This appeal under Section 66 of the PSTSA 2012 "The Act" was filed before this tribunal on 19.06.2019.
2. Briefly , the facts involved in this appeal are that on 28.12.2018, Additional Commissioner , Enforcement-I of PRA, issued a show-cause notice (SCN) to the appellant for alleged violation of the Section 2(43), Section 3, 10, 11, 18 or 35 of "The Act". It was alleged in the show-cause notice that the appellant being franchisee of M/s. "Subway International BV" was required to declare its true sales but this information was concealed which act, was considered as tax fraud. The appellant was required to show-cause that why an amount of Rs.16,430,877/- may not be assessed against him along with default surcharge (to be calculated at the time of payment) and the penalty .
The show-cause notice also contained the following table, for convenience of the appellant to understand the alleged discrepancy .
Tax Period Royalty Fee (8% of service)Actual services as per FranchiserServices Declared by the FranchiseeValue of services suppressed by the FranchiseeSales Tax Suppressed by the Franchisee Sep to Dec 20153,326,804'41,585,0467,382,42934,202,617 5,472,419 Jan to Dec 20163,646,20945,577,61922,190,02923,387,5903,742,014 Jan to Dec 20173,578,71844,733,97527,327,839 17,405,136 2,784,982 Jan to Sept 20183,073,03338,412,913 10,716,272 27,696,641 4,431,462 Total 13,624,764170,309,552 67,616,569102,692,983 16,430,877 Despite issuance of notices of hearing, the appellant, as per record available before this tribunal, did not appear before the assessing authority . Resultantly order dated 14.02.2019 was passed against the appellant whereby he was held liable for the evasion of sales tax amounting to Rs.16,430,877/-, recoverable from the appellant along with default surcharge (to be calculate d at the time of payment) and the amount of penalty amounting to Rs.16,430,877/-. Feeling aggrieved of the said order , the appellant filed an appeal before the Commissioner (Appeals) PRA, Lahore. This appeal was also dismissed vide order dated 13.05.2019 and the order of the assessing of ficer was upheld. Feeling dissatisfied, the appellant has preferred this appeal.
3. Learned Counsel for the appellant has argued that in the impugned orders, there is mention of an agreement between the franchiser and the franchisee but the said agreement was never confronted' to the appellant:- that calculations made in the SCN are incorrect hence illegal;- that in the SCN there is no mention of the subsections/Clauses of the main Sections therefore no specific allegation is made against the appellant;- that although it was mentioned in the SCN that the appellant committed crime but till today no criminal proceedings is initiated against the appellant;- that despite presence of one of the appellant, the order was passed by the assessing officer without affording him an opportunity of being heard;- that the assessing officer, in the impugned order has stated that no one on behalf of the appellant was present but this observation is against the record because one of the appellant himself was present before the assessing officer;- that the information, on the basis of which the SCN was issued, is not confronted to the appellant;- that the amount of penalty is the same as the amount of tax assessed against the appellant which is very harsh in nature;- that if the affidavit submitted before the Commissioner (Appeals) was false then why the notice was not issued to the appellant;- that the grounds agitated by the appellant were not adjudicated by the Commissioner (Appeal s). Lastly learned counsel has contended that the appeal may kindly be accepted and the order impugned may be set aside. Learned counsel has relied upon the following case laws;
(i) 2001 SCMR 838 .
(ii) 2003 PTD 1797 .
(iii) 2003 PTD 1593 .
4. On the other hand Learned DR has opposed the contentions raised by the appellant side and has argued that the appellant has never agitated the contention regarding wrong calculation;- that none, on behalf of the appellant was present before the assessing officer on the fateful date therefore the presence was not marked;- that there was no need to mention the Subsections/Clauses of the main Sub-Sections;- that despite having many opportunities, the appellant did not defen d its case before the assessing officer rather tried to play hide and seek.
Lastly , he contends that the appeal has no merits therefore it may be dismissed.
5. Arguments heard. Record perused.
6. After issuance of the SCN, total 5 dates of hearing were fixed by the Assessing Officer. Except on two dates of hearing, no one appeared before the Assessing Officer on behalf of the appellant and on all the said 5 dates of hearing, requests for adjournments were made, except on 14.02.19 when nobody appeared before the officer nor any written request was submitted. This conduct is more than enough to prove the lethargic and evasive attitude of the appellant. It is also rightly observed by the Assessing Officer in her order dated 14.02.19 that continuous absence and requests for adjournment proved that the appellant had nothing to say in defense. It is absolutely wrong to contend that sufficient opportunities of being heard were not provided to the appellant rather on the contrary more than sufficient opportunities were granted to defend the cause but he failed, for the reasons best known to him.
7. The record on the basis of which the SCN was issued is the sales tax returns of the franchiser and the information provided by the franchiser therefore, the said documents/information could not be treated controversial by the appellant and perhaps that is why he opted to remain absent or to linger on the proceedings. It was the duty of appellant to appear and contest the SCN but he did not do so.
8. In the memorandum of appeal, it is mentioned in ground No. 04 that the taxpayer attended the office of the respondent No.1, with a request to argue the case himself but it was turned down with the remarks that the order had already been passed. Respondent-1 is the Commissioner (Appeals) and the order dated 13.05.19 clearly shows that the AR was present before the said officer and argued the case. In the affidavit of Faisal Mukhtar Khan (one of the appellants), this incident is alleged to have taken place before the Additional Commissioner Enforcement-I. It is notable that the appellant has not made the Additional Commissioner Enforcement-I as respondent in this appeal rather "Assistant Commissioner Punjab Revenue Authority" is respondent No.2, who has nothing to do in connection with these proceedings.
9. Contention of the learned counsel that the SCN was vague hence illegal because no subsection/clause of main sections was mentioned in it, is a misconceived notion of law. Suffice to state that in the SCN Section 24 is mentioned which reads as under; - "Section 24. Assessment of tax. - - (1) Where on the basis of any information acquired during an audit, inquiry , inspection or otherwise, an officer of the Authority is of the opinion that a registered person has not paid the tax due on taxable services provided by him or has made short payment, the officer shall make an assessment of the tax actually payable by that person and shall impose a penalty and charge default surcharge in accordance with sections 48 and 49."
Bare reading of this section clarifies that the officer had rightly mentioned Section-24 without mentioning its subsections as it has nothing to do with the controversy in hand.
Section 60 deals with the powers of adjudication therefore there was no need to mention the subsection of the same.
In the SCN there is also mention of the violation of Sections 3, 10, 11, 18 and 35 of PSTSA, 2012. All these sections are self-explanatory and had encompassed the issue, suf ficiently .
10. The contention of the appellant that despite presence of the appellant before the assessing officer on 14.02.19, no presence of him was marked by the officer and that in fact the assessment order is an ex-parte order , is again incorrect and against the facts. It is spec ifically mentioned in the said order that none appeared on behalf of the appellant on 14.02.19 therefore this tribunal rely on the record, because no evidence on the contrary exists before us. The appellant submitted an affidavit, before the Commissioner (Appeals), of one of the appellants namely Faisal Mukhtar Khan. In his affidavit, he himself deposed that when he appeared before the assessing officer, he was informed that the order had already been passed. The deponent has not controverted this fact by stating anything that the order had not been passed prior to his appearance before the officer. The affidavit does not contain any date of its execution which further makes it an unreliable document. Nowhere in the affidavit there is mention of the time when the litigant appeared before the officer. It is rightly observed by the Commissioner (Appeals) that the filing of af fidavit seems to be an afterthought.
11. As far as the arguments regarding composition and establishment of PRA is concerned, suffice to hold that it is again a misdirected argument because by way of the validation Act/Section, the needful was done by the Government in light of the judgement of the Honorable Lahore High Court, Lahore. In another case titled, Messrs Frigz Foods Sialkot Cantt v. Commiss ioner (Appeals) PRA Lahore, this tribunal has already dealt with the same proposition in the following manner; "The contention of the appellant that vide judgment of the Hon'ble High Court reported in 2016 PTD 1103, all the actions taken and notices issued by the Chairperson of PRA, acting as Authority were declared illegal and without lawful authority therefore, the SCN issued to the appellant is also unlawful and without authority , is a misconceived notion of law because after passing of said judgment i.e., on 25.01.2016, the Punjab Government introduced/inserted section 36 in the PRA Act, 2012, on 05.02.2016." This section reads as under;
(a) "Any action of the Chairperson on behalf of the Authority , or anything to the contrary contained in any decree, judgment or order of any court, the sales tax or any other amount levied, charg ed, collected or realized by the functionaries of the Authority from any person shall be deemed to have been validly taken, levied, charged, collected or realized under the Act;
(b) Any action taken by the Chairperson till the establishment of the Authority under section 3 of the Act shall be deemed to be the action taken by the Authority"
On the same date sub-clause (4) of section 5 of PRA Act, 2012 was also introduced/inserted. It reads as under; "(4) Till such time that the authority is constituted under this Act, the Chairperson shall perform the functions and discharge the duties of the Authority ."
Thereafter , on 05.09.2016 sub-clause (C) of section 36 of PRA Act, 2012 was also introduced/inserted. It reads as under
(c) "The Authority stands established under section 3 and shall be deemed to have been established with effect from 1st July 2012."
Cumulative effect of the above-mentioned provisions 'is that the authority stood established under section 3 of PRA with effect from 01.07.2012 and that all actions taken by the Chairperson on behalf of the authority were deemed to be the actions validly by the Authority . In this view of the matter the objection/conte ntion of the appellant is not well- founded.
12. The upshot of the above discussion is that this tribunal has not found any infirmity in the impugned orders. No benefit can be extended to the appellant for his lethargic, evasive and contumacious attitude and conduct before the lower forums. This tribunal is of the firm view that the appellant is not entitled to any relief by this tribunal as no illegality or irregularity is found in the orders. Resultantly this appeal is dismissed.
The Registrar of the Tribunal is directed to communicate this order to all concerned immediately . File of appeal be consigned to record room.