CH. SHAHID IQBAL DHILLON (JUDICIAL MEMBER).--(1). Titled sales tax appeal has been filed by the taxpayer calling in question the impugned Order-in-Appeal No. 376/2018 dated 20-12-2018 passed by the learned CIR(A), Faisalabad.
2. Succinct facts leading to the instant appeal case are that according to Rule 14(1) of the Sales Tax Rules, 2006, every person registered under the Sales Tax Act, 1990 or the Federal Excise Act, 2005, shall file the return as specified in the form STR-7 alongwith all its annexure provided therein. All the registered manufacturers making supply of taxable goods "Yarn and Processed Fabrics" shall furnish, in Annex-J of the monthly return, details of such goods manufactured or produced and goods supplied, using the units. Moreover, according to section 33(10) of the Sales Tax Act, 1990, any person who fails to furnish the information required by the Board through a notification issued under section 26, such person shall pay a penalty of ten thousand rupees. Scrutiny of sales tax returns for the tax years 2016 and 2017 revealed that the appellant did not submit the information required in Annex-J to the return since July-2015 to conceal its opening, closing stocks and its production. Resultantly, a show cause notice dated 12-01-2018 was issued to appellant as to why penalty amounting to Rs. 240,000/-may not be recovered under section 33(10) of the Sales Tax Act, 1990. Upon culmination of adjudication proceedings, learned ACIR being dissatisfied with the explanation given by the appellant, passed adjudication order dated 02-05-2018 directing him to pay penalty worth Rs. 240,000/- under section 33(10) of the Act. Being dissatisfied and aggrieved by the said order, appellant filed the first appeal before the learned CIR(A). Faisalabad who disposed it off in the same vein against the appellant and uphold recovery of penalty vide Order-in-Appeal dated 20-12-2018. 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 appearing on behalf of the registered person has termed the actions of both the authorities below to be illegal, void, arbitrary and contrary to the facts of the case. Learned counsel for appellant has vehemently contested that rule 14(1). of the Sales Tax Rules, 2006 is not applicable in the instant case and taxable supplies of stitched fabrics made by the appellant are not hit by Notification No. SRO 494(1)12015 as 'stitched fabrics' is not included in the goods mentioned therein therefore, the appellant was not legally required to file Annex-J and penalty imposed on this account is also illegal and unlawful. At the end, it was submitted by the learned counsel that the format of Annex-J as substituted vide SRO 757(1)12016 has not been uploaded in FBR system till to date which is still exhibiting the format of Annex-J having 9 columns although w.e.f. 15.08.2016 it has been replaced with new format having 11 columns and all registered persons are filing Annex-J which is nonexistent in the eyes of law. On the other hand, when learned DR confronted with the tax situation cited supra, in counter arguments, she has assailed the case on similar grounds and charges as leveled earlier in impugned show cause notices 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. We have gone through the relevant case record, duly weighed written as well as verbal arguments of the rival parties and have carefully examined factual as well as legal infirmities and improprieties arising out of the impugned orders and after adjudication at length, we have no hesitation to conclude that rule 14 of the Sales Tax Rules, 2006 was amended through SRO 494(1)12015 dated 30-06-2015 and a proviso was added which requires all registered persons making supply of taxable goods (yarn and processed fabrics) as have mentioned in column (2) of the Table given below the said rule, to furnish, in Annex-J of the monthly return, details of goods manufactured or produced and goods supplied, using the units mentioned in column (3) of the table. Annex-J which relates to "Production Data" was also added through the notification dated 30-06-2015. There is nobody denying the fact that appellant running a stitching unit, has purchased 'processed fabrics' from the open market and thereafter converted into made ups through stitching process. The FBR through Notification No. SRO 494(1)/2015 disclosed a list of products requiring the registered manufacturers engaged in making supply of taxable goods as mentioned in Column (2) of the Table shall furnish details of goods manufactured or produced and goods supplied in the Annex-J. The taxable supplies of stitched fabrics made by the appellant are not hit by SRO 494(1)/2015 as 'stitched fabrics' is not included in the goods mentioned therein therefore, the appellant was not legally required to file Annex-J and penalty imposed on this account is also illegal and unlawful. Since, stitched fabrics is not included in the list of goods mentioned in SRO 494(1)/2015 therefore, if it was so required then it should have been clearly mentioned therein as the SRO deals only with "yarn" and "processed fabrics".
5. We have observed with grave concern that Annex-J as was inserted through SRO 494(1)/2015 dated 30-06- 2015 contained Nine (9) columns and format of sales tax return [STR-7] was substituted through SRO 757(1)/2016 dated 15-08-2016 and Annex-J as substituted which contains Eleven (11) columns. Surprisingly, the format of Annex-J as substituted vide SRO 757(1)/2016 has not been uploaded in FBR system till to date which is still exhibiting the format of Annex-J having (9) columns although w.e.f: 15-08-2016 it has been replaced with new format having (11) columns. Since lawful format of Annex-J containing (11) columns as is effective from 15-08-2016 has not been uploaded in FBR. Web Portal therefore; the appellant is not obliged to provide information in a format of Annex-J containing (9) columns which is non-existent in the eyes of law. The format of Annex-J having (9) columns is not a valid piece of legal document since it has been omitted w.ef 15- 08-2016 therefore, no action whatsoever can be taken against the appellant on account of not providing information in the format which has been omitted from the Statue book. It is a settled principle of law that a taxpayer cannot be required to perform an act which is not provided or prescribed under law. The Annex-J having (9) columns available in FBR Web Portal, has lost its validity from the date i.e. 15-08-2016 when new format having (11) columns was notified therefore, the appellant is not obliged to give information in the format having (9) columns whereas it is not possible for the appellant to give information in the format of Annex-J having (11) columns since the same has not been uploaded in FBR Web Portal. The appellant has been required to do an act which is beyond his control since information in the format of (11) columns cannot be given until and unless, the said format is uploaded by the FBR. The registered person cannot be penalized for inefficiency on the part of FBR and cannot be subjected to give information in the format which does not have sanctity of law.
6. In view of what has been stated above, particularly in the light of record and legal propositions discussed hereinabove, the impugned show cause notice and consequent orders of both the authorities below are declared to be illegal, ab initio void and are thus hereby set-aside. Appeal filed by the appellant is accepted as indicated above.