the Sales Tax returns filed by the appellant for the tax periods from July-2014 to June-2015, certain discrepancies were pointed out, on the basis of which a show cause notice dated 06-03-2017 was issued that as to why an amount of Rs.17,817,1 15/: may not be recovered under section 11(3) of the Act along with default surcharge and penalty under sections 34 and 33 ibid. In response to show-cause notice, appellant has filed written detailed reply supported with documentary evidences but the learned adjudicating authority partially accepted and partially rejected the stance of the appellant vide Sales Tax Order-in- Original dated 24-05-2017. Being aggrieved by the said order , appellant filed first appeal before learned CIR(A), Faisalabad who also dismissed the appeal vide Order-in-Appeal No.481/2017 dated 21-12-2017 upholding recovery of sales tax worth Rs.216,744/- on issue of (i) non-compliance of section 73 of the Act by making late payments to its suppliers beyond specifi ed period of 180 days (ii) inadmissible input tax claimed which was not declared by the suppliers in their returns (iii) non-payment of further tax on account of supplies not own by the buyers in their returns. The appellant being discontented and aggrieved by the said order has now filed the second appeal before this Tribunal.
3. Initiating the arguments, learned counsel for the appellant has vehemently contented that the impugned order is erroneous in law and the same is based on misconceived facts. Learned counsel assailed that no doubt, all the payments have been made through cheq ues crossed in the name of the alleged suppliers in their business bank accounts but due to certain financial constraints and pecuniary hardships, paym ents could not be made within specified time period of '180 days' and this act, on part of the appellant, is not deliberate and contumacious being caused for financial problems always beyond control of humanity . Counsel placed reliance on a judgment of Hon'ble High Court reported as (2019 PTD 298). Learned counsel argued that appellant has transacted with the alleged suppliers against proper sales tax invoices issued under section 23 of the Sales Tax Act, 1990 and payments in respect of alleged transactions have also been made through banking channel as requisitioned under section 73 ibid and if the alleged suppliers have not shown or have shown amount of output tax less than the amount of input tax received by the appel lant on this strength of invoices issued by them then the appellant cannot be impeded with undue recovery of sales tax. Lastly , he stated that appellant has declared sales vis-a-vis output tax thereon in his respective monthly sales tax returns for the periods in question and no further tax was chargeable thereon as in case of supplies made to registered persons, provisions of further tax under section 3(1A) of the Act are not attracted at all particularly when all payments in its respect have been received through banking channel as required under section 73 of the Act. Conversely , when the learned DR confronted with the tax situation cited supra, in counter arguments, she has assailed the case on similar grounds and charges as levelled earlier in impugned show-cause notice as well as adjudged in consequent orders and nothing newel, except to reiterate earlier set of contentions, has been put forth by her and fully supported the orders passed by both the authorities below simply re-endorsing the basis evolved therein.
4. The arguments of the learned representatives of both the rival parties have been heard, the orders of the authorities below as well as relevant record and relevant provisions of law and the case laws cited by the learned AR of the taxpayer have also been perused carefully .
5. It is an admitted fact that all the payments , have been made through banking channel in the name of the alleged suppliers as required under section 73 of the Act but due to certain financial constraints, payments could not be made within specified time period of '180 days' and the controversy in hand has already been decided by Hon'ble High Court, Lahore in ref: The CIR (Zone- II), RTO, Faisalabad v. Messrs Chawala Enterprises, Faisalabad reported as (2019 PTD 298) hence, recovery of already refunded amount of sales tax on account of late payments is vacated.
6. Now coming up to the second issue of inadmissible input tax claimed which was not declared by the suppliers in their returns, suffice it to say that all legal obligations resting upon the appellant for incorporating the purchase invoices in his summary statements and sales tax, returns for that very tax periods and the payments transacted through B bank have duly been complied with and for any default whatsoever , on the part of his suppliers, for not showing sales or less showing sales in its respective monthly sales tax returns, cannot be made basis for creating sales tax liability against the appellant. If the alleged suppliers have not shown or less shown the amount of output tax than the amount of input tax received by the appellant on this strength of invoices issued by them then the appellant cannot be impeded with undue recovery of sales tax. Every person his a separate legal character enjoying distinct rights and liabilities unde r the law and to impose the liability of one over the other is opposed to the basic fundamentals of law. It is now well-settled law that no one would suffer for the act of another and nobody could be punished for the wrong of others. Reliance is placed on the un-reported judgment of ATIR, Lahore bearing S.T.A. No. 246/LB/2019.
7. As far as, the third issue of non-payment of further tax on account of supplies not own by the buyers in their returns is concerned, we hold that instant charge is totally based upon assumption and hypothesis without any material evidence as the appellant has supplied the alleged goods to registered buyers only, having sales tax registration numbers duly issued by the FBR, as also mentioned in the show-cause notice therefore, provisions of section 3(1A) the Act cannot be applied to the persons who were registered and operative at the time of transactions. Any default whatsoever , on the part of the alleged registered buyers, for not showing the purchases made from the appellant cannot be made basis for creating tax liability against the appellant. Beyond any doubt, the appellant has declared sales vis-a-vi s output tax thereon in his respective monthly sales tax returns for the periods in question hence no further tax was chargeable thereon as in case of supplies made to registered persons, provisions of further tax under section 3(1A) of the Act are not attracte d at all. Reliance can safely be placed on the judgment of ATIR, Lahore reported as (2019 PTD (T rib.) 56 ).
8. In view of what has been stated above, the impugned show-cause notice as well as consequent orders of both the authorities below are declared to be illegal, ab initio void and are thus hereby set-aside. The appeal filed by the appellant is accepted as indicated above.