Trajectory of the case: This an appeal filed under section 66 of the Punjab Sales Tax on Services Act, 2012 (hereinafter referred to as The Act) by "Messrs Pakistan Gum and Chemicals Limited" (hereinafter referred to as the appellant) being aggrieved of the order dated 1-3-2021 of the Commissioner (Appeals), Punjab Revenue Authority, Lahore who upheld the findings of assessing officer i.e learned Additional Commissioner, Enforcement-HI of the Punjab Revenue Authority, Lahore (hereinafter referred to as the Authority).
Factual Statement:
2. The synoptical background of the instant case is that M/s. Pakistan Gum and Chemicals Limited being manufacturing company providing "Gaur Gum" is registered with Punjab Revenue Authority as withholding agent having PNTN 0676291-3 of March, 2020. On 09.03.2020 Additional Commissioner, Enforcement-III, PRA, Lahore issued a show-cause notice to the appellant wherein it was alleged that the appellant received different (detail is mentioned in the table of show-cause notice) taxable services during the period from July-2017 to June-2018 but failed to withhold and deposit the due tax amounting to Rs.12,356,000/-. It was stated in the show-cause notice that the appellant violated the provisions of Sections 14 and 19 of the Punjab Sales Tax on Services Act, 2012 read with Punjab Sales Tax on Services (Withholding) Rules, 2015 with the intent to evade tax, therefore, why the appellant may not be assessed under section 52 of The Act and why the said amount may not be recovered under section 70 along with penalty and default surcharge under sections 48 and 49 of The Act. The show-cause notice was issued on the strength of the information obtained from the audited financial statements of the appellant. After receipt of the show-cause notice, the appellant appeared through A.R submitted written replies and documents as well. On 02.10.2020 the Additional Commissioner passed the assessment order whereby the assessing officer partially accepted the stance of the appellant in some heads of expenses and granted substantial relief while rejecting the stance of the appellant regarding the heads of sale promotion and freight consequently reduced the amount of sales tax to the tune of Rs.403,595/- along with penalty of Rs.20,180 under section 48(2) (Serial No. 3 of the table) and default surcharge (to be calculated at the time of deposit).
3. Feeling aggrieved of the said assessment order, the appellant preferred an appeal before Commissioner (Appeals) who passed the impugned order whereby the appellant was held responsible for not providing the documentary evidence therefore, upheld the findings of assessing officer vide order dated 01.03.2021, hence this appeal.
Submissions by A.R. for Appellant:
4. The learned Authorized Representative of the appellant has argued that the impugned order is not only bad in law but also against the facts of the case;- that the appellant had provided full information in shape of documents to the first forum i.e Additional Commissioner, Enforcement-III but he failed to appreciate the same;- that in the assessment order sales tax demand was. raised even on the services of the goods rendered beyond the jurisdiction of Punjab province;- that the Authority was not justified in raising the tax demand on account of services charged specifically excluded from the purview of sales tax withholding;- that the order impugned amounts to the dual taxation as the tax demand was raised on the services against which the appellant had already charged and deposited the sales tax with the respective tax authorities;-that the penalty under section 48 was also wrongly imposed upon the appellant;- that without prior scrutiny show-cause notice cannot be issued straightaway;- that Rules 2, 9 and 13 of Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012 were violated. Lastly learned A.R argued that the appeal may kindly be accepted and the order impugned may be set aside.
Submissions by D.R for Respondent:
5. On the other hand learned Departmental Representative has opposed this appeal by arguing that bare perusal of the impugned order is enough to prove that sufficient opportunities were provided to the appellant to present its case and to file the documentary evidence but the appellant did not contest the case properly and failed to submit the documents to substantiate his claim therefore, the Commissioner (Appeals) passed the order on the basis of available record after due appreciation of the same. Learned D.R has further argued that the appeal has no merits hence, it may be dismissed.
6. We have heard the arguments of learned counsel for the parties who have reiterated their respective arguments and perused the available record.
7. This an axiomatic and well-established principle of law that first and foremost aspect in a pending lis is the fairness and grant of ample opportunity to both parties involved in litigation to prove its stance so that no one feels discrimination. The adjudicating officer is supposed and required to dilate upon all issues involved in the case and to make a speaking order, thereafter, by looking into every piece of evidence produced by the parties. The relevant rules in this regard are 13 and 16 of the Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012 provide the principle to be adhered to by the first adjudicating officer and also by the first appellate forum i.e. the Commissioner (Appeals). The fairness of the trial / adjudication is such an important right that it was inserted by the legislature in the Constitution of the country as enshrined in Article 10-A, speaks as under: "10-A Right to fair trial---For the determination of the civil rights/and obligations or in any criminal charge against him a person shall be entitled to a fair trial and due process."
8. In the instant case learned AR has drawn the attention of this Tribunal towards the contents of paragraph No.7 of the appeal the same has been reiterated and highlighted and also towards the contents of letter dated October 02, 2020 while addressing to the Additional Commissioner, Enforcement-III by the appellant it has been requested for perusal of the documents produced in shape of annexure-A. The said annexure-A contains documents / ledgers corresponding invoices / vouchers in respect of head of accounts i.e "freight and sales promotions" mentioned below i.e: Ledger (From 01-Jan-2017 To 31-Dec-2017, Upto Level = 6)
(From A/c Code 13-02-003-001 To 13-02-003-001-003)
Ledger (From January 2017 To December 2017, Upto Level = 6)
(From A/c Code 13-01-023 To 13-01-023-001-100)
Ledger (From 01-Jan-2017 To 31-Dec-2017, Upto Level = 6, Voucher Type = PV)
(From A/c Code 13-02-003-001-001 To 13-02-003-001-002)
Ledger (From 01-Jan-2017 To 31-Dec-2017, Upto Level = 6)
(From A/c Code 13-01-023-001 To 13-01-023-001-100)
Ledger (From 01-Jan-2018 To 31-Dec-2018, Upto Level = 6)
(From A/c Code 13-02-003-001 To 13-02-003-001-003)
Ledger (From 01-Jan-2018 To 31-Dec-2018, Upto Level = 6)
(From A/c Code 13-01-023-001 To 13-01-023-001-100)
After going through the record, this Tribunal is of the view that the case in hand was not dealt fairly by both the lower forums. The learned Commissioner (Appeals) has failed to look into the relevant record mentioned above and the evidence produced before her in shape of annexure-A i.e copies of invoices and breakup / summery of expenses on the prescribed format and passed the impugned order which indicates that the documents provided by the appellant were not looked into properly as apparently there was some haste in the mind of the Commissioner (Appeals) at the time of the passing of the impugned order. Although soon after the passing of the impugned order dated 01.03.2021 by the Commissioner (Appeals), the appellant preferred an application / letter of request to learned Commissioner (Appeals) bearing No. ST/ Pakistan Gum and Chemicals/21/508 dated 06.05.2021 requesting to recall and rectify with assertion that during the course of hearing of the appeal he had submitted copies of party-wise system generated ledgers in respect of both the account heads i.e. "Freight charges" and "Sales promotion" whereas as per observation of learned Commissioner (Appeals), the A.R has not produced a single document to substantiate his contention taken before the assessing officer regarding the heads of sales promotion and freight charges. The said application also met the same fate as it was declined by the Commissioner (Appeals). It is strongly observed that this could have been avoided easily by granting an opportunity to the appellant after specifying the nature of the invoices and ledgers to be provided. It is important to mention that the primary duty is always of the authority to dig out the truth which enables it to assess the tax demand in exact terms and not on presumptions. In tax regime no presumptions or guess work is allowed to be the basis of tax demand/assessment rather the demand/assessm ent, essentially requires to be in exactness.
9. It is also observed that show-cause notice in the case contained the figures of Trans provincial activities of the appellant. The assessing officer was duty bound to afford as many opportunities as possible (within the statutory time limitation) to the appellant to get all the relevant data of the tax authorities operating on trans provincial basis to arrive at the exact amount of tax liability payable within the bounds of Punjab Revenue Authority. However, in quite many other cases as well, this Tribunal has observed that the orders have been finalized on the basis of such show-cause notices with tax liabilities according to percentage of bank's branches operating in the province of Punjab.
Non-affording of proper opportunity in getting aforementioned documents in such cases of taxpayers operating beyond province create complications especially when time limitations do afford ample tune for further hearing opportunities.
10. Keeping in view all the circumstances mentioned above, we are of the conceded view that the case of the appellant needs a fresh decision therefore, the appeal in hand is accepted, resultantly the impugned order dated 01.03.2021 is set aside. The case of the appellant is remanded to the competent authority i.e. Commissioner (Appeals), PRA with a direction to decide the case afresh after going through the available record. It is further directed that the officer/authority shall give one clear opportunity to the appellant to provide all the necessary documents / evidence required by the Authority for a fair and proper decision of the case. If the appellant fails to submit / produce the documents/evidence, required by the authority or by the appellant himself to prove its case, the authority / officer will decide the case in the light of the observations of this Tribunal on the basis of available record. The appellant is also directed to substantiate its contention by producing all the supporting evidence / documents including returns / ledgers / invoices and CPRs pertaining to all the respective provincial sales tax authorities to avoid any branch wise formula by the assessing officer.
The Registrar of the Tribunal is directed to communicate this order to all concerned immediately.
File of appeal be consigned to record room.