SHAHID MASOOD MANZAR, CHAIRMAN. By this order, the titled five (05) appeals, three (03) filed by the Registered Person and two (02) filed by the Department are disposed of as common/ identical questions of law and facts are involved therein and the parties of appeals are same.
Brief facts of these cases are that the Peshawar Electric Supply Company (the PESCO) claimed refund of amounts of input tax paid by PESCO in excess of PESCO's output tax. The Assessing Officer rejected the refund claims. On appeal, the learned CIR (A) remanded the cases relating to is orders in Appeal No. 94 of 2015 (subject matter of above titled cross Appeals STA No.16/PB/2016 filed by the Department and STA No. 30/PB/2016 filed by the Registered Person) and Order No.07 of 2017 (subject matter Appeal STA No. 111 /PB/2016) while he upheld the decision of rejection in his Orders- in-Order No. 01 of 2017 (Appeal STA No. 66/PB/2017) and Order No. 64 of 2020 (Appeal STA No. 155/PB/2019) titled above.
In these appeals, the Learned A.R on behalf of the Peshawar Electric Supply Company has contended that the prescribed procedure of law under Rule 29(2) of the Sales Tax Rules, 2006 to process the refund claim through C.R.E.S.T has not been followed by the department which renders the entire proceedings by the department void and consequently the refund is liable to be given to the PESCO. Rules 29(2) and (3) of Sales Tax Rules, 2006 requires:- "29. Scrutiny and processing of refund claim.
(1) ............
(2) After assigning the unique identification number, the CREST shall cross match the data on soft copy with the data available in the system and process the claim by applying the risk parameters and generate analysis report indicating the admissible amount as well as the amount not validated on the basis of automated risk criterion along with the objections raised by the system.
(3) The processing officer shall forward the claim file along with the analysis report referred to in sub-clause (2) to the officer-in-charge for further necessary action,"
(Emphasis Supplied)
It has been argued that this process has been circumvented as it would have resulted in sanctioning of major part of the amounts claimed as refund and it also entailed laborious exercise and as such simple rejection strategy was adopted. It has been pointed out that the department had processed an earlier refund claim of the PESCO filed vide' letter dated 17-08-2012 and Claim No. D050312100052 through CREST and had issued a show-cause notice dated 04-01-2013 comprising of 370 pages. It is well settled principle of law that a thing required by law to be done in a certain manner must be done in the same manner as prescribed by law or not at all. Reliance has been placed on:-
(i) 2020 SCMR 2129 = 2021 PLC (C. S.) 420 -- Ajmir Shah; Ex-Sepoy v. The Inspector-General, Frontier Corps Khyber Pakhtunkhwa and another---
(ii) 2014 SCMR 1015 --- Zia ur Rehman v. Syed Ahmed Hussain and others--
(iii) 2001 SCMR 838 ---Assistant Collector Customs and others v. M/s Khyber Electric Store --- The Learned A.R has highlighted that the Commissioner IR (Appeals) has also held in his orders challenged in STA No.16/B/16; STA No. 30/PB/16 and STA No. 111/PB/2016:- "In view of the aforementioned facts, the case is hereby remanded back to the respondent department with the directions to call for specific record and process refund claim on the basis of scrutiny of record and analysis report of CREST in accordance with law."
(Emphasis Supplied] (Para 9 on page 28 of the paper book In STA No.16/PB/16)
3. However, in rebuttal the department has asserted that the PESCO failed to substantiate its claim before the refund sanctioning authority/assessing officer despite availing sufficient time which proves that the PESCO has filed a hollow refund claim.
4. The Learned A.R has disputed the demand by the department to provide hard copies of the record maintained by PESCO. It has been explained that Rule 17(3) of the Sales Tax Special Procedure Rules, 2007 and Rule 29(2) of the Sales Tax Rules, 2006 read with Sections 50-A and 50-B of the Sales Tax Act, 1990 fully cover the maintenance of computerized record by the PESCO. It is also submitted that SRO 697(I)/96 dated 22-08-1996 has also approved that a registered person may keep his business records on computer in such form and manner as he may wish to keep. He adds that PESCO has millions of consumers and thus only the electricity bills for a year run into crones of papers.
He stated that the Commissioner IR (Appeals) has held in his orders challenged in STA No. 16/PB/16; STA No. 30/PB/16, STA No. 111/PB/2016:- ".........Production of individual sales invoices shall not be pressed in view of Rule 17(3) of Sales Tax Rules, 2006 and summary/soft copy of the data shall be relied upon. The Appellant is also directed to produce complete record in terms of section 73 of the Sale Tax Act, 1990 and bank statements if not produced earlier and work out the exact refund rejection as claimed to have been made by the appellant and process the refund claim in accordance with law."
(Para 9 on page 28 of the paper book in STA No.16/PB/16)
It was argued by the Learned A.R that the record submitted by the PESCO has not been examined. It was emphasized that the PESCO was willing to produce any further relevant record but the RTO refused to exceed to this request before the learned CIR (Appeals). In particular, the learned 'CIR
(A) has observed in his orders challenged in STA No. 16/PB/16; STA No. 30/PB/16 and STA No. 111/PB/2016:- "9. In view of the above I have come to the conclusion that the department has not been able to reject the refund claim of the Appellant in excess of the input tax adjustment with any documentary evidences. Production of record by the appellant is proved from contents of the appeal memo wherein, the learned Counsel for the appellant has provided the record and provision of that record has not been denied by the respondent department. At this forum also the appellant showed willingness of production of complete record but the respondent deportment expressed their unwillingness on the plea that all possible measures have already been exhausted. In the absence of any documentary evidence, stances of the respondent department with regard to excess input tax adjustment by the appellant and rejection of refund claim on the basis thereof cannot be accepted........."
(Emphasis Supplied)
(Para 9 on pages 27- 28 of the paper book in STA No.16/PB/16)
3. However, in rebuttal the. Learned D.R has taken the plea that PESCO has failed to produce the requisite record either before the pre-refund audit team and assessing officer or before the CIR(A) which proves that the PESCO has nothing to produce in support of his claim. Therefore, passing of impugned order with directions for production of the same record which has not been produced earlier by the PESCO before the officers below is not justifiable.
6. It has been contended by the Learned A.R that Section 10(3) of the Sales Tax Act, 1990 provides that the proceedings against the taxpayer shall be completed within sixty days. In all the refund cases, the proceedings have not been completed within stipulated period, hence the refund claim should have been sanctioned and the proceedings are liable to be declared time barred. Reliance has been placed on:- 2018 PTD (Trib.) 1131 --- 2012 PTD (Trib.) 126 --- 2011 PTD (Trib.) 401 --- 2013 PTD (Trib.) 158 --- 2012 PTD (Trib.) 34 and 2011 PTD (Trib.) 1010---.
It was pleaded by the Learned KR that the word "shall" is used in section 10(3) of the Act ibid. This word "shall" has also been mentioned in similar provisions relating to assessment of taxes and recovery of tax under section 11 and now omitted section 36 of the Sales Tax Act, 1990. Thus orders passed beyond the prescribed period of limitation have been held to be void.
In particular, reference has been made to STA No.111/PB/2016 wherein PESCO has claimed refund vide letter dated 19-08-2014 and the refund claim No. D050314100035 was assigned on 10-11-2014.
The show-cause notice was issued on 16-07-2015 and the Assessm ent Order dated 15-02-16 was received by PESCO on 07-03-16 (Copy of the Receipt Register is enclosed as Annex-9 of the written arguments) i.e. 234 days after the issuance of show-cause notice [July 15 days + Aug 31 days + Sep 30 days + Oct 31 days + Nov 30 days + Dec 31 days +Jan 31 days + Feb 29 days + March 6 days = 234 days].
In the same vein, Learned A.R has emphasized that the date of receipt of the order is the crucial date under Section 36 of the Sales Tax Act, 1990 and extension granted by the Commissioner is invalid in this case.
The Learned A.R contended that PESCO has complied with Section 73 as the PESCO has provided proof of payments made to CPPA/NTDC along with the bank statements as required under Section 73 of the Sales Tax Act, 1990. It was submitted that payments were made through banking channels which are verifiable from the bank statements as provided in the proviso of Section 73(1) ibid. It was explained that payments for purchase of electricity are made by banking credit transfers as well as adjustments against subsidies granted by the Government. All funds collected from consumers on account of billing revenue by DISCOs are transmitted on daily basis to Manager Finance Treasury CPPA as decided by the Ministry of Finance, Government of Pakistan. The amounts of subsidies are released directly by Ministry of Finance to NTDC/CPPA for the settlement of certain portion of amounts payable by PESCO in line with Government of Pakistan policy/ mechanism for maintaining uniform tariff throughout the country.
7. In response, Learned D.R has asserted that the RTO, Peshawar in its reconciliation report submitted before the Commissioner Inland Revenue (Appeals), Peshawar has stated that PESCO has provided statement showing transfer of funds to CPPA and subsidy adjusted by the CPPA which do not fulfill the requirement of Section 73 ibid.
8. As regards the remand issue, the learned D.R has stated that the CIR(A) has erred in law by violating the provisions of Section 45B(3) of the Sales Tax Act, 1990 which provides that " in deciding an appeal, the [Commissioner Inland Revenue] (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration". Therefore, the impugned order is liable to be set-aside on this score alone.
9. Learned A.R has argued that the blank acceptance of the stance of the RTO that CIR (Appeals) has no power to remand a case without further remedy to the refund claimant is fraught with serious risk to the principles of justice. The learned CIR (Appeals) being a departmental office is totally under the administrative control of the Revenue. It will be a very convenient refund policy to get remand orders in all refund cases by learned CIR (Appeals) and then block the further relief to the' refund claimant on the ground that learned CIR (Appeals) had no authority to remand it. It is requested by the learned AR that the Tribunal may kindly pass suitable orders to meet the ends of justice.
As regards inadmissibility of input tax relating to Transmission and Distribution Losses, the Learned A.R has submitted that this issue has already been decided by the Tribunal in cases 2015 PTD (Trib.) 1112 -- M/s. Peshawar Electric Supply Company, WAPDA House, Peshawar v. C.L.R., R.T.O., Peshawar and 2014 PTD (Trib.) 1629 --- M/s. Faisalabad Electric Company v. C.L.R, ZONE-I, R.T.O., Faisalabad. It was contended that these orders have neither been over-ruled nor stayed. On the basis of above arguments the learned AR requested to allow the refund while DR requested to uphold the impugned orders.
10. We have given careful consideration to the submissions made by the appellant PESCO and the department. It is well settled proposition of law that a thing required by law to be done in a certain manner must be done in the same manner as prescribed by law or not at all. Reliance in this regard is placed on; 2020 SCMR 2129 - Ajmir Shah, Ex-Sepoy v. The Inspector-General, Frontier Corps Khyber Pakhtunkhwa and another ---2014 SCMR 1015 - Zia ur Rehman v. Syed Ahmed Hussain and others --2001 SCMR 838, ---- Assistant Collector Customs and others v. Messrs Khyber Electric Store --- Resultantly, the submissions with reference to Sections 10(3), 11 and 36 of the Sales Tax Act, 1990 are in order. However, it is also pertinent to mention here that the refund claims are required to be processed in accordance with the procedure prescribed by the Sales Tax Rules, 2006 and Rule 29(2) and (3) categorically provides:- "29. Scrutiny and processing of refund claim.
(1).......
(2) After assigning the unique identification number, the CREST shall cross match the data on soft copy with the data available in the system and process the claim by applying the risk parameters and generate analysis report indicating the admissible amount as well as the amount not validated on the basis of automated risk criterion along with the objections raised by the system.
(3) The processing officer shall forward the claim file along with the analysis report referred to in sub-clause (2) to the officer-in-charge for further necessary action."
(Emphasis Supplied)
For what has been discussed above, the impugned orders are set aside and all the titled refund cases are remanded for processing the same under Rule 29(2) of the Sales Tax Rules, 2006 within a period of thirty days from the date of receipt of this order subject to following directions:-
(i) The hard copies of the computerized record maintained by the PESCO shall not be insisted. Any record if demanded by the department, may be produced in the form of soft copies and paper copies shall not be insisted provided under Rule 17(3) of the Sales Tax Special Procedure Rules, 2007, Rule 29(2) of the Sales Tax Rules, 2006 read with Sections 50-A and 50-B of the Sales Tax Act, 1990 and SRO 697(I)/96 dated 22-08-1996.
(ii) As decided earlier in 2015 PTD (Trib.) 1112 and 2014 PTD (Trib.) 1629 --- input tax relating to transmission and distribution losses is admissible.
(iii) Daily transmission of funds to Manager Finance Treasury CPPA as decided by the Ministry of Finance, Government of Pakistan is in order. Similarly, the amounts of subsidies are released directly by Ministry of Finance to NTDC/CPPA for the settlement of certain portion of amounts payable by PESCO are also in order.
11. The instant appeals are disposed off in the manner and to the extent as dilated supra.