JUDGMENT: MR. JUSTICE KAMRAN HAYAT MIANKHEL. (1). Through this single judgment, we propose to decide the following eighteen (18) Sales Tax References as common question of law and facts are involved therein:--
1. Sales Tax Reference No. 09-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
2. Sales Tax Reference No. 10-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
3. Sales Tax Reference No. 11-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills. Swabi and, another
4. Sales Tax Reference No. 12-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
5. Sales Tax Reference No. 13-P/2017. Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
6. Sales Tax Reference No. 14-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
7. Sales Tax Reference No. 15-P/2017 Commissioner Inland Revenue. Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
8. Sales Tax Reference No. 16-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
9. Sales Tax Reference No. 17-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
10. Sales Tax Reference No. 18-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
11. Sales Tax Reference No. 19-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
12. Sales Tax Reference No. 20-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
13. Sales Tax Reference No. 21-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
14. Sales Tax Reference No. 22-P/2017 Commissioner Inland Revenue, Regional Tax Office.
Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
15. Sales Tax Reference No. 23-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
16. Sales Tax Reference No. 24-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
17. Sales Tax Reference No. 25-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another
18. Sales Tax Reference No. 26-P/2017 Commissioner Inland Revenue, Regional Tax Office, Peshawar v. M/s. Gadoon Textile Mills, Swabi and another.
2. The petitioner (Commissioner Inland Revenue, Regional Tax Office, Peshawar) has approached this Court, through the Sales Tax Reference under section 47 of the Sales Tax Act, 1990 against the order STA No. 73 (PB) of 2016 dated 20.12.2016 passed by the learned Appellate Tribunal Inland Revenue Peshawar communicated on 02.01.2017.
3. Facts of Sales Tax Reference No. 09-P/2017 are that the respondent taxpayer filed Sales Tax refund claim for the tax period January, 2014 under section 66 of the Sales Tax Act, 1990 wrongly mentioned in the order of learned Tribunal as tax period March, 2012. As per the prescribed procedure the refund claim of the respondent was subjected for scrutiny by STARR/CREST (herein after referred to as the system) for cross verification of the input tax claimed by the respondent.
That during the processing of the refund claim and cross verification of the input tax, the system observed certain discrepancies involving sales tax to the tune of Rs. 4,818,710/-. The discrepancies were duly communicated to the respondent vide show cause C. No. T050114100054/21 dated 31.08.2015. The respondent replied to the show-cause notice which was duly examined and based on the reply of the respondent an Assessment Order No. 46/2015 dated 23.12.2015 was passed. Vide the said order, an amount of Rs. 4,717,275/- was rejected on account of being inadmissible input tax in terms of sections 8(1), 8A, 10(4), 11(2), 26(5) and 73 of the Sales Tax Act, 1990 read with Rule 37 of Sales Tax Refund Rules, 2006 notified vide SRO. 555(I)/2006 dated 05.06.2006. Feeling aggrieved by the assessm ent order, the respondent preferred appeal before learned Commissioner Inland Revenue (Appeals) Peshawar which was partially accepted vide Order-in-Appeal No. 223 of 2016 dated 19.05.2016. Being dissatisfied with the above mentioned Order-in-Appeal, the respondent filed appeal before the learned Tribunal (Respondent No. 2) which was accepted and the learned Tribunal vacated the orders passed by the officers below vide Tribunal's order dated 20.12.2016 in Appeal STA No. 73 (PB) of 2016 communicated on 02.01.2017. So far as the facts of other references are concerned, same are somewhat similar to the present reference, which need not to be reiterated. Hence the instant and Connected references.
4. We have heard arguments of learned counsel for the parties and have perused the documents available on the file with valuable assistance.
5. The main thrust of the learned counsel for the appellant was to press into service the provision of section 8 sub-section (ca) of the Sales Tax Act, 1990 and that the judgment of the Appellate Tribunal directing the department to recover the due sales tax from the supplier and then after its recovery from the supplier credit of the same may be given to the taxpayer is contrary to section 8(ca).
6. Whereas the learned counsel for the respondent argued that under section 73 of the Sales Tax Act, the only responsibility on the Buyer is that he should pay through cross cheque on a bank or by cross bank draft or cross pay order or any other cross banking instrument showing transfer of amount of the sale tax invoices in favour of the supplier from the business account of the buyer and argued that judgment of the learned appellate Tribunal is well reasoned and needs no interference. Before giving any findings, it is imperative to produce the relevant law.
7. Section 8 sub-section (ca) of the Sales Tax Act, 1990, is reproduced below for ready reference:--
8. Tax credit not allowed.--(1) Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct input tax paid on--
(ca) the goods or services in respect of which sales tax has not been deposited in the Government treasury by the respective supplier.
8. After hearing the arguments of both the learned counsel, it is pertinent to reproduce section-73 of the Sales Tax Act, which reads as under:--
73. Certain transactions not admissible.--(1) Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer.
9. The cumulative effect of both sections 8 (ca) and section 73 is that two conditions were necessary to claim refund, (i) The supplier has deposited the sales tax in government treasury, (ii)
The buyer has deposited through banking channel from his business account amount of the sales tax invoices in favour of the supplier. The record transpires that the buyer has fulfilled his duty as per section 73 but the supplier has not deposited the sales tax amount in government treasury. So, buyer is not entitled to the refund of sales tax. While going through section-73, it transpired that only duty on the buyer is that if the payment of the amount for transaction exceeding Rs. 50,000/- shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer. The record transpired that this condition as envisaged under section 73 of the Act has fully been complied with by the buyer. The law on the subject is silent that if the department recovers sales tax from the supplier what will happen to the refund of the buyer.
10. The order of the learned appellate Tribunal in which it ordered the department to recover sale tax from supplier and then refund it to buyer is a well reasoned order and needs no interference from this court.
11. So keeping in view the above averments, this and the connected Tax References are dismissed with no order as to costs. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.