1. ' Brief facts of the case are that upon a report made by Assistant Collector (External Audit)
2. Collec.Orate of Sales Tax and Central Excise Rawalpindi; that the appellant Messrs Oil and Gas Development Corporation has failed to pay Sales Tax on L.P.G. Supplied from the bore-holes a show-cause notice was issued to the appellant for the recovery of Rs,10,31,37,382 alongwith additional tax, ' The appellant contested the show-cause notice on the plea that upon promulgation of Notification No,S.R.O. 1040(1)/99, dated 14-9-1999, the impression was that liability of charging/collecting/ deposing sales tax wall be on the person who is a dealer distributor or retailer of L.P.G. And that the appellant being producer of L.P.G. Were not liable for the same.
3. ' The case was heard and decided by the Collector (Adjudication) who vide Order-in-Original No,24 of 2002, dated 29-4-2002 directed the appellant to pay a sum of Rs,10,31,37,382 alongwith additional tax levied under section 34 of the Sales Tax Act, 1990. The appellant was further ordered to pay penalty equal to 3% of the amount of tax.
4. ' An appeal against this order was filed before the Customs, Central Excise & Sales Tax Appellate Tribunal by the appellant. Vide judgment, dated 3-10-2002 the appeal of the appellant was dismissed and the Order-in-Original was upheld. The plea of the appellant that the default was unintentional and that they were not liable to pay penalty or additional tax was also repelled.
5. ' The appellants have assailed the judgment of the Tribunal in the instant appeal preferred under section 47 of the Sales Tax Act, 1990.
6. ' The questions of law formulated by the appellant are as under:--
(a) Whether an action under section 11 of the Sales Tax Act of 1990 for issuance of show-cause notice and subsequent assessm ent order and an action for recovery under section 36 of the said Act is warranted by law in the absence of any procedural liability of a party?
(b) Whether a procedure for levy/charge and collection of the Sales Tax prescribed under S.R.O.
7. No,1040(0/99, dated 14-9-1999 issued under section 71 of the Sales Tax Act can be applied exclusively upon the appellant in discharge of a responsibility to charge and collect the sales tax upon LPG (Liquet: . Petroleum Gas)?
(c) Whether the rule 3 sub-rule 2 paragraphs (i) to (v) does not prescribe five different stages and manners for the levy/charge/ collection of sales tax upon natural gas?
(d) Whether in absence of any liability of levy/charge/collect the Sales Tax upon LPG the appellant can be forced in any legal circumstances for such collection, invoking the provisions of sections 3, 7, 23, 26, 33 and 34 of the Sales Tax Act, 1990?
8. ' The respondents in pursuance of the notice issued in this behalf, placed on the record their written objections/reply to the contentions raised in the appeal.
9. ' The learned counsel for the parties have been heard, ' The exemption from sales tax on the natural gas was withdrawn w,e,f, 16-8-1999 vide Notification No, S.R.O. 922(1)/1999. Consequently, the Collection and Payment of Sales Tax of Natural Gas Rules, 1999 were promulgated through Notification No,S.R.O. 1040(1)/99, dated 14-9-1999 in exercise of powers conferred by section 71 of the Sales Tax Act, 1990. According to section 1(2) the said Rules applied for Collection and Payment of Sales Tax on Natural Gas including Compressed Natural Gas (CNG). And Liquefied Petroleum Gas (LPG) imported, produced transmitted and supplied by gas wellhead companies and gas transmission and distribution companies licensed under Natural Gas Rules, 1971 including their distributors, dealers, sales agent retailers or by any other person covered by the said rules. Natural. Gas" and "LPG" dealer have been defined in. Rule 2-D and E as under:--
(D) "natural gas" means the gas obtained from bore-holes and wells, whether unmixed or mixed with artificial gas consisting primarily of hydrocarbons whether gaseous or liquid in form which are nor oils and includes liquefied petroleum gas (LPG) and Compressed Natural Gas (CNG);
(E) "LPG dealer" means any person authorized by the gas transmission and distribution company or by any other person to be a distributor or supplier who deals in the sale of LPG to any consumer whether in containers or otherwise; ' The manner of levy and Collection of Sales Tax in respect of Natural Gas has been specified in Rule 3(2)(I) (ii)(iii)(iv)(v).
10. ' For the purpose of resolution of the present controversy, the correct effect and interpretation of Rule 3(2)(ii) and (v) are relevant.
11. In case of production and supply from bore-holes and wells, the person responsible to charge and pay sales Tax shall be the person making the supply at the boreholes or the well heads. Admittedly, the Oil & Gas Development Corporation is the person responsible for production and supply of the natural gas from the boreholes and well heads. According to the definition of natural gas indicated herein before, Liquefied Petroleum Gas (LPG) in natural gas in essence. This in contradistinction with the other product viz. Crude oil which is in the form of a liquid which consists of Kerosene, Diesel, Petrol and Coaltar which are later separated and refined in a Refinery. Natural gas on the other hand is in gaseous form, which is later subjected to process of condensation in a condensate plant and is converted into a Liquefied form in which form and shape it remains only in thick walled steel cylinders. The LPG base stock prepared in condensate plant is then transported to various gas plants for filling in cylinders and for supply to the LPG consumers. The LPG which is originally a natural gas produced and supplied from the boreholes and wells by the -appellant is susceptible for being charged sales tax which is the responsibility of the appellant who is its producer and suppliers from the wells. As discussed in some detail above, the natural gas, which is later converted into LPG, is further disposed of by dealers, distributors and retailers to make it available to the consumers. Under rule 3(2)(v) this later category of suppliers of LPG ae further responsible to charge/collect and deposit sales tax upon the supply made by them. This is further clarified in sub- rule (v) itself when it is stipulated that the value of LPG for the purpose of levy of sales tax shall include price of LPG charges, rents, commission and all duties and taxes local, Provincial and Federal. When read in juxtaposition with the provisions of sub-clause (ii) it becomes clear that producer and supplier of natural gas from the boreholes includes price of natural gas for the purpose of levy of Sales Tax. While in the case of dealer/distributor etc. Of LPG, the value for the purpose of Sales Tax is calculated on the price of LPG.
12. Further perusal of the different provisions of Rule 3(2) of the S.R.O. 1040-1/99 would show that incidence of payment of sales tax is provided for different eventualities and is separate and distinct from each other for example sub-clause (i) of rule 3(2) deals with the levy of sales tax in case of importation of natural gas upon the importer. Sub-clause (ii) ibid deals with responsibility of charge and pay sales tax upon the producer and suppliers from the natural gas from the boreholes and D wells. Sub-clause (iii) deals with responsibility to charge in deposit sales and tax upon the gas transmission and distribution Company where natural gas is transmitted or distributed by companies such as Sui Northern and Sui Southern etc. Sub-clause (iv) places the responsibility of Collection and Payment of sales tax upon the person supplying CNG and finally sub-clause (v) deals with the dealership or distributorship of LPG dealers.
13. ' In view of the foregoing, there was no ambiguity regarding the charging and payment of sales tax in case of natural gas in its various eventualities. There was no legal justification for the appellant to have failed to charge and deposit the sales tax upon LPG which as discussed above is natural gas which is produced from bore holes well/heads. Both the Collector in the Order-in-Original and the Customs Central Excise and Sales Tax Appellate Tribunal were justified to hold that default was deliberate. It was justifiably held by the Tribunal that there was no ambiguity or confusion in the matter. The relevant portion from the order of the Tribunal may be reproduced:--- "In our considered 'opinion it was nothing but self-created confusion which could be termed as self-serving device obviously with a motive to avoid or at least to Prolong the payment of huge amount of more than Rupees one Million."
14. ' After having considered the case at length we find no substance in the present Tax Appeal which is hereby dismissed.