ABDUL AZIZ MEMON, MEMBER (JUDICIAL)-This is an appeal from order No. 87/1996, dated 13-4-1996 in appeal No. 1(113) CE(App) S.Z/95 (case No. 8(89)ST/Cont/Gas/STC/IV/95/990) whereby Corrector of Customs (Appeals) South Zone, Karachi, has upheld the order of Superintendent Sales Tax Division-IV, Karachi imposing a penalty of Rs. 25,000/- on the ground that the appellant had failed to maintain purchase register, Inventory Register-ll and Inventory REGISTERED as required by Section 22(1 )(d) of the Sales Tax Act, 1990 (hereinafter referred to as "the Act").
2. We have heard Mr. Sheikh Abdul Aziz, Advocate for the appellant and Mr. Muhammad Ikram Virk, Dy. Supdt. Sales Tax for the respondent.
3. Narrating the facts Mr. Sheikh Abdul Aziz submitted that the appellant, a sole proprietary concern, is a registered person within the meaning of the 'Act' having received its certificate of registration in the 2nd week of August, 1995. Shortly after-wards the appellant received letter dated 5-9-1995 from respondent No.2 pointing out that the above-mentioned registers were not being maintained by it. The appellant made a reply to the notice and submitted that being merely a vendor of M/s. Siemens Pakistan Limited, the firm converted raw material, received from them through despatch notes by welding the same into semi-finished goods on labour charges. Value of the raw material is never mentioned in such notes, ln the circumstances appellant requested respondent No.2 to inform the firm as to how and in what manner the above-mentioned registers were to be maintained. Instead of guiding, respondent No.2, thought it fit to issue notice to the appellant on 22-10-1995 to show cause why action be not taken against the firm under Section 33 of the 'Act' for above-mentioned failure. The appellant in its reply dated 11-5-1995, re-iterated the above mentioned facts and denied its liability for not maintaining the registers. Upon this respondent No.2 initiated adjudication proceedings and imposed afore-mentioned penalty by his order dated 13-11- 1995. An appeal from the said order preferred before the learned respondent No.1 having failed, the appellant has come up before this Tribunal.
4. The learned counsel for the appellant submitted that for the purpose of welding, the appellant purchased welding rods only. The account of such purchase was maintained in purchase register which was duly authenticated by the office of respondent No. 2. He emphasised that right from the beginning the attitude of the office of respondent No. 2 was tainted with mala fides. ln the first place they did not attach Sales Tax guide with the registration certificate as was mentioned in the note appended at the foot thereof. Secondly, the appellant was not advised to maintain the above-mentioned registers even when the register was got authenticated, lt was the duty of the respondents and their staff to help the appellant by providing relevant forms and imparting instructions for their proper maintenance. They however, did not do so inspire of a request from the appellant. The purpose obviously was to trap the appellant with ulterior motive.
5. The learned counsel further submitted that forms of Inventory registers are not appended to the Sales Tax 'Act' sold in the market. The appellant was not aware of these register. The appellant can not therefore be said to have wilfully defaulted in maintaining these registers. Imposition of penalty on appellant without considering the above-mentioned facts and circumstances is bad in law and is liable to be set aside.
6. Mr. Muhammad Ikram Virk, Deputy Supdt. Sales Tax on the other hand submitted that Inventory register is provided by clause (d) of sub-section (1) of Section 22 of the 'Act'. The two registers were prescribed by Standing Order No. 5 of 1995, dated 11-2-1995. Since these registers were duly prescribed by law it was not necessary for the department to supply the forms to the appellant.
The Deputy Supdt. concerned had visited the premises of the appellant for verification whether the registers were being maintained. The contention of appellant is therefore devoid of truth. Even during the proceedings of adjudication before the Superintendent Sales Tax he did not bother to produce the purchase register. The wilful default of the appellant is therefore fully established. The imposition of penalty is therefore just and proper and ought to be maintained.
7. The learned advocate has produced before us the purchase register maintained by appellant, lt is duly authenticated by an officer of the department. Entries have also been made in it. The allegation that it was not maintained is therefore, without any substance. As regards inventory registers it may be seen that they were prescribed by an Standing Order on or about 11-2-1995.
Copies of these forms were sent to the Deputy Supdt. Sales Tax with the direction that copies thereof should be provided to all the units immediately, lt is not known whether the copies were supplied to other units as directed by the said letter but it is highly probable that the same were not provided to the appellant as it was not in existence at that time. Burden was on the respondents to show that forms of Inventory registers were provided to the appellant after it was established but they have failed to discharge this burden. Without the forms it was not possible for the appellant to maintain the registers.
8. The contention of the respondent that they were not bound to provide the forms to the appellant is unpalatable. To our mind it is moral, if not legal duty of the respondents to extend all possible assistance to the tax-payers to make them conversant with the law, rules, orders and instructions issued by the department from time to time so as to enable them to maintain proper records and thereby facilitate the ascertainment of their tax liability.
9. The purpose of establishment of Sales Tax organization is to collect a much revenue for the government as is possible. Best way of doing that is to encourage the spread of trade and industry rather than to ensnare the entrepreneur and squeeze out as much money from him as is possible.
If the entrepreneur is scared away in this manner, the growth of trade and industry would be impeded. This would mean killing the goose that lays golden eggs. Instant is the case exactly in point because we have been informed during arguments that the appellant establishment has been closed down due to sheer harassment from respondent No. 2 and his staff.
10. The above-mentioned facts clearly indicate that the proprietor of the appellant who had twice asked the respondent to inform him about the forms of the registers and instruct him how to maintain them cannot be said to have wilfully evaded his duty. Section 33 of the 'Act' speaks of liability to penalty if aforesaid records are not maintained. Terms "shall be liable" was examined in Shamroz Khan and another v. Muhammad Amin and others (PLD 1978 S.C. 89) and it was held that if a person is liable to suffer penalty he is potentially subject to that penalty and this means that the penalty may be enforced against him at the discretion of authority entitled to enforce the penalty": lt is now well-settled that this discretion is to be exercised judicially and not arbitrarily, ln the case of M/s. Humayun Ltd. v. Pakistan and others (PLD 1991 SC 963) it was ruled that penalty can only be levied in case of wilful evasion of duty. As has already been observed by us, the appellant has not evaded his duty wilfully. We, therefore, accept this appeal and set aside the impugned order.