JUDGMENT: JUSTICE (R) AKHTAR HASSAN, CHAIRMAN.--(1). This appeal by M/s. Blue Horizon (Pvt) Ltd. Sialkot is directed against the Sales Tax Order-in-Appeal No, CE/ST-192 of 1996 passed by the learned Collector (Appeals) Northern Zone, 323-D, Statellite Town, Opp. Commercial Market, Rawalpindi on 26.11.1996.
2. On 07.05.1996, the Sales Tax staff of the Sialkot Division apprehended a Tonga loaded with 08 parcels of gloves. The driver could not produce any transport permit for transporting these taxable supplies and disclosed that he had brought the same from the appellants' factory. Thinking that violation of sections 3, 14, 23, 26, 35, 35-A and 39 of the Sales Tax Act 1990 had been made, the goods as also the Tonga were seized. Later the appellants got the goods released against the bank guarantee and ultimately exported those to Italy.
3. During adjudication the appellants produced documents showing that the goods had in fact been exported and maintained that they were not liable for payment of the sales tax under sections 3 and 4 of the Sales Tax Act 1990 and that they could not be held liable for contravention of any provisions thereof.
4. The adjudicating officer over-ruled their contentions, held them guilty on various counts and determined their liability to pay as under:--
(i) Sales Tax amounting to Rs. 21,916/-
(ii) Penalty @ Rs, 500/- per dayw.e.f,19.04.1992 undersection 14 read withRs. 7,42,500/- section33(1)(a) of the Act for not getting themselves registeredamounting to
(iii) The enhanced penalty changed by order dated 25.06.1996 upto 0.06.1994Rs. 5,000/-
(iv) Penalty @ Rs, 500/- per day Rs,w,e,f 01.07.1994 to 12.05.1996 totalling toRs. 3,46,000/-
(v) Further penaltyviz.twice the amount of the sales tax under section 35(1) amounting toRs.43,831/-
5. Aggrieved by the aforesaid Order-in-Original, the appellants preferred an appeal before the learned Collector (Appeals) who dismissed the same. Thus the instant appeal was preferred before this Tribunal.
6. It was not denied before us that the goods in question were actually exported to Italy. Form ' E' of 07.05.1996 besides Bill of Export etc. were relied upon and in fact the department did not have the audacity to assail their authenticity. Thus when once it was established that the goods were exported, there was no' question of taking any proceedings against the appellants. Section 3 of the Sales Tax Act provides for charging registered persons for taxable supplies made in Pakistan. The definition of the term "taxable supplies" as contained these days in section 2, sub-section (41) (as against Clause (28) of the earlier text of the section) clearly defines such supply of taxable goods <u>made in Pakistan</u> and indeed excludes the exempted goods under section 13. Although it includes a supply of goods chargeable to tax @ zero per cent under section 4 yet the expression "zero per cent" is nothing but total exemption of the goods exported. This was exactly the meaning of this expression as contained in section 4 also. In a way in legal semantics the term zero rated provided in section 4 means a nil liability created by the legislature itself in the shape of this statutory provision. It is some-thing stronger than the exemption awarded either by the Central Board of Revenue or the Federal Government under section 13. I must, therefore, say that the goods exported were totally immune from the sales tax and the appellants' contention on that behalf was really un-assailable.
7. The impugned order happens to make a reference to section 35 of the Act which required obtaining a transport permit for shifting the goods from the factory to the Dryport Sialkot. The learned Collector (Appeals) delivered the impugned judgment on 26.11.1996 whereas section 35 ibid was totally omitted from the Statute Book on 01.07.1996. It should have been rather appreciated that section 35 was merely procedural and its amendment applied even to the pending cases like the present one which was decided by the appellate forum as late as 26.11.1996. In short, section 35 became non-existent when the learned Collector was holding the appellants guilty thereunder. It is true that the law applicable on the date of seizure viz. 07.05.1996 was ordinarily applicable but any amendment effected in the mean time in any procedural law shall apply retrospectively even to the pending cases like the one in-hand. We, therefore, can not sustain the findings of the lower fora on this count.
8. Speaking for myself I held similar views on 31.10.1998 in a Karachi case (Re-M/s. Khas Traders
(Pvt) Ltd. Karachi versus Collector of Customs (Appeals) South Zone, Karachi and M/s. Khas Shoes
(Pvt) Ltd., Karachi Versus Collector of Customs (Appeals) South Zone, Karachi (S. T. Appeals Nos, 15 to 17 of 1996 and S.T. Appeals Nos, 18 to 20 of 1996) referred to me as third Member on arising difference of opinion between the two Members of the Karachi Bench. The following excerpts from para'41 thereof may be worth its while for re-production:-- "(41) The corollary would be that the Act did not apply to the taxable supplies made out of Pakistan.
It was certainly not the Departments' case that these supplies were made in Pakistan. Instead they were agreed that the supplies were made abroad. Thus definition-wise as also the chargeability- wise the typical goods involved in these six cases were not the "taxable supplies" and did not fall within the purview of the very opening Clause of section 22 namely:-- .
"A registered person making taxable supplies..........."
I, therefore, can not hold differently on the precise facts.
9. The appellants were held guilty for not getting themselves registered under the Act. I could not see any such provision in the Act. Sections 14, 18 and 19 do not visualize an impeccable obligation for getting one-self compulsorily registered under the Act. The plenary position is that it is option.
Further, if there was requirement of getting one-self registered, an elaborate inquiry had to be conducted by the Collector under section 19 to that effect. In this case no such inquiry was held and yet the conclusion taken was that the appellants avoided such registration deliberately. This was not in accord with the provisions of the Act.
10.The appeal is allowed and the impugned order is set aside in its entirety.