SHAHID KARIM, J.----This is an appeal under section 47 of the Sales Tax Act, 1990 (Act, 1990 ) against the order dated 25.03.2003 (impugned order ) passed by the Appellate Tribunal Sales Tax, Customs and Central Excise (Tribunal).
2. The relevant facts can be summarized as follows: i) The appellant-company was served with a show-cause notice and was charged with the contravention under section 2(19A) read with SRO 1136(1)/90 , section 6, section 33 and section 34 of the Act, 1990. The show-cause notice was replied to and the allegations raised in the show-cause notice were controverted. Hearing were conducted in the matter by the Collector Sales Tax and Central Excise (Adjudication), Lahore and on 9.3.2002, the order-in-original was passed in respect of the show-cause notice. ii) During the course of the proceedings before the respondent No.2, a further show-cause notice was received by the appellant-company . It later transpired that a corrigendum No.180-DC (ST-I) Cont./9/8530 dated 26.12.2001 was issued by which the show-cause notice was amended and the appellant-company was further charged with the contravention sections 11 and 36(1) of the Act. The contents of the show-cause notice which are relevant for the resolution of the controversy in the instant appeal are reproduced as under: "Whereas, it has been reported to the undersigned by the staff of Central Excise and Sales Tax, Chunian Division, Lahore that an information was received that Honda Civic Car 1500-CC Ex-Model fully loaded manufactured by M/s. Honda Atlas Cars (Pakistan) Ltd., 43-Km, Multan Road, Lahore is sold at a retail price of Rs.7,27,750/- per unit by their authorized dealer M/s. Honda Fort (Pvt.) Ltd., Queen's Road, Lahore. While the retail price as declared by the above referred manufacturer to the Sales Tax authorities for the same vehicl e is Rs.578000/- for the purpose of the assessment and payment of the Sales T ax.
2. Basing on the information further investigations were made and a quotation dated: 15.01.1995 for the supply of Honda Civic Car 1500-CC, 16 valve fully loaded Ex-Model at the price of Rs.7,27,750/- per car was obtained from the above-mentioned authorized dealers. Which confirmed that the sale of car was being made @ Rs.7,27,750/- per unit. The prescribed records of the aforesaid firm relating to the period from 07/94 to 16-01-1995 was scrutinized. It was observed that in their letter dated: 06.07.1994, the firm had declared Rs.5,78,000/- as ex-factory price of Ex-Model 1500-CC Car but subsequently on 04.08.1994, they declared the same price as Retail Price and informed that this retail price was effected from 01.07.1994.
3......................................
4. It is only logical that a commonly cannot have simultaneously the same price as the Ex factory price and the retail price. The very act of M/s. Honda Atlas Car (Pakistan) Ltd. of declaring their ex factor price as the retail price was a misdeclaration and supersession of correct retail price of taxable supply i.e. (Motor Cars) with the intent to evade the due amount of Sales Tax which was otherwise payable by them on the actual retail price. The quotation obtained from their authorized agent in a proof that the actual accessible retail price of their aforementioned Honda Car is Rs.6,26,1 16/- each and not Rs.5,78,000/- each on which the firm was paying the Sales T ax." iii) The nub of the allegations in the show-cause notice against the appellant, therefore, was that the appellant had short paid sale tax to the tune of Rs.133,88,277/- Additional tax and surcharge was also sought to be imposed on the appellant for the contravention alleged in the show-cause notice. The period to which the show-cause notice related span through 07/94 to 16.01.1995.
3. A reading of the show-cause notice would at once bring forth the deduction of the certain facts. One, the retail price fixed by the appellant-company for the period in dispute was Rs.5,78,000/-. Two, the Honda Civic Car 1500- CC (vehicle in question) was allegedly being sold at the retail price of Rs.7,27,750/- and that too by one of the dealers of the appellant-company viz. M/s Honda Fort (Pvt.) Ltd. Queen's Road, Lahore. Thus, the allegation seemed to relate to the dealer of the appellant-company and was directed against the dealer more than the appellant-company itself. Three, the basis for the allegation and thus the show-cause notice is a purported quotation dated 15.1.95 which document has not been placed on the file but which was made out by the dealer in question from which it was inferred that the vehicle was being sold at the retail price of Rs.7,27,750/- per unit. Four, by the show-cause notice it was thought "logical that commodity cannot have simultaneously the same price as the ex-factory price and the retail price".
4. The Tribunal has dismissed the appeal filed by the appellant herein in the following manner: "5. From the above it was evident that ex-factory price and retail price were two different prices. Ex factory price meant to be the price of the vehicle in question up to the factory gate and from that time and place till the time of its delivery to the customer from the premises of dealer , all expenses incurred thereon were required to be included (excluding sales tax and octroi) to call the ex-factory price as the "retail price in terms of section 2(19A) of Sales Tax Act, 1990, as it cxisted then. It is not possible that the same amount of Rs.5,78,000/- which was ex-factory price on 06.07.1994 was made as the retail price w.e.f 01.07.1994 vide letter dated 04.08.1994. It would not be out of place to mention here that when the case for grant of interim relief was earlier taken up by Lahore Bench-I of this Tribunal, the learned counsel was repea tedly asked to produce the original agreement signed by the appellants' company with the dealer to ascertain the amount/percentage of commission allowed to the dealers but the same was not complied with. Clause 8.6 of the dealership agreement forbids the dealer from disclosure of any information from the currency of the agreement and even after five years from the expiry of the agreement.
Perhaps due to these reasons the appellants have chosen not to come up with the original dealership agreements signed by the appellants company with its dealers so as not to divulge the whole truth. How much was the commission of the dealer? This question was repeatedly asked but the same was not answered. The appellant's stance has been that the commission of the dealer was included in the retail price. What is the break up? There is no answer to this question. The adjudicating officer was justified in arriving at the conclusion that the dealer could not have issued the quotation on his own since he was bound to quote only that price which was "suggested retail price", as fixed by the appellant. If the same was incorrect, as per contention of the learned counsel, the only answer was to produce the original agreement signed by the appellant with the dealers and to disclose the percentage of commission allowed to the dealers. The appellants are not prepared to divulge the whole truth. The clauses of the agreement, as discussed above, do reveal a number of charges which got added up to the ex- factory price to make it retail price at which the vehicle is sold to general body of consumers."
5. The conclusion thus drawn by the Tribunal was that: - "6. Having taken into consideration all aspects of the case and in view of the forego ing detailed discussions we find that the adjudicating officer was justified in asking the appellant to pay the short paid amount of Rs.1,33,88,277/- as sales tax and we order the appellants to pay the said amount, if already not paid. Considering overall circumstances of the case we grant relief to the appellant by way of remitting one-half of the additional tax then actually due and they shall pay the remaining one-half of the additional tax, if already not paid. The amount of penalty is Rs.40,16,483/- is considered harsh and the same is reduced to Rs.25,000/- only ."
6. This judgment shall also decide the connected appeal S.T.A. No.108 of 2003, which lays a challenge to the portion of the impugned order by which relief was granted to the appellant to the extent of remitting one half of the additional tax as also the reduction of the amount in the penalty .
7. To recapitulate the primary basis of the show-cause notice is a quotation which was issued by the dealer of the appellant-company viz. Honda Fort (Pvt.) Ltd. Queen's Road, Lahore and is not a quotation issued by the appellant-company itself. Thus very basis of the allegation against the appellant-company is tenuous one. It is not denied on all hands that the retail price fixed by the company was Rs.5,78,000/- and in case some quotation was issued by a dealer of the appellant-company , it does not logically follow that that retail price has been fixed by the appellant-company . No proof is forthcoming nor any evidence has been led by the department which would establish a connection between the quotation which was issued by the dealer and the appellant-company . We may point out that the initial burden and the onus of proof is on the department to bring forth cogent and reliable evidence to establish the allegations contained in the show-cause notice. The show-cause notice seems to be based on a roving and fishing inquiry which cannot be A countenanced. The reliance on a quotation as the only piece of evidence to serve the appellant with a show-cause notice was indeed tendentious and left a lot to be desired. During the course of the entire proceedings either before the respondent No.2 or the Tribunal, the department did not produce any documen ts which would demonstrate and establis h the fact that the retail price at which the quotation was issued was on behalf of the appellant-company and that the appellant stood to benefit out of the inflated retail price which was given in the quotation. In this regard, it is pertinent to mention that on 11.4.2002, the appellant produced the following documents before the Tribunal: a) Booking information and commission payable for the subject period; b) Booking information and car dispatch report for the said period; and c) Annual report duly added by A.F. Ferguson, approved Auditor of the Sales T ax Department.
8. No rebuttal by the department was offered or brought on the record to the documents which have been mentioned above and which documents are official documents to which authenticity is attached unless the contents of these documents are rebutted by reliable evidence. Most importantly , unless proof was forthcoming that the appellant-company was a direct beneficiary of the retail price quoted by the dealer , no liability could be fixed on the appellant-company .
9. Also evidence is woefully lacking on other aspects of the matter as well. For example, there is no proof by the department that the dealer was, in fact, selling the vehicle at the quoted price. This was the minimum that the department had to prove in order to lay the foundation of the case against the appellant-company . We have also noticed that no show-cause notice with regard to this matter has been issued to the appellant-company before or after the show-cause notice in question and, therefore, this also leads to the infere nce that the retail price fixed by the appellant-company has been taken to be the retail price in fact.
10. There is no dispute on the definition of the retail price which is given in section 2(27) of the Act, 1990 and the current definition reads as under:. "retail price", with reference to the Third Schedule, means the price fixed by the manufacturer , inclusive of all duties, charges and taxes (other than sales tax) at which any particular brand or variety of any article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety , the highest of such price."
11. Quite clearly , the retail price is the price fixed by the manufacturer inclusive of all duties, charges and taxes at which any particular brand or variety of any article should be sold to the general body of consumers. There is no dispute nor is there any allegation in the show-cause notice that the retail price fixed by the appellant-company did not include all duties, charges and taxes. The allegation is merely about suppre ssion of the original retail price.
Thus, the retail price is non order than the price fixed by the manufacturer . The price fixed by the appellant is Rs.5,78,000/- and the department does not dispute that originally this was the price fixed by the manufacturer . The allegation, however , on a proper analysis, relates to one quotation purportedly issued by a dealer of the appellant- company . The appellant-company denies that it had anything to do with that quotation and no proof is forthcoming from the department that the dealer was, in fact, selling the vehicle in question at the retail price given in the quotation as also that the said quotation had the approval of the appellant-company . Thus, clearly no connection or nexus has been established between the appellant-company and the alleged quotation.
12. One factor underlying the show-cause notice as also the order-in-original passed by the respondent No.2 is that it was "only logical that a commodity cannot have simultaneously the same price as the ex-factory price and the retail price". The respondent No.2 has thereby concluded that act of the appellant-company of declaring its ex- factory price as the , retail price was mis-declaration and suppression of correct retail price of the taxable supply .
This argument is inherently flawed. No basis has been given in the show-cause notice or by the respondent No.2 in arriving at the conclusion that it was logical to assume that a commodity cannot have the same price as an ex- factory price and the retail price. No provision of law has been quoted for arriving at the conclusion, therefore, we would not dwell further on the said issue since the conclusion drawn does not have a basis in law. As stated above, the retail price is the price fixed by the manufacturer and unless the contrary is proved, that price fixed by the manufacturer has to be taken as the retail price.
13. The Tribunal has relied upon certain clauses of the Dealership Agreement between the appellant and its dealers to conclude that the ex-factory price and the retail price were two different concepts. In this regard, reliance has been placed upon clause 8.2 (A) of the said agreement. That clause is reproduced as under: "8.2(A) RETAIL PRICE The Company shall fix the suggested retail price of the automobiles, parts and accessories to be distributed by the Dealer , and the service to be performed on the Automobiles. However , the Dealer may collect reasonable transportation cost and carriage insurance premium prescribed by the company from the customer ."
14. It can be seen from a perusal of the clause, reproduced above, that there is no ground for drawing the conclusion which the Tribunal has done. The said clause clearly shows that the company shall fix the suggested retail price. By the same clause, however , the dealers have been permitted to collect reasonable transportation cost and carriage insurance premium prescribed by the company from the customer . It does not follow at all that the retail price fixed by the company is any different from the ex-factory price. Also we are of the opinion that it would be futile and palpably wrong to cause an interplay in the concepts of ex-fac tory price and retail price. What we are concerned here is the retail price and not the ex-factory price and to bring in the concept of ex-factory price to confuse and complicate the issue regarding retail price is misconceived. Further , it was patently unlawful for the Tribunal to conclude without any evidence that "the dealer could not have issued the quotation of his own since he was bound to quote only that price which was suggested retail price as fixed by the appellant". Firstly , no proof has been brought on the record to bring home the fact that the dealer was acting on behalf of the appellant-company .
As mentioned above, there is no connection which has been established to relate the transaction of the issuance of quotation which the appellant-company . Thus, to conclude that the quotation must have been issued with the permission of the appellant-company was presumptuous, whimsical and fantastic to say the least. It was also patently wrong on the part of the Tribunal to bring in the issue of commission, etc. which was due to the dealers and to attempt to connect the concept of commission with the retail price. Suffice to say that this was not the basis of the show-cause notice and the Tribunal clearly travelled beyond its jurisdiction in basing its judgment on the said aspect.
15. In view of the above, the instant appeal is accepted and the impugned order is set aside. As a consequence, the appeal filed by the department viz. S.T .A. No.108 of 2003 stands dismissed.