1. This judgment shall decide captioned, as well as, connected Tax References, which are arising out of consolidated judgment dated 27.06.2005 passed by erstwhile Customs, Excise & Sales Tax Appellate Tribunal Lahore (“Appellate Tribunal”).
2. Number of questions are proposed, which are argumentative in nature. The proposition of law, requiring expression of this Court, is summarized to answer it in advisory jurisdiction under Section 47 of the Sales Tax Act, 1990 (“Act of 1990”).
“Whether under the facts and circumstances of the cases, Appellate Tribunal was justified to hold that exemption, under SRO 208(I)/1998 dated 31.03.1998, did not include further tax levied under Section 3(1A) of the Sales Tax Act, 1990?”
3. Impugned order was passed after remand by Hon’ble Supreme Court of Pakistan through judgment dated 18.01.2005 in Civil Appeal No.142/2002 (along with connected appeals); A decision by learned Division Bench of this Court in Messrs Kamalia Sugar Mills Ltd., Kamalia v. Superintendent, Intelligence and Investigation (Customs and Central Excise), Regional Office Lahore and another (2002 PTD 632) was assailed by applicants taxpayers to the extent of finding on exemption of tax under Section 3(1A) of the Act of 1990. Hon’ble Supreme Court set aside the asserted part of decision for the reason that Appellate Tribunal had not decided the cases on merits. Matter was remanded to the Appellate Tribunal for re-adjudication on merits. Relevant part from the judgment by Hon’ble Supreme Court in Civil Appeal No. 142/2002 is reproduced for ease of reference:
“4. We have heard learned counsel for parties and have also gone through the impugned judgment, judgment of the Tribunal as well as law on the subject. Initially we were of the opinion to dispose of the appeals finally without taking into consideration the effect and non-decision of cases on merits by the Tribunal but during hearing when the learned counsel for appellants expressed his grievance that the Tribunal had not decided the cases on merits, therefore, learned High Court instead of non-suiting them on merits in the interest of justice should have remanded the cases to the Tribunal for sake of justice. Besides it we have also noticed that the findings of the Tribunal on merits are necessary, so that the learned High Court may take its benefit while deciding the cases. Even otherwise it is consistent practice of the judicial forums that a party cannot be nonsuited on the point on which the lower forum had not given its decision, therefore, we have decided to remand the cases to the Tribunal for decision of appeals on merits within a period of three months.”
4. Facts, necessary to form an opinion, are that an SRO 207(I)/1998 dated 31.03.1998 (“SRO 207”) was issued under Section 2(46) of the Act of 1990, whereby value of taxable supply on locally produced sugar was fixed at Rs.13/- per kilogram for the month of April, 1998. This SRO was extended/ amended from time to time through various notifications and last in line was SRO 818(I)/1999 dated 05.07.1999 (“SRO 818”), which extended the period till January, 2000, besides enhancing the value so fixed from Rs.13/- to Rs.14/- per kilogram. Another SRO 208(I)/1998 dated 31.03.1998 (“SRO 208”) was issued under Section 13(2) of the Act of 1990 (along with the SRO 207); Sales Tax leviable in excess of the assessable value fixed under the SRO 207 was exempted.
Applicants/Sugar Mills were served with respective show cause notices for not paying sales tax on actual value of supplies received from market for the period February, 2000 onwards, as they continued paying sales tax at value of Rs.14/- despite the fact that after January 2000, value fixed under SRO 207 was not extended. The show cause notices were followed by orders-in-original for payment of sales tax on actual market value along with Further Tax, under Section 3(1A) at the rate of 1% on the supplies made to unregistered persons. Meanwhile the then Central Board of Revenue (now Federal Board of Revenue) (“FBR”) issued yet another SRO 751(I)/2000 dated 21.10.2000 (“SRO 751”), whereby further amendment was made in SRO 207 by inserting the months from February to October, 2000, i.e., value of supply fixed at Rs.14/- was extended retrospectively for the months of February to October, 2000.
The matter reached Appellate Tribunal through appeals filed by the appellants/applicants/Sugar Mills. The Appellate Tribunal vide judgment dated 31.03.2001, declared the amendment made through SRO 571(I)/2000 dated 21.10.2000 (“SRO 571”) as ultra vires and upheld levy of Further Tax. Being dissatisfied the applicants/Sugar Mills brought the matter before this Court through respective Tax References. Learned Division Bench of this Court through its judgment in M/s Kamalia Sugar Mills’ Case (supra) held that Appellate Tribunal had no jurisdiction to examine the vires of SRO 571. Retrospective effect of SRO 571, being beneficial in nature, was restored and charge of Further Tax under Section 3(1A) of the Act of 1990 was upheld. The judgment in M/s Kamalia Sugar Mills’ Case was assailed by applicants/Sugar Mills before Hon’ble Supreme Court of Pakistan to the extent of Further Tax; levy of which was held not exempted under SRO 208. The Apex Court, through its judgment in Civil Appeal 142/2002 (supra) remanded the cases to Appellate Tribunal for decision on merits i.e., to the extent of charging Further Tax which was challenged before Apex Court. After rehearing appeals learned Appellate Tribunal through its impugned judgment dated 27.06.2015, held that levy of Further Tax was not exempted under SRO 208 and was leviable on actual market value of the supply, hence these Tax References.
5. Mr. Ali Sibtain Fazli, Advocate opened arguments for the applicants. It was argued that tax leviable under Section 3(1A) of the Act of 1990, at relevant time, was nothing but sales tax, therefore, was exempted under SRO 208. He read the text of SRO 208 along with subsection (1) & (1A) of Section 3 of the Act of 1990, in support of these contentions. Learned counsel advanced his arguments by reading Section 23(1)(ff), [before amendment by Finance Act, 2004,] to contend that amount of tax charged under subsection (1) is contained in the invoices as sales tax. He has placed reliance on Collector of Customs and others v. Ravi Spinning Ltd. and others (1999 SCMR 412), Messrs Gadoon Textile Mills and 814 others v. WAPDA and others (1997 SCMR 641), Sohail Jute Mills Ltd. and others v. Federation of Pakistan through Secretary, Ministry of Finance and others (PLD 1991 S.C. 329) and The Treasurer of Charitable Endowments for Pakistan v. Central Board of Revenue and 2 others (1986 MLD 1731).
It is also argued that charging of Further Tax was not confronted to the applicants/registered persons in the show cause notices which is defective, therefore, Further Tax could not be charged in the proceedings initiated through these notices.
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