This appeal is preferred under section 66 of the Punjab Sales Tax on Services Act, 2012 by Messrs Gujranwala Food Industry (Pvt.) Ltd. against the learned Commissioner (Appeals) PRA Lahore's order dated 29.08.2017 whereby the order-in-original of Additional Commissioner Enforcement-I PRA Lahore was set aside and appeal of the appellant was allowed.
2. Brief facts leading to the instant case are that a show-cause notice dated 06-09-2016 under section 52 of the Punjab Sales Tax on Services Act, 2012' was issued by the assessing officer against the appellant for the tax period 01-07-2014 to 30-06-2015 at Rs.7,760,075/-. for not withholding tax in contr avention to section 14 of the Act read with Punjab Sales Tax on Services (Withholding) Rules, 2012 and 2015. The show-cause notice was contested by appellant vide their reply dated 13-10-2016, however , being not satisfied with the reply of the appellant, the Additional Commissioner vide order-in-original dated 07.11.2016, determined an amount of sales tax to the tune of Rs.7,760,075 under section 52 of the Act, 2012 along with default surcharge under section 49 and penalty under section 48 of the Act ibid. Feeling aggrieved the appellant preferred appeal before the learned Commissioner (Appeals) PRA Lahore. The appellant contested the Order in original mainly on the following ground, which for ease of reference is being reproduced as under; "That the appellant is not a withholding agent within the meaning of Rule 1(2) of the Punjab Sales Tax on Services (Withholding) Rules, 2012, therefore legally not required to withhold tax during the period July, 2014 to February , 2015. Hence, the initiation of proceedings for this period and demand created thereto is unlawful, baseless and without jurisdiction."
3. The learned Commissioner (Appeals) vide order dated 29-08-2017 set aside the order in original holding that since the withholding Rules, 2015 were framed on 20-02-2015 which included resident companies too in the definition of Withholding Agent, therefore the appellant being resident compan y were under the obligation of withholding tax, if any, only for the period from 20-02-2015 to 30-06-2015 as for the remaining periods that is, from 01-07-2014 to 19-02-2015 Withholding Rules, 2012 were not applicable.
4. The appellant still feeling aggrieved has assailed this order before this tribunal.
5. The learned counsel for appellant through their Grounds of Appeal has argued that while passing the impugned order the learned Commissioner (Appeals) unjustifiably and unlawfully directed the adjudicating authority to issue a fresh show-cause notice for passing an order for post enforcement period of Withholding Rules, 2015. The appellant further prayed to expunge these directions and vacating the order in original in totality .
6. On the other hand this appeal is contested by the learned DR for the Responde nts on the grounds that the said appeal is not maintainable as the order-in-original has already been set aside and maximum relief has already been allowed to the appellant and there is no recoverable demand against the appellant in field. As regards the prayer of the appellant to expunging the observations of Commissioner (Appeals) regarding fresh issuance of show-cause notice, the same is neither illegal nor has caused any prejudice to the appellant. The learned DR objected to these remarks being 'Directions and held them as mere 'Observations which were not against the law .
7. Arguments heard and record perused.
8. The Assessing officer determined an amount of sales tax to the tune of Rs.7,760,075 under section 52 of the Act, 2012 and 2015 of the Act ibid for the period from July 2014 to June 2015 without realizing that the appellant became withholding agent vide amended withholding rules 2015 which came into operation on 20-02-2015. Since these amendments being prospective could obligate the appellant to withhold tax w.e.f 20-02-2015 and not for the whole period from July 2014 to June 2015 : therefore the Commissioner (Appeals) had rightly set aside the order-in- original while holding that the obligation of the appellant had to start from 20-02-2015 onwards. The relevant part of Commissioner (Appeals) order is reproduced for ready reference; "At all material times, the appellant did not fall in the jurisdiction of LTUs establi shed by FBR, hence, when the Withholding Rules, 2012 were in force, it was not under an obligation to withhold tax under the Act of 2012. It is the enhancement of definition of a "withhold ing agent" under the Withholding Rules, 2015 which has brought the appellant within the scope of withholding tax regime. As mentioned above, the assessing officer has assessed the withholding tax liability of the appellant for the tax period 01.07.2014 to 30.06.2015, without taking into account that the obligation of the appellant to withhold tax, if any, has to start from 20.2.2015 (i.e, when Withholding Rules, 2015 came into force)."
Now let us examine the concluding Para of learned Commissioner (Appeals) order , which the appellant wants to get expunged claiming the same to be Directory and Unlawful. Before we comment on this it would be appropriate to have recourse to the relevant part of that order , being shared as under; "Based on the above principle, the assessing officer has erred in law by giving retrospective operation to the Withholding Rules, 2015 by imposing liability on the Appellant for a period when there was no legal obligation to withhold tax. The impugned order is, therefore, without lawful force"
"The assessing officer may issue a fresh show-cause notice for a tax period post 20-02-2015 and pass speaking order strictly in accordance with the mandatory provisions of the Punjab Sales Tax on Services Act, 2012 (Adjudication) Rules, 2012.
9. The appellant is grieved with the secon d para of the Commissioner (Appeals) order shown in bold characters. A keen perusal of the same reveals that these are not directions but mere observations as the word "may" have been used which according to Rules of Interpretation can at best have persuasive and not mandatory connotations.
Moreover the same has not caused any prejudice to the appellant as the departme nt can proceed with fresh show- cause with or without any such observations provided the original limitation as contained in section 52(1) of the Punjab Sales Tax on Services Act, 2012 has not lapsed. Instead the Commissioner (Appeals) vide these observations have rather suggested the assessing officer to pass a speaking order strictly in accordance with the mandatory provisions of the Punjab Sales Tax on Services Act, 2012 (Adjudication) Rules, 2012 to protect the rights of the taxpayers. Hence has caused no prejudice to the appellant.
10. In view of the foregoing discussion where the order-in-original has already been set aside and maximum relief has already been allowed to the appellant with no recoverable demand against the appellant in field, we, therefore, have no qualms in holding that such remarks by the Commissioner (Appeals) are neither directory nor unlawful.
11. For what has been discussed above, the appeal is dismissed being devoid of merit.
The Registrar of the Tribunal is directed to communicate this judgment to all conce rned immediately File of appeal be consigned to record room.