2013 P T D (Trib.) 1723


[Appellate Tribunal Inland Revenue]


Before Jawaid Masood Tahir Bhatti, Chairman and Faheem-ul-Haq Khan, Accountant Member








S.T.As. Nos.92/IB and 93/IB of 2011, decided on 30th June, 2013.


Hamidullah Shah, D.R. for Appellant.


Ch. Naeemul Haq for Respondent.


Date of hearing: 12th March, 2013.




Above captioned appeals have been filed by the Department against the impugned order vide No.118 of 2011 dated 2-3-2011 passed by the learned Commissioner Inland Revenue (Appeals-I), Islamabad. The Department has agitated on the following common grounds: –


“(a) The learned Commissioner Inland Revenue Appeal-I in para-10 states that the appellant charged Sales Tax on supplies of glass invariably, however, the services of tempering, crystal motive, frosting and edging are not carried by him. Hence no manufacturing activity carried out on the part of appellant.


The learned Commissioner again states that “I am of the considered opinion that the contention of the appellant carried weight and any activity of tempering, crystal motive, frosting etc. are not proved on the part of the appellant.” However the learned CIR(A) in Para 11 of the order holds “Appellant is registered as a “Manufacturer” and liable to charge SED @1% hence this charge is accordingly upheld.” Apparently there exists a contradiction in the ruling of the learned CIR(A).


(b) Out of the total suppressed sales of Rs.28,958,602 as mentioned in Order-in-Original No.19 of 2010 by the Assistant Commissioner, the appellant provided purchase invoices only of Rs.1,603,372 for the tax year 2008-2009 during the process of adjudication. The appellant did not provide any single purchase invoice for the tax year 2007-2008. If we convert the purchase invoices, provided the appellant of Rs.1,603,372 into sales by taking value addition as per the Income Tax Return i.e. 17.73%, the sales would be Rs.1,887,650 (1,603,372*117.73/100). This means that the appellant failed to provide sales invoices of Rs.27,077,952 (28,958,602-1,887,650).


(c) The facts and figures show that the learned Commissioner Inland Revenue Appeal-I declared the decision in favour of the appellant without looking into and perusal of the 93% of sale invoices relating to the suppressed sales.”


2. Brief facts of the case are that during the comparison of sales tax returns with income tax returns for the years 2007-08 and 2008-09, it was found that the registered person declared less amount of sales in its Sales Tax Returns and failed to declare sales of Rs.28,958,602 in the sales tax returns, thus did not deposit an amount of Rs.4,489,876 as sales tax. Therefore, an amount of Rs.4,489,876 as sales tax was considered as recoverable under section 36(1) for violation of sections 3, 6 and 26 along with default surcharge and penalty under sections 34 and 33 of the Sales Tax Act, 1990. Besides this, the taxpayer during the period from July, 2007 to June, 2009 failed to pay 1% Special excise duty levied under section 3A of the Federal Excise Act, 2005 and with S.R.O. No.655(I)/2007 dated 29-6-2007 amounting to Rs.370,161 (calculated on the sales declared in income tax returns). Therefore an amount of Rs.370,161 as Special excise duty is recoverable under section 14(1) of the Federal Excise Act, 2005 for violation of sections 3A, 4, read with S.R.O. No.655(I)/2007 along with default surcharge and penalty under sections 8 and 19 ibid respectively. The taxpayer for the period from July 2008 to January 2009 deposited the amount of sales tax on 12-3-2009, hence an amount of Rs.3,729 as default surcharge under section 34 of the Sales Tax Act, 1990 is still payable. Furthermore the taxpayer e-filed its sales tax returns for the period from July, 8 to May, 9 on 30-6-2009 and failed to file its sales tax returns for September, 2007 and June, 2009, which attracts a penalty of Rs.61,500 under section 33 of the Sales Tax Act, 1990.


The discrepancy pointed out in the show cause notice was replied by the taxpayer in the following words:-


“(i) During the filing of our income tax periods 2008 and 2009, we filed the values of supplies and services as per the annual returns. During the aforesaid audit you have pointed out that sales declared in sales tax returns are less than the sales declared in income tax returns. On this basis we had reconciled all the data and found that there are services on which we have not paid the sales tax. In the light of Income Tax Returns actual picture of our sales are as under:–


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