DR. MUHAMMAD NAEEM (ACCOUNT ANT MEMBER).---- The appeal has been filed at instance of the registered person against Order-in-Appeal No. 383/2019 dated 17-09-2019 passed by the learned CIR(A), Faisalabad whereby he while maintaining the Order-in-Original No. 129/2019 dated 22-04-2019, dismissed the appeal.
2. Brief facts of the instant case are that during scrutiny of sales tax returns for the tax periods from July-2017 to June-2018, it has been observed that the appellant has failed to pay further tax @ 2% of the value of the supplies made to un-registered persons in terms of section 3(1A) of the Act. Consequently , the appellant was called upon to show-cause notice dated 17-01-2019 under section 11(5) of the Act as to why further tax worth Rs.6,046,595/- may not be recovered under section 11(2) of the Act along with penalty and default surcharge under sections 33 and 34(1) ibid. The appellant was also charged with the violation of sections 2(14), 5, 6, 7, 22, 23 and 26 of the Act.
Resultantly , adjudication proceedings were culminated in passing of an order dated 22-04-2019 adjudging recovery of further tax which was challenged before the learned CIR(A) who also rejected the appeal vide its appellate order dated 17-09-2019. The appellant being discontented and aggrieved by the said order has now filed the second appeal before this Tribunal.
3. Before this Tribunal, the learned counsel for appellant has vehemently contended that the impugned order is erroneous in law and the same is based on misconceived facts. The learned coun sel argued that the department has illegally charged further tax on the basis of declaration of SRO 584(1)/2017 as null and void by the High Court because only SRO 491(1)/2016 was in field. He submitted that the learned ACIR has erred in law while charging further tax inspite of the fact that register ed person's supplies fall under five zero-rated sectors which is governed by SRO 1125(1)/201 1. The learned couns el assailed that the department by misinterpreting the statutory provisions of sales tax laws has imposed further tax under section 3(1A) of the Act, 1990 on five sectors zero-rated goods when supplied to unregistered persons as the demand of payment of further tax after issuance of Notification No. SRO 491(1)/2016 dated 30-06-2016 on the zero-rated supplies made to un-registe red persons by the appellant, is illegal and unlawful under the Sales Tax Act, 1990. He stated that the SRO 584(1)/2017 was never superseded the previous legally enacted SRO 491(1)/2016 as both SROs have independently operated. Thus it is contended that further tax is not chargeable in case of the registered person.
4. Conversely , the learned DR, in counter arguments, has supported the orders of both the authorities below 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 earner set of contentions, has been put forth by her and fully supported the impugned orders simply re-endorsing the basis evolved therein.
5. The arguments of both the 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 registered person have also been perused carefully . While considering the arguments of the rival parties, we conclude that SRO 1125(1)/201 1 was firstly amended by SRO 491(1)/2016 and by virtue of the later SRO, all suppli es made by a registered person covered by the said notification whether to registered or un-registered persons have been subject to zero rate of tax. At present, after declaration of amendments made through SRO 584(I)/2017 as ultra vires and of no legal effect and its struck down by the Hon'ble High Court since, no notification under section 71 read with sections 4 and 3(1A) of the Act, 1990 has currently been issued by the Federal Government therefore, demand of further tax on supply of zero-rated five sectors goods to the persons who have not obtained sales tax registration is illegal and unlawful. Therefore, supplies made to un-registered persons cannot be subjected to levy of further tax in view of clause (iii) of Sr. No. 1 of Table-II given under SRO 491(1)/2016 that supplies to registered or un-registered persons of the said five sectors shall be charged at the rate of zero percent. Reliance in this regard is placed on the judgment of this Tribunal propounded in S.T . A . No. 280/LB/2019.
6. It is also worth mentioning here that all the previous notifications were issued by the Federal Government with the powers conferred by section 71 of the Sales Tax Act, 1990 which starts with the words notwithstanding which means that it is a non-obstante clause overriding all other provisions of the Sales Tax Act, 1990 therefore, if there was any intention of the Federal Government to impose further tax under section 3(1A) of the Act, 1990 on notified special procedure goods then it should have been made levied only if its levy was provided in the Special Procedure notified under section 71 of the Act and if levy of further tax was not made provided under section 71 on the notified special procedure goods then its demand under section 3(1A) of the Act, 1990 is not sustainable under law since, these provisions stand overrid den by implication of non-obstante clause. A non-obstante clause is a legislative tool employed to give overridin g effect to certain provisions over some contrary provisions that are to be found in the same enactment or in a different enactment in order to avoid the operation and effect of all contrary provisions. Since section 71 of the Sales Tax Act, 1990 overrides all other provisions of the said Act, including section 3 thereof inter alia including subsection 3(1A) of the Act therefore, further tax cannot be imposed on the five sectors zero-rated goods.
7. The impugned proceedings for recovery of further tax are initiated in defiance of clear cut law as laid down by the Hon'ble Court in a judgment reported as (2018 PTD 2364 ) to the effect that further tax as per definition of sales tax under section 2(29A) of the Act does included in and there is no ambiguity that 'further tax' is specie of 'sales tax' therefore, if sales tax is zero as per zero-rating facility granted through special notification for five export- oriented sectors then further tax is also zero even in the case where supply of zero-rated goods is made to un- registered persons, no further tax can be imposed. The learned ACIR has fallen into error of law by not appreciating the provisions of section 71 of the Act and the special procedure prescribed thereunder as has been notified by the Federal Government vide SRO 1125(1)/201 1 as amended vide SRO 491(1)/2016 through which products of five specified sectors including textile, have been subjected to zero-rating.
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.