Titled sales tax appeal has been filed at the instance of the registered person against order-in- appeal No. 179/2022 dated 27-04-2022 passed by the learned CIR(Appeals-II), Faisalabad, on the grounds as set forth in the memo of appeal.
2. Briefly stated, the relevant facts of the case are that appellant has failed to integrate its point of sale (POS) with the Federal Board of Revenue Online Computer System in terms of section 3(9A) and section 40C of the Act read with Notification No. S.R.O. 1203(I)/2019 dated 10-10-2019. Since the appellant was required to install point of sales (POS) software duly integrated for monitoring/recording or reporting of sales with FBR and has allegedly failed to do so therefore, a show cause notice dated 20-06-2021 was issued as to why penalty of Rs. 1,000,000/- under section 33(25) of the Act may not be imposed against him. The contravention proceedings initiated against the appellant was culminated in passing an assessment order dated 31-08-2021 whereby alleged demand on account of penalty was adjudged against the appellant. Feeling aggrieved by the said treatment, registered person went in appeal before CIR(A) who also upheld the impugned adjudication order by way of rejection of the appeal. The appellant, to show discontent, has thrown challenge on the order of learned CIR(A) by availing the remedy of second appeal enshrined under section 46 of the Act, 1990; hence the instant appeal proceedings.
3. At the very outset of his arguments, learned AR argued that the appellant has integrated its point of sale with the Online Computer System of FBR in terms of section 3(9A) and section 40C of the Act read with SRO 1203(I)/2019 and too appellant has installed point of sales (POS) software duly integrated for monitoring/recording or reporting of sales with the FBR therefore, imposition of penalty is illegal and unjustified. Learned AR further contended that in similar situation and identical circumstances, the DCIR, RTO, Faisalabad has vacated the show cause notice and deleted penalty of one million rupees in case of M/s. Mujtaba Saud Textile vide Order-in-Original No. 78/2021 dated 08-03-2021 hence, imposing penalty against the appellant is discrimination not permissible under the Constitution of Pakistan, 1973. In support of his stance, Learned AR produced copies of sales invoices showing FBR POS IDs issued under POS invoicing system, copy of point of sale registration, copy of order-in-original No. 78/2021 & judgment of this ATIR reported as (PTCL 2022 CL 705). On the strength of these assertions, learned AR seeks vacation of the impugned orders passed by both the authorities below.
4. On the other hand, in counter arguments, learned DR while appearing on behalf of the revenue/department has fully supported the impugned orders however, he failed to put-forth any explanation to justify any deviation from the arguments of the learned AR.
5. After having heard the arguments of the rival parties and from the bare perusal of the relevant orders as well as relevant provisions of law and the record made available before us, we have found that initially the registered person failed to comply with the provisions regarding integration of the system with FBR however, now the appellant has integrated its point of sale with the Online Computer System of FBR and too appellant has installed point of sales (POS) software duly integrated for monitoring, recording or reporting of sales with the FBR therefore, imposition of penalty is illegal and unlawful. There is no body denying the fact that the provisions contain in section 33 of the Act are not charging provisions and are not provided for the purpose of generating revenue rather the purpose is to ensure compliance of different provisions given in the Statute. The purpose of levying penalty is to deter the assessee from repeating the default in future but it cannot be made as resource of mobilization/revenue generation measure. The penalty provisions are not meant to strangulate a business or to generate revenue. These provisions are to operate only as a deterrence force and their purpose has never been to throw a person out of business. We have further noted that in similar situation, the DCIR, RTO, Faisalabad has also vacated the show cause notice and deleted penalty of one million rupees in case of M/s. Mujtaba Saud Textile, Faisalabad vide order-in-original No. 78/2021 therefore, imposition of penalty against the appellant is discrimination. It is now well-settled that vacating the show cause notice in one case and taking action against another person in similar situation, amounts to discrimination which is hit by the Article 25 of the Constitution of Islamic Republic of Pakistan, 1973.
6. Based on what has been stated hereinabove, titled appeal is accepted and the impugned show cause notice and consequent orders of both the authorities below, being devoid of legal substance are hereby set aside.
7. The appeal filed by the registered person is disposed of in the manners as indicated above.