ZAHID SIKANDAR, JUDICIAL M EM BER. This is an appeal preferred by the registered person against sales tax order-in-appeal dated 10.09.2021 passed by Commissioner Inland Revenue (Appeals-II), Faisalabad.
2. Brief facts of the case are that it was reported to the taxation officer by the Directorate of Intelligence and Investigation-IR Faisalabad that M/s. Punjab Aluminum Extrusion was involved in tax fraud by way of making taxable supplies without charging/paying due sales tax and further tax and without Sales tax registration. Furthermore, electricity meter with Consumer No.24131255509148 showed huge electricity bill of Rs. 12,285,987/- (10/2017 to 09/2018). Subsequently, the registered person got itself registered in sales tax on 24.12.2018 and agreed to deposit a certain amount voluntarily. Later on the registered person filed declaration of Amnesty on 03.07.2019 under Assets Declaration Ordinance, 2019 (hereinafter referred as 'Amnesty ordinance') showing undeclared sales of Rs.130,915,760/- therein with payable of Rs.5,236,237/- as deferred payment. The appellant was required to submit proof of payment of tax under amnesty but allegedly the appellant did not provide the proof of payment. The department made calculation of the recoverable amount as under: Value Sales tax Further TaxTotal Sales as per declaration of amnesty upto130,915,76022,255,679445,114 22,700,793 2018 Sales as per resumed record (July-2018 to Nov-2018)12,810,720 1,177,822 384,322 2,562,144 Total 143,726,48024,433,502829,43525,262,937 Less already deposited (on the basis of record resumed under section 38 of the STA, 1990 and Deposited before declaration of amnesty scheme) 3,750,000 Net recoverable 21,512,937
3. As per order-in-original no reply was filed by the RP against the notices despite issuance of various reminders followed by show-cause notice. In the absence of any defense put forth by the RP, the assessing officer held the amount recoverable from the appellant. The learned OIR observed that the registered person at his own declared sales of Rs.130,915,760/- (as un-declared sales upto June 2018) under tax amnesty scheme and un-declared supplies of Rs.12,810,720/- was detected during proceedings under section 38 (From July 2018 to Nov 2018) therefore total un- declared supplies come to Rs.143,726,480/-. According to the learned OIR, to avail the benefit of amnesty due tax on un-declared supplies was to be deposited upto 30th June 2020 along with default surcharge but the RP failed to deposit the same in National Exchequer. Hence, amount of Rs.25,262,937/- on value of undeclared sales of Rs.143,726,480/- was taxed on the appellant. The registered person had already paid tax amount of Rs.3,750,000/- before issuance of tax amnesty hence after deduction of already paid amount, therefore balance short paid amount of Rs.21,512,917/- including further tax was held recoverable along with default surcharge and penalty.
4. Being aggrieved, the taxpayer filed appeal before the CIR(A) which was dismissed. Hence, the appellant has come up further before the Tribunal in this second appeal against orders passed by the learned authorities below.
5. Arguments heard, orders perused.
6. It transpires from record that the whole controversy emerged after the appellant declared supplies under Assets Declaration Ordinance, 2019 promulgated for voluntary declaration of undisclosed assets, sales and expenditure. Under the said scheme, the appellant declared supplies of Rs. 130,915,760/- but since there-was no proof of payment of tax paid by the taxpayer under the claimed amnesty, therefore the department taxed the entire undeclared sales shown in amnesty.
7. Before we dilate upon the issue further, it would be advantageous to reproduce section 3 of Assets Declaration Ordinance, 2019 which reads as under: "3. Declaration of undisclosed assets, sales and expenditure. Subject to the provisos of this Ordinance, any person may make, on or before the 30th June, 2019, a declaration only in respect of any -
(a) Undisclosed assets, held I Pakistan and abroad, acquire up to 30th June, 2018;
(b) Undisclosed sales made up to 30th June, 2018
(c) Undisclosed sales made up to 30th June, 2018; or
(d) Benami acquired or held on or before the date of declaration."
8. It is provided in clause (b) of section 3 that any person may declare undisclosed sales made upto 30th June 2018. In the absence of any proof of payment of tax under claimed amnesty, the department took the whole supplies declared in the amnesty and charged tax on them. Under section 6(3) of Amnesty Ordinance, if a person fails to pay tax and default surcharge, the declaration made shall be void and shall deemed to have never been made under this ordinance.
The learned AR took the plea of confidentiality against claimed amnesty given under section 14 of the said Ordinance for not providing any payment proof, but in our view primarily the said provision is restrictive for department for making any disclosure of amnesty claimed by any person. The appellant cannot hide behind this provision not to show payment of proof to the concerned department and still avail benefit when section 6 clearly says that in case of non-payment of tax the amnesty declared shall be void.
9. However, one important aspect of the matter which requires consideration is that the Amnesty Ordinance provides declaration of undisclosed sales upto 30th June 2018. The phrase "upto 30th June 2018" is very relevant here. Word 'upto' suggests that any sales prior to this date can be declared under the scheme. Sales can be of any period which were made till 30th June 2018. It can be one month old, one year old or even more than five years old. Under the said provision the appellant declared sales of Rs.130,915,760/- made without specifically bifurcating the tax periods involved in making sales. The department took the entire undisclosed sales from the claim and taxed it without even making any effort to determine through probe the tax periods involved in these sales.
10. Under the provisions of Sales Tax Act, 1990, there are certain time limitations provided for making any assessm ent which are mandatory to be followed. The recovery of tax is only possible after the tax has been duly assessed and the amount of 'tax due' is determined under section 11. Section 11(5) contains that show-cause notice to the person in default is to be issued within five years from the 'relevant date'. Now a question arises as to how the department came to conclusion that the default was committed by the appellant registered person within five years from the date of issuance of show-cause notice when the chart enumerated above regarding charge of tax by the OIR itself suggests the 'sales made upto 30th June 2018' without specifying any particular tax period. As per the learned counsel, sales were not declared for separate tax periods after bifurcation rather was declared in toto as the Amnesty Ordinance allowed any sales to be disclosed upto 30th June 2018 without any constraint or limitation. We could not gather from record any determination of the tax periods involved in these sales by the department rather it appears that by taking easy approach the department took the entire declared sales as claimed and taxed it. Benefits available to any person under the law cannot be overridden by use of unbridled powers and when the law specifically says that proceedings can only be initiated within five years from the relevant date of default then without even determining the relevant date of default, any issuance of notice is vague, void and illegal.
11. We have also noted with surprise that even no tax period has been confronted/mentioned to the appellant for the alleged default. In the absence of any mention of tax period, how the relevant date of default is to be determined for the purpose of time limitation in making assessment? Such vague proceedings with a predetermined and premeditated opinion of making an assessment order is not only contrary to the principles of natural justice but in excess of jurisdiction. It is a case of mere pretence so as to circumvent the period of limitation. Time and again the apex courts have given guidelines through their judgments that issuance of show-cause notice is a serious business and is not a casual correspondence. Further, show-cause notice is required to state all the particulars so that addressee is fully informed with the allegations as to give him an opportunity to furnish explanation and to raise all factual/legal objections including question of limitation. It is a fundamental document which is to comprehensively describe the case made out against the taxpayer by making reference to the evidence collected in support of the same.
12. The exact tax periods involved prior to 30th June 2018 for those supplies cannot be unearthed from record as there is no such determination on the part of department to find out the relevant date of default. Without mention of relevant date of default of the alleged supplies any show- cause notice is void and illegal given the fact that the law does not allow taxing authorities to go beyond period of five years for assessment. The CIR(A) without considering the merits of the case endorsed the 'findings of the taxation officer and dismissed the first appeal on account of non- pursuance. The order of CIR(A) is itself contradictory as it suggests that the appeal was dismissed for non-pursuance but there are many instances available in the order where the CIR(A) made certain observations with regards to the arguments made by the learned AR. Nonetheless, the CIR(A) has not made any serious effort to probe the matter rather upheld the findings of taxation officer in a cyclostyle manner without touching the merits of the case which is quite unjustified.
13. With the above stated reasons and observations, we declare that impugned orders passed to the extent of alleged undeclared supplies of Rs.130,915,760/- by the learned authorities below are illegal, unlawful and void, therefore, are accordingly set aside. However, tax charged on sales of Rs.12,810,720 for period of July 2018 to November 2018 is confirmed.
14. The instant appeal is partly allowed.