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2015 P T D (Trib.) 2352

 

[Inland Revenue Appellate Tribunal]

 

Before Shahid Masood Manzar, Judicial Member and Faheemul Haq Khan, Accountant Member

 

Messrs WATEEN TELECOM (PVT.) LTD., ISLAMABAD

 

Versus

 

C.I.R., LARGE TAXPAYER UNIT, ISLAMABAD

 

F.E.As. Nos. 3/IB and 4/IB of 2013, decided on 23rd September, 2013.

 

2013 PTD (Trib.) 1322; 2006 PTD 336 and 2007 PTD (Trib.) 1775 rel.

 

Taqiuddin, FCA for Appellant.

 

Imran Shah, D.R. for Respondent.

 

Date of hearing: 3rd September, 2013.

 

ORDER

 

This appeal has been filed by the taxpayer against the Order No.385/2013 dated 23-1-2013 of CIR (Appeals-II), Islamabad. The taxpayer has agitated the impugned order of CIR (Appeal) on the basis of following grounds:–

 

“(1) The Order-in-Appeal No. ST-385/2013 dated January 23, 2013 issued by the learned Commissioner Inland Revenue (Appeal-II), Regional Tax Office, Islamabad [CIR (Appeals)] is bad in law, on facts and in the circumstances of the case.

 

(2) The learned CIR (Appeals) has erred in upholding action of ACIR in holding that payment made by the Company are not covered under the amnesty scheme announced vide S.R.O. 548(1)/2012 dated May 22,2012.

 

(3) The learned CIR (Appeals) has erred in not appreciating that the provisions of section 11 of the Sales Tax Act, 1990 are not applicable for Federal Excise purposes.

 

(4) The learned CIR (Appeals) has grossly erred in holding that the payment made on the date of issuance of S.R.O. 548(1)/2012 dated May 22, 2012 are not covered under the said SRO.

 

(5) The learned CIR (Appeals) has further erred in holding that the payment made during the validity period of S.R.O. 548(1)/2012 dated May 22, 2012 are not covered under the said SRO.

 

(6) The learned CIR (Appeals) has erred in not appreciating that hearing in respect of show cause notice dated April 27, 2012 was fixed for October 8, 2012.

 

(7) The learned CIR (Appeals) has erred in not appreciating that element of mens rea is not involved in the instant case as the company lately filed sales tax and federal excise returns due to existence of abnormal circumstances.”

 

2. Brief facts of the case are that the taxpayer did not file the sales tax return for the period i.e. October 2011 to. February 2012 and March 2012 to June 2012, violating the provisions of sections 3, 6(2), 7 and 26(1) of the Sales Tax Act, 1990 along with provisions of sections 3A and 4 of the Federal Excise Act, 2005. The taxpayer was, called upon to show cause vide letter No. C. No.ST/LTU/Enf-IV/Non filing/2011-12/503 dated 27-4-2012. and C. No. ST/LTU/Enf-IV/Non filing/2011-12/130 dated 1-10-2012 under section 11(1) of the Sales Tax Act, 1990 and Sales Tax General Order No.03 of 2004, dated 12-6-2004 and section 14 of the Federal Excise Act, 2005. ‘In respect of levy of penalty and additional taxes under the relevant provisions of Sales Tax Act. The taxpayer through his AR, vide letter dated 5-10-2012 submitted that Sales Tax Federal Excise returns have been filed along with payment of taxes availing amnesty scheme announced by Federal Board of Revenue besides filing the returns of the following period i.e. March 2012 to June 2012 not otherwise covered in the show cause notice. Hence the reply of the taxpayer could not find favour with the Assistant Commissioner Inland Revenue, who consequently passed the order in original dated 24-10-2012 as worded below:–

 

“I have gone through the case record submitted and has observed that registered person has filed late returns for the period October, 2011 to June, 2012 and the stance of registered person that it had filed returns under amnesty for the tax period December, 2011 to February, 2012 on, 22 May, 2012 is not tenable as per law because the records of the CPRS (computerized payment receipts) indicated that it has already submitted the cheques for clearing before the announcement of the amnesty under S.R.O. 548(1)/2012 dated 22 May, 2012. Now, in exercise of power conferred upon me under section 11(1), of Sales Tax Act, 1990 and section 14(1) of the Federal Excise Act, 2005, 1 hereby order respondent to deposit Penalty of Rs.8,541,285 under sections 33(1) and 33(1)(5) and under section 9(1) of the Federal Excise Act, 2005 and default surcharge amounting to Rs.3,917,907 under section 34 of the Sales Tax Act, 1990 and section 8 of the Federal Excise Act, 2005 for the month of October, 2011 to June, 2012.

 

Bifurcating of month-wise Government dues is as under.

 

Tax period

Date of payment

Due date

Amount of tax paid

Penalty

Kibor

Days of default

Amount of default

October, 2011

11/1/12

21-11-2011

22,884,204

1,149,210

16.53

50

518,186

November, 2011

11/1/2012

21-12-2011

10,893,989

549,699

16.53

20

98,673

December, 2011

22/5/2012

21-1-2012

23,463,026

1,178,151

16.53

122

1,296,355

January, 2012

22/5/2012

21-2-2012

20,287,599

1,019,380

15.3

90

765,371

February, 2012

22/5/2012

21-3-2012

18,027,928

906,396

15.3

60

453,415

March, 2012

22/5/2012

21-4-2012

18,350,934

922,547

15.3

29

223,077

April, 2012

22/5/2012

21-5-2012

22,476,715

1,128,836

15.32

 

0

May, 2012

3/8/2012

21-6-2012

16,419,339

825,967

15.32

41

282,557

June, 2012

31/8/2012

21/07/2012

17,121,975

861,099

15.32

39

280,275

Total

8,541,285

 

 

3,917,907

 

3. On appeal, the learned CIR(A) upheld the treatment in the following words:–

 

“(5) The contentions of the AR, documents filed and case-laws referred have been examined and record perused which transpired that the ACIR observed the late filing of sales tax returns for the period mentioned above to which no plausible reasons were provided. The AR’s contentions are general in nature, rather misleading which tantamount willful default on the part of the registered person. The first contention of the AR that ‘no basis for adjudication was communicated’ is so confusing that at least I could not follow the purpose of this ground of appeal which shows that grounds of appeal have been taken without application of mind and without understanding the contents of the said grounds. The officer simply conveyed the late filing of returns and his intended action under the law. The contention of the AR is baseless having no substance. Such, in called for grounds leads to the conclusion that the AR did not have anything to say in his defence and this ground has been taken just for the sake of arguments hence the same is rejected.

 

(6) The next ground that AC1R has erred in applying the provisions of section 11 of the Sales Tax Act, 1990 as the same are not applicable for federal excise, is again a misconception and misleading as the officer has also referred section 14(1) of the Federal Excise Act, 2005. Further the order shows that the officer has referred sections of both law i.e. Sales Tax and Federal Excise Act which is carrying no any legal infirmity. The contention of the AR is devoid of merits and is rejected.

 

(7) The AR further contended that payments made were with reference to amnesty S.R.O. Mp.548(1)/2012 dated 22-5-2012. The said SR has been examined and it shows that the SRO was applicable to only those payments which were outstanding on the date of issuance of this SRO whereas the records shows that all payments were made by 22-5-2012 hence these payments were not covered under the said SRO. The contention of the AR is again misleading and to hood wink the department, the officer rightly charged penalty and default surcharge the contention of the AR is devoid of merits and is rejected.”

 

4. Thereafter the taxpayer has come up before this Tribunal. Mr. Taqiuddin, FCA attended on behalf of the taxpayer/appellant. Whereas Mr. Imran Shah, appear as D.R.

 

5. The learned counsel for the appellant has contended that the learned first appellate authority as well as the Adjudicating Officer disregarded the legal as well as the factual aspects of the case. According to him, the authorities below failed to appreciate the evidence available on record and passed the impugned orders without considering the available evidence. The learned counsel has further contended that there are a number of discrepancies in the charges framed against the appellant and the same were never reconciled neither by the learned first appellate authority nor by the Adjudicating Officer.

The learned DR, on behalf of the respondent, supported the impugned orders and contended that the Adjudicating Officer in his very elaborate and detailed order has taken into consideration all the points and pleas put up by the appellant and since the evidence available on record was compelling, therefore, he was left with no choice but to enforce the additional demand raised against the appellant. Similarly, the learned CIR (Appeals-II) was also of the view that the facts and circumstances supported the charges against the appellant and therefore, there was no merit in his appeal which was rightly rejected. The D.R. also informed this bench that taxpayer is a habitual defaulter and bears a history of frequent defiance.

 

7. We have heard the arguments of both the parties and also perused the relevant SRO, which is also being reproduced hereunder:–

 

“S.R.O.548(/)/2012.—In exercise of the powers conferred by section 34A of the Sales Tax Act, 1990 and subsection (4) of section 16 of the Federal Excise Act, 2005, the Federal Government is pleased to exempt whole of the amount of default surcharge and penalty for non-payment payable by a person against whom an amount of sales tax or federal excise duty is outstanding on account of any audit observation, audit report, show cause notice or any adjudication order or who has failed to pay any amount of sales tax or federal excise duty or claimed inadmissible input tax credit, adjustment, refund, drawback or rebate due to any reason, subject to the condition that the outstanding principal amount of sales tax or federal excise duty is paid by the 31st May, 2012:

 

Provided that where refund becomes due to any person in consequence of a decision or judgment of court after the issuance of this Notification, the tax deposited by that person under this Notification shall be refunded to him.

 

Benefit of this Notification shall not be available in case of fraudulent refunds or drawback and other tax fraud.

 

The above S.R.O. was modified by the following SRO in respect of extension in the date of compliance.

 

“S.R.O.700(1)/2012.—In exercise of the powers conferred by section 34A of the Sales Tax Act, 1990 and subsection (4) of section 16 of the Federal Excise Act, 2005, the Federal Government is pleased to direct that the following amendment shall be made in its Notification No.S.R.O.548(I)/2012, dated the 22nd May, 2012, namely.

 

In the aforesaid Notification, for the figures, letters, word and comma ’31st May, 2012′ the figures, letters, word and comma `25th June, 2012′ shall be substituted.”

 

8. The learned DR has relied upon the following reported cases 2013 PTD (Trib.) 1322, 2006 PTD 336 and 2007 PTD (Trib.) 1775 and laid his emphasis on the following text:–

 

2013 PTD (Trib.) 1322

 

“The appellant having paid the amount of sales tax and SED before the issuance of the said S.R.O. but also much before the issuance of show-cause notices from the department, was clearly entitled to the benefit of amnesty contemplated in the S.R.O. 648(1)/2011 on 25-6-2011. To hold otherwise would be negation of justice, fair and equal protection of law. It needs to be brought home that the amnesty granting legislation both superior as well as subordinate needs to be construed liberally so that it does not either trap an unwary taxpayer or else otherwise succeeds in taking away with the other hand while giving it by the one. The appellant having paid the sales tax and SED due from him is as much entitled to the amnesty contemplated in the S.R.O. 648(1)/2011 on 25-6-2011 as other taxpayer who pays the due taxes after issuance of the S.R.O. 648(1)/2011 on 25-6-2011. To hold otherwise would result in the situation as noted above.

 

Therefore, without any hesitation we will allow these appeals by setting aside the orders of the Revenue authorities as well as the impugned order of the Commissioner Inland Revenue Appeals, Gujranwala. Resultantly the default surcharge as well as the Penalty imposed against the appellant shall be remitted in toto.

 

2006 PTD 336

 

After hearing the learned counsel for the parties we are not persuaded to agree that the amnesty S.R.O. No.575(I)/98, dated 12-6-1998 is not applicable to the case of the present appellant.

 

It is that whereas the persons who had already paid the amount due will be deprived of the amnesty while those who will pay that amount after the issuance of S.R.O. 575(I)/98 on 12-6-1998 will be spared of the additional tax and penalty. In other words a person who had already paid the due tax to the public exchequer will be burdened with additional tax and penalty while the one who does so after issuance of that notification and having withheld the amount of the tax due from him in the meanwhile will be rewarded by allowing exemption from penalty and levy of additional tax. This could never be the intention of any superior or subordinate legislation. A person placed in similar factual situation cannot be discriminated against merely for the reason that he has first to be a continuous defaulter on a particular date of grant of amnesty in order to avail the same. The appellant having paid the fixed tax before the issuance of the said S.R.O. but before the issuance of show-cause notice was clearly entitled to the benefit of the amnesty contemplated in the S.R.O. To hold otherwise would be negation of justice fait: and equal protection of law.

 

2007 PTD (Trib.) 1775

 

That the amount of excess claimed input tax of Rs.15,357 has been deposited by the appellant, a copy of the proof of payment has been placed on record.

 

However, following the principle laid down in the judgment of Lahore High Court cited as 2006 PTD 336 a lenient view is taken and demand of additional tax and penalty is remitted.”

 

9. Owing to the facts of present case following salient features are worth consideration:–

 

(1) The taxpayer, who is a persistent defaulter can be deprived of the benefit of said SROs of amnesty.

 

(2) The department has already commenced proceeding to enforce the return and payment of Sales Tax/Federal Excise Duly, at the time of issuance of SRO granting amnesty from additional encumbrances.

 

(3) Whether Payment of tax and issuance of SRO falling on the same date i.e. 22-5-2012 would deprive the taxpayer from the benefits of waiver?

 

10. We have considered the above issues in the light of reported judgments and our findings in this behalf are as under:–

 

(1) That SRO does not exclude single default or multiple defaults in its meaning and manifestation. It only takes into accounts, the amount of tax on account of any audit observation, audit report, show-cause notice or in adjudication order. Thus on the particular date the scheme takes into account the aggregate defaults whatsoever, to grant bilateral benefits i.e. payment of taxpayer voluntarily and waiver of additional sums from the exchequer. Therefore we hold that the multiple default on the due date of compliance of SRO do not impede the taxpayer from availing the benefit of the scheme.

 

(2) The said SRO covers not only shows notice but the adjudication order as well, which means that despite the fact that proceedings initiated quite early yet the taxpayer would be entitled to the benefit of the scheme.

 

(3) That in the instant case issuance of final SRO and payment of Sales Tax/Federal Excise Duty (principle amount) falls on the same date. The department has charged the additional levies on the plea that payment was made prior to the declaration/issuance of SRO. It has been alleged by the Officer Inland Revenue that voluntary payment of taxes through cross cheque on 22-5-2012 and cleared on 22-5-2012 (CPRS). On the contrary the taxpayer pleaded that cross-cheque was issued on the same date. But procedurally, the draft S.R.O. is released by the FBR at least 15 days prior to the issuance of main S.R.O. Thus it was very much in the knowledge of taxpayer at least 15 days ago that amnesty scheme is in the process of launch and no sooner the scheme attained finality, the taxpayer made voluntary payment. Hence in the absence in conclusive evidence to the contrary we hold that the taxpayer complied with S.R.O. No.548 dated 22-5-2012.

 

(4) Consequent to above deliberations, we hold that the charge of penalty and default surcharge in respect of principal amount which was defrayed according to amnesty scheme would not attract the penal provision creating additional encumbrance on the taxpayer.

 

(5) However, the S.R.O. No.548 dated 22-5-2012, whose operational life was extended from 31-5-2012 to 25-6-2012 through S.R.O. No.700 dated 7-6-2000 would not give any concession to default if occurring after said dated i.e. 25-6-2012.

 

(6) Thus we uphold the levy of penalty and additional tax/default surcharge for the periods May 2012 and June 2012 having due date on 21-6-2012 and 21-7-2012 respectively but the principal accounts was paid on 3-8-2012 and 31-8-2012.

 

11. The appeal succeed to extent and manners mentioned above.

 

HBT/69/Tax(Trib.) Order accordingly.

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