W AJID AKRAM , ACCOUNTANT M EM BER. The titled appeal filed at the instance of the registered person is directed against Order-in-Original No. 73/2018 dated 26-12-2018 passed by the Commissioner Inland Revenue (Zone-I) Gujranwala on the grounds as set out in the memo. of appeal as well as the others as taken at the bar.
2. Briefly facts of the case are that the OIR observed from the data retrieved from Data Base Administration System and scrutiny of information available in Sales Tax Returns for March-2018 to June-2018 that appellant has declared supplies worth Rs.38,854,829/- made to unregistered person on which sales tax at the rate of 17% has correctly A been paid but further tax at 2% leviable under section 3(1A) has not been charged and paid thereon. The appellant is therefore; called upon show-cause notice dated 23-10-2018 as to why further tax of Rs.745,697/- may not be recovered under section 11(2) OF the Act along with default surcharge, under section 34 and as to why penalty under sections 33(1)(a) and 33(5) ibid may not be imposed in violation of sections 3(1A), 23 and 26 of the Act. In response, the appellant contested the charges levelled in impugned show-cause notice on the basis that imported "Zinc Ignots" has been supplied by the appellant to "the Master of Mint" and the said person, an end consumer, is not liable to be registered hence further tax, is not required to be charged nevertheless the learned Commissioner Inland Revenue has adversely adjudged liability as to further tax through his Order-in-Original No.73/2018 dated 26-12-2018. Feeling aggrieved by this treatment, the appellant has come up in appeal before this Tribunal.
3. During hearing of the case, the learned counsel of appellant has contested impugned show- cause notice and consequent order on various grounds submitting that the appellant has supplied Zinc Ingots to the Master of Mint, bearing FTN 9011200-8, Finance Division, Government of Pakistan through Invoice No. 767 dated 11-05-2018 and has accordingly discharged its sales tax liability at the rate of 17% on its supply whereas, no further tax is leviable on the supply made to the person who is not liable for registration under the sales tax. He submitted that in this case, the buyer i.e. "Master of Mint" is engaged in making of currency coins which are exempt from payment of sales tax as being "money" which is excluded from the very definition of "goods" as given in section 2(12) of the Act which stands that "goods" include every kind of moveable property other than actionable claims, money, stocks, shares and securities". The AR asserted that since currency notes and coins being included in money used as a medium of exchange at large are precluded from the very definition of goods therefore; the coins are not taxable goods and no sales tax is chargeable thereon and as such, Pakistan Mint making supply of such coins is not liable to be registered under the sales tax therefore no further tax is chargeable in case supply of taxable goods is made to it.
4. Besides above, the AR argued that further tax is not leviable in the instant case as appellant is directly supplying the goods to end-consumers i.e. Pakistan Mint and the sales made to end- consumers are not subject to levy of further tax under the provisions of section 3(1A) when read in juxtaposition with Notification No. S.R.O. 648(1)/2013 dated 09-07-2013 wherein, supply of goods made directly to end-consumers is excluded from levy of further tax under section 3(1A) of the Act.
5. The AR explained that the appellant has imported alleged Zinc Ingots and has accordingly paid sales tax along with value addition tax on its import. The AR has provided Import Goods Declaration for confirmations of value addition tax being paid in addition to sales tax at the time of import of aforesaid goods and has asserted that sales tax and value addition tax paid at the time of import of taxable goods covers the chargeability of sales tax on value addition made in due course of business upto the stage of end consumers not liable for registration in sales tax therefore; the goods on which sales tax on value addition is already paid at the time of their imports, no further tax works to remain payable on their subsequent supply even if it is made to unregistered persons.
6. Besides above, the AR has argued that supplies made to Government, Semi-Government and Statutory Regulatory Bodies shall not be chargeable to further tax in terms of newly added entry at Sr. No.12 of the Table given in Notification No. S.R.O. 648(1)/2013 dated 09-07-2013. He pleaded that though this entry is added subsequently with effect from 1st July, 2019 yet it is being curative and beneficial in nature to the taxpayers is applicable retrospectively since the inception of said notification. Reliance has been placed in this regard on the judgments of Hon'ble Supreme Court of Pakistan in the cases reported at 2005 SCM R 492, 2007 PTD 67, PLO 2001 SC 340 and 2006 SCM R 129.
7. On the other hand, the attending DR supported the case on similar ground and the charges as contained in impugned show-cause notice and as also adjudged in consequent order.
8. We have heard the arguments of both the parties and have perused other allied documents tendered by the AR. In the present case, appellant has supplied imported "Zinc Ingots" to M/s. The Master of Mint, bearing FTN 9011200-8, Finance Division, Government of Pakistan and has admittedly discharged its sales tax liability at the rate of 17% on the supplies on the other hand the buyer M/s. Master of Mint is engaged in manufacturing of coins which is "money". The term, money is nowhere defined in the Sales Tax Act, 1990 or in the Rules made thereunder however; as per its definition given in the Black Laws Dictionary, it means and includes both currency notes and coins.
There is no confliction in it that "Money" is excluded from the very purview of "Goods" as defined in section 2(12) of the Act hence it is established that currency and coins being money are precluded from the very purview of "goods" and in turn "taxable goods" as defined in the Sales Tax Act, 1990 and are therefore exempt from levy of sales tax. As such, the person engaged in supply of coins (Master of Mint in this case) is not required to be registered in the sales tax hence does not fall under the scope of section 3(1A) of the Act. It is clear that the sole buyer in the case at hand is M/s. Master of Mint is manufacturing coins which are not subject to sales tax as being excluded from the very definition of goods under section 2(12) of the Act therefore, is not bound to obtain sales tax registration under the Act, as a consequence thereof, it is under no obligation to pay "Further Tax" in terms of section 3(A) of the Act.
In view of above, the impugned order therefore annulled: Ordered accordingly.