SHAHID MASOOD MANZAR, CHAIRMAN .----This appeal has been filed under the provisions of 46(1)(b) against Order-in-Original No.12/2018 dated 14-03-2018 passed by Commissioner Inland Revenue Zone-I, RTO, Abbottabad. The Registered Person is engaged in the business of manufacture and sale of MS bars. The CIR concerned observed that the registered person failed to deposit in cash sale tax of Rs.21,785,709 for the period 08/2014 to 06/2016. Accordingly show cause notice was issued containing monthly details of electricity units consumed by the appellant and inadmiss ible adjustment of tax. It was conveyed to the registered person that as per sub-rule (2C) of Rule 58H of the Sales Tax Special Procedure Rules, 2007 adjustment of sales tax paid on imported remeltable iron and steel scrap against the sales tax payable through electricity bills was admissible only to "steel melters". It was also conveyed that since independent re-rolling unit was being operated with separate electricity connection, therefore no adjustment/input tax credit of sales tax paid at import stage was admissible. The CIR concerned also intimated that verification was carried out by his office from FBR on line system as well as data provided by PESCO and it was found that no sales tax in cash to the tune of Rs.21,785,709/- had been paid by the appellant. The taxpayer replied that his case did not fall under rule 58H(2C). He was covered under Rule 58H(1) which provides that every steel melter , steel re-roller , composite unit of melting, re-rolling and MS cold drawing and composite unit of steel melting and re-rolling (having a single electricity meter), excluding units operated by sugar mills and other persons using self-genera ted electricity shall pay sales tax at the rate of ten and half rupees per unit of electricity consumed for the production of steel billets, ingots and mild steel (MS) products excluding stainless steel, which will be considered as their final discharge of sales tax liability . Reply of the appellate was rejected and sales tax liability of Rs.21,785,709/- was created under section 11(2) along with penalty of Rs.1,089,285/- under section 33 and default surcharge of Rs.5,758,852/- under section 34. The taxpayer being dis-satisfied filed appeal under section 46(1)(b) on the following grounds:- A. That the impugned Sales Tax Order -in-Original No.012/2018 dated 14-03-2018 passed by the Commissioner of Inland Revenue (Zone-I) Regional T ax Office, Abbottabad is so bad in law and also against the facts of the case.
B. That the Commissioner Inland Revenue (Zone-I) Regional Tax Office, Abbottabad has imposed Sales Tax under Section 11(2) of the Sales Tax Act 1990 of Rs.21, 785, 709/- and imposed surch arge under section 33(5) of the Sales Tax Act, 1990 of Rs.3,883,820/- which is illegal and against Sub-Rule (2C) of Rule 58H of the Sales Tax Special Procedure Rules, 2007.
C. That the Commissioner Inland Revenu e (Zone-I) Regional Tax Office, Abbottab ad has mentioned in order that the taxpayer should deposit the sales tax in cash while, in the Sales Tax Special Procedure Rules 2007 there is no word :Cash.: used anywhere and as per Rule 58H(2) Payment of Tax by Steel Melters, RE-Rollers, Composition unit of melting, re-rolling and MS Cold drawings and composite unit of melting and re-rolling shall be made through electricity bills along with electricity charges as final discharge of tax liability .
D. That the Commissioner Inland Revenue (Zone-I) Regional Tax Office, Abbottabad has ignored all the sales tax adjustment certificates issued to tax payers by the RTO Abbottabad during the period 2014 to 2016. Whereas the Sales Tax Adjustments certificates are issued only if the sales tax is paid in advance to FBR at import stage, and it is online verified by R TO Abbottabad before issuing any certificate.
E. That the Commissioner Inland Revenue (Zone-I) Regional Tax Office Abbottabad has not justified facts of the case charged Sales Tax on Steel Re-Rolling mills on the basis of STGO 119 of 2017 dated 02/08/2017, whereas STGO 119 is issued on 02/08/2017 and taxpayer is being charged for the year 2014 to 2016 by CIR Zone-I, RTO, Abbottabad.
2. Learned AR stated that the CIR concer ned failed to appreciate the correct provisions of law. The taxpayer did not claim any inadmissible adjustment or credit of any inadmissible input sales tax. He further stated that the CIR allegedly imposed sales tax for the reason that payment of sales tax could not be verified by him from PESCO. He contended that the taxpayer had provided complete record of paid electricity bills. In these electricity bills payment of sales tax under rule 58H had been separately reflected. Learned AR again provided copies of these records in support of his claim. Learned AR vehemently claimed that payment of sales tax along with electricity bills constituted full and final payment of liability . The CIR concerned failed to appreciate the facts of this case in correct perspective. The impugned tax liability was totally against the law .
3. Learned DR while supporting the departmental case repeated the contention of the author of assessment order .
He stated that the tax liability under appe al was rightfully created because taxpayer's contention was found to be against the law and rules.
4. We have considered arguments of both the sides in the light of relevant law, rules and record. We are inclined to agree with learned AR that in the case of this steel re-roller , payment of sales tax according to the prescribed tax rates, along with electricity bills constitut ed full and final payment of tax liability . No further tax liability could be created. The payment of sales tax, along with electricity bills was fully verifiable. The appellant's claim was in conformity with the relevant provisions of law. The CIR Abbottabad misdirected himself because STGO 119 of 2017 dated 02/08/2017 was issued on 02/08/2 017 and tax period which is charged for tax year 2014 to 2016 the SRO can't be applied retrospectively being substantive piece of law and applied incorrect provisions of law. As a result thereof an illegal demand of sales tax was created against the appellant. In the light of all the facts as discussed above the impugned assessment order is hereby vacated and the demand under appeal is deleted.
5. The appeal is decided in the manner referred above. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.