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S.T. Nos.44/PB of 2007 (Old No.) and 102/ST/IB of 2008 (New No.) decided on 16th July, 2009.

----Ss.3, 2(46), 3(1), 6(2), 7(1), 11(2), 22, 23, 26, 33, 34 & 36(1)---C.B.R. Order No. 4/2005 dated 11-1-2005---Scope of tax---Tax period November, 1998 to February, 1999---Recommendation of ADR Committee---Double jeopardy---Sales tax liabilities pertaining to the said tax periods were ordered to be excluded from the period involved on the basis of recommendations of ADR Committee in the identical case of the appellate recommendations of ADR Committee were that "it is abundantly clear, that the matter pertaining to the sales tax liabilities for the tax periods of November, -1 998 to February , 1999 have already been settled by the ADR Committee and the appellants have already deposited the due amount of tax as determined by the ADRC, therefore, it would be a case of double jeopardy, if the appellants are charged with the same allegation which has already been settled by depositing the due amount of tax and thus, it has attained finality; DR also conceded that sales tax liabilities pertaining to the tax periods of November, 1998 to February, 1999 have already been discharged by the appellants as determined by the ADR Committee." No.7 1045 ST/Transfer/2001 PB and 2004 PTD 3020 rel.

----S.36(1)---Recovery of tax not levied or short-levied or erroneously ,refunded---Show-cause notice---Partial audit observations---Issuance of---Effect---Partial audit observations issued by the Department had the same legal sanctity as that of the show-cause notice under S. 36 of the Sales Tax Act, 1990.

----S.36(1)---Recovery of tax not levied or short-levied or erroneously refunded---Limitation---Partial audit observations---If the period of time limitation as provided under S. 36(1) of the Sales Tax Act 1990, is reckoned from the date of partial audit observations i.e. 15-10-2004, then in such a situation, the department can raise their demand up to the period of October, 1999 and period beyond October, 1999 was badly barred by time limitation as provided under S. 36(1) of the Sales Tax Act, 1990---Sales tax liabilities beyond October, 1999, were barred by time limitation and the order-in-appeal to that extent was set aside by the Appellate Tribunal. Messrs West Pakistan Tanks Terminal (Pvt.) Ltd. case C.P.L.A. No.1098 of 2006 distinguished.

----Ss.7, 26, 33(19) & 66---C.B.R. Order No. 4/2005 dated 11-1-2005---Determination of tax liability---Claim of input tax adjustment of tax paid at import stage which was not claimed in monthly sales tax returns when pressed by the department to pay output tax due on supplies---Department contended that appellants were required to claim their input tax adjustment in the relevant tax periods but they failed to do so and at this belated stage, the input tax adjustment was not only barred by time in accordance with the express provisions of S. 7 of the Sales Tax Act, 1990 but the assessees were not even entitled to claim the same under the provisions of S. 66 of the Sales Tax Act, 1990, as the statutory period for the input tax adjustment/claim of refund had already lapsed due to slackness of the assessees---Assessees wilfully and deliberately dill not declare their imports in the monthly sales tax returns in order to suppress their local taxable supplies---Assessees pleaded that input tax was their vested right due to very reason that they had paid due tax at the time of importation; however assessees had not filed the sales tax return for the respective periods and they. could not claim and adjust input tax in their monthly sales tax returns---Validity---Assessees had not filed their true and correct sales tax returns indicting the purchases and supplies of the relevant tax periods and could not claim their input tax---Adjudicating authority as well as the First Appellate Authority were required to invoke the penal provisions as provided under S.33(19) of the Sales Tax Act, 1990 for not filing the correct and true return for the relevant tax period but denial of input tax adjustment on this ground will amount to double taxation which was neither permissible nor maintainable in the eyes of law---Further, ADR Committee had already allowed input tax adjustment in the identical issue of the assessees for the tax periods of November, 1998 to February, 1999 and department had implemented the C.B.R. Order No.4/2005 dated 11-1-2005, based on the recommendations of ADR Committee---Denial of input tax adjustment of the assessees will amount to discrimination, which was not sustainable in the eyes of law, being contrary to the principles of natural justice---Assessees were entitled to input tax adjustment subject to payment of tax due on taxable supplies and by depositing a penalty of Rs. 5000 per return for not filing the true and correct sales tax returns.

----S.7A---Levy and collection of tax on specified goods on value addition---C.B.R. Order No. 4/2005 dated 11-1-2005---Scope of tax---Criteria of value addition---Appellant contended that department had made 14% value addition on Duty Paid Value (DPV) in order to arrive at the value for taxable supplies and the tax had been calculated on such value---Value addition made by the department was arbitrary and capricious in nature---Goods were sold at lowest price due to stiff competition and market conditions---Presently, Central Board of Revenue had fixed 2% value addition for commercial importers---Validity---Section 7A was inserted in the Sales Tax Act, 1990, through Finance Act, 2003, assented on 16th June, 2003, enabling the Federal Government to fix percentage of value addition for certain class. of persons---First time, "Special Procedure for payment of sales tax by commercial importers on value addition" was prescribed by the Federal Board of Revenue in 2004-2005, whereunder the commercial importers were required to pay sales tax @ 14% value addition on the taxable supplies---According to the said procedure, 14% was a minimum value addition---Prior to said period, there was no prescribed procedure for commercial importers and different practices were prevalent in the department for the purpose of value addition---Department made out the case in the year 2004-2005, therefore, 14% value addition was taken into account for the purpose of taxable supplies---Value addition 14% worked out by the department was reasonable and was in accordance with law and did not call for any interference---Appellant had already discharged their sales tax liabilities @ 10.39% value addition on their .taxable supplies during the periods of November, 1998 and February, 1999, as determined by the ADRC, duly approved by the F.B.R. and accepted by the department---Department was directed by the Appellate Tribunal to recover the sales tax @ 14% value addition on the taxable supplies for the tax periods November and December, 1999 and January and February, 2000, after allowing the input tax adjustment of the relevant period, which the appellants had already paid at import stage---Since the additional tax had already been remitted by the Board vide Order No.4/2005, dated 11-1-2005, on the recommendations of ADR Committee, in the identical case of the appellants, the same was also remitted in the present case, except the amount of penalty of Rs. 5000 per return for not filing the true and correct sales tax return for the said tax period---Order-in-appeal was modified to such extent only. Ishtiaq Ahmad for Appellant. Abdul Razzaq, D. R./Additional Collector, Fazal Hameed, Sr. Auditor, Muhammad Haroon Khattak, Sr. Auditor and Dost Muhammad, Sr. Auditor for Respondents. Dates of hearing: 16th, December, 2008, 8th April, 7th May, 9th, 15th, 16th, 17th, 18th, 22nd and 23rd June, 2009.

This appeal has been filed by Messrs Faisal Traders, Peshawar (hereinafter called as the appellants) against the Order-in-Appeal No.439 of 2006, dated 30-11-2006, passed by .the Collector of Customs, Sales Tax and Federal Excise (Appeals), Peshawar. 2. Precisely, the stated facts of the case as recapitulated from the available case records are that on scrutiny of the data received from Pakistan Revenue Automation (Pvt.) Ltd., Islamabad in respect of the appellants, it was revealed that input tax amounting to Rs.28,507,538 had been claimed in excess as compared to the actual imports made during the period between November, 1998 to March, 2000, and this act of the appellants attracted the levy of additional tax (to be calculated at the time of actual payment) in terms of section 34 of the Sales Tax Act, 1990. Month-wise breakup was as under:--

3. The appellant had made actual imports of Rs.105,160,240 (Input Tax x 100/15) during the period between January, 1999 to February, 2000, but did not declare the same in the sales tax record. In case of minimum value addition of 14% as per formula framed by" C.B.R. (now F.B.R.) for value addition based on the definition of "value of supply" in terms of section 2(46) of the Sales Tax Act, 1990, the appellants were alleged to have suppressed the value of supplies worth Rs. 119,882,674 by under/ non-declaration of imports and were alleged to have made short payment of sales tax to the tune of Rs.19,362,332 which also attracted the levy of additional tax (to be calculated at the time of actual payment) in terms of section 34 of the Sales Tax Act, 1990, as per details given below:-

4. Accordingly, a contravention case for violation of the provisions of sections 2(46), 3(1), 6(2), 7(1), 11(2), 22, 23, 26, read with sections 33, 34 & 36 (1) & (3) of the Sales Tax Act, 1990, was made against the appellants and the flame was submitted for subsequent adjudication. A show-cause notice was issued to the appellant and after hearing the parties, the learned Additional Collector of Sales Tax & Federal Excise (Adjudication), Peshawar vide his Order-in-Original No.03 of 2006, dated 5-2-2006 ordered asunder:--

"7. I have gone through the case record and considered the arguments advanced by the prosecutor of petitioner:

(i) First allegation against the respondent is that no prescribed Sales Tax record" under sections 22 and 23 of the Sales Tax Act, 1990 was maintained nor produced before the audit team by the respondent. Non-production of record attracts the penal provision prescribed under section 33(3)(b) of the Sales Tax Act, 1990. Since the respondent did not attend hearing nor submitted any written reply to the show-cause notice, therefore, the respondent lost all the opportunities of being heard, hence the allegations levelled against him in the show-cause notice are fully established. A penalty of ten thousand rupees under section 33(8) of the Sales Tax Act, 1990 is, therefore, imposed which is to be recovered in the prescribed manner;

(ii) Second allegation against the respondent is that the respondent has made actual imports of Rs. 105, 160, 240 (Input Tax 100/15) during January, 1999 to February, 2000, but did not declare the same in the sales tax record. The tax profile of the registered person generated by the Computer Section of this Collectorate reveals purchases involving huge amount of input tax. Obviously, the respondent had supplied these goods on the value inclusive of all costs, duty and taxes, over head charges, expenses etc., besides his own profit margin. The respondent, on the contrary suppressed the value of supplies and resultantly short paid huge amount of tax. The sales tax is a value-added system based on a mechanism of normal trade practice of inclusion of all charges in cost of goods. The C.B.R. had also provided guidelines for working out of ultimate value of supply which is not only in consonance with the normal trade practice but also in conformity with the definition as provided under clause (46) of section 2 of the Sales Tax Act, 1990. The prosecution has accordingly determined the tax liabilities in the instant case on the value addition of 14%. Reliance in this respect has also been placed on the judgment of Honourable Appellate Tribunal, Peshawar Bench in case titled Messrs Maharaja Traders, Mingora Swat bearing No.7(1045) ST/ Transfer/2001 (PB) wherein it was held as under:--

"[The goods are importable against free list and the formula of value-addition, agreed to by the parties, include financial charges, L.C. charges, incidental charges and landing charges and also include all import levies. We accept an average of 2% margin of profit for the imported consignment of taxable goods supplied by him in Pakistan. This liability (minus the amount of output sales tax already paid by the appellant), should be worked out and paid by the appellant to the satisfaction of the Collector of Sales Tax & Central Excise, Peshawar.]"

(iii) The third allegation against the respondent is that input tax of Rs.28,507,538 has been claimed in excess as compared to the actual imports made during the period November, 1998 to March, 2000. Keeping in view the fact that the respondent did not produce any documentary evidence in support of the input adjustment, therefore, the inadmissible adjustment of Rs.28,507,538 is ordered to be recovered from the respondent along with additional tax (to be calculated till the time of recovery) under sections 34 and 36 (1) of the Sales Tax Act, 1990 is also imposed for violation of statutory provisions of Sales Tax Act, 1990.

8. The respondent has also suppressed the value of supplies made during the period January, 1999 to February, 2000, therefore, in respectful agreement with aforementioned decision of the Honourable Appellate Tribunal, the tax liabilities of the respondent are re-determined to the tune of Rs.19,362,332 with additional tax (to be calculated at the time of final payment) in true spirit of sections 11, 34 and 36 of the Sales Tax Act, 1990. A penalty of 3% of the amount of tax involved is also imposed as provided under section 33 (2) (cc) ibid." 5. Being aggrieved of the impugned order-in-original, the appellant filed an appeal before the Collector of Customs, Sales Tax & Federal Excise (Appeals), Peshawar, who vide his Order-in-Appeal No. 439 of 2006, dated 30-11-2006, ordered as under:--

8. I have gone through the case record and considered the verbal as well as written arguments of both the parties. In the instant case, there are three allegations against the appellant which were adjudicated and decided by the Additional Collector of Sales Tax and Federal Excise, Peshawar vide the" impugned Order-in-Original. The first allegation pertains to the non-Maintenance of sales tax record required under sections 22 and 23 of" the Sales Tax Act, 1990. The appellant during the entire hearing proceedings could not rebut this allegation through any convincing argument which leads me to conclude that the decision of the respondent Additional Collector pertaining to the first allegation is correct and the same is accordingly upheld.

9. The second and third allegation against the appellant pertain to the non-declaration and misdeclaration of the actual imports made by the appellant during the impugned period in the monthly tax returns. The counsel of the appellant Mr. Haseeb during the hearing proceedings expressed his reservations over the import data which was obtained by the department from PRAL and ultimately framed contravention case against the appellant. In order to meet the ends of justice and to remove the objections of the appellant, both the parties were directed by the undersigned to make reconciliation of the data and other related record in the instant case and come out with a reconciliation report after having a consensus of opinion thereon. Mr. Fazal Hameed, Senior Auditor presented a reconciliation report pertaining to the quantum of actual imports made by the appellant during the impugned period and the taxable supplies declared in the sales tax record. The said report has been endorsed by the Deputy Collector (Legal) Sales Tax and Federal Excise, Peshawar.

10. In view of the foregoing discussions and facts of the case, I am inclined to conclude that the reconciliation of entire record in the instant case which could not be made during the adjudication stage has now been done by both the parties whereunder undisputed liabilities payable by the appellant have been worked out and the same has been endorsed by the D.C. (Legal) Collectorate of ST & FE, Peshawar. Now the respondent Collectorate is directed to work out the liabilities of sales tax afresh in accordance with the report presented by the DR Mr. Fazal Hameed, Senior Auditor. The respondent-Collectorate is also advised to recover principal amount of the same liabilities as discussed above along with additional tax and penalties. The instant appeal of the appellant stands disposed of in the above manner."" 6. Being further aggrieved by the impugned Order-in-Appeal, the appellants have filed the instant appeal to this Tribunal, inter alia, on the following grounds:--

(a) that the show-cause notice for payment of amount specified therein is required to be issued within three years of the relevant date is by reason of any inadvertence, error or misconstruction, any tax or charge has not been levied but the term has been extended to five years if any tax or charge has not been levied or made by reason of some collusion or deliberate act of the appellant. The tax demanded in the show-cause notice neither conform to subsection (1) or subsection (2) of section 36 of the Act as the matter is barred by the time for which no demand can be raised;

(b) that without prejudice to the above, the demand is illegal as no reconciliation of the record was made by the departmental auditor;

(c) that the amount of input tax as per PRAL record is greater than the input tax as per computer profile of the Collectorate as reported by the auditor which itself speak about the innocence of the appellant; and

(d) that the calculations as made by the auditor are beyond understanding and are not in conformity with any standard of law. 7. On the last date of hearing fixed for 23-6-2009, the learned counsel for the appellants appeared and almost reiterated the same arguments as advanced in the memo. of appeal. At the end of his arguments, he prayed that the case may be decided on merits. On the other hand, the Departmental Representative appearing on behalf of the respondent-Department also almost reiterated the same arguments as advanced in the parawise comments to the memo. of appeal and additional comments subsequently filed (placed on record) and rebutted the aforesaid arguments by the learned counsel for the appellants. 8. We have carefully perused the available case records and have anxiously considered the written as well as oral submissions made by the learned counsel for the appellants and the Departmental Representative for respondent-Department. We now intend to go into the, deeper appreciation of the factual legal issues involved in this case, in chronological, systematic and legally convincing manner, as given in the succeeding paras, so as to arrive at, the proper, just and fair decision in the instant appeal. 9. First Issue:

Whether it is a case of double jeopardy as the appellants have been charged with the allegation of sales tax liabilities pertaining to the tax period between November, 1998 to February, 1999 which has already been covered under show-cause notice issued "vide C. No. ST(STG Contra/06/99/4481, dated 24-5-1999 and decided by the ADR Committee and has attained finality

(a) The doctrine of "double jeopardy", which corresponds to the principle of "autre fois acquit and autre fois convict" prohibits a duplicate trial and, a duplicate punishment for the same offence. In this context, we would like to revert to the judgment of the Superior Court in the case of Mehran Motor Car Co. v. Collector of Customs (Appraisement), as reported in 2004 PTD 1482, wherein it has been held that:-

"Where the recovery of tax short-levied and imposition of the penalty in appropriate cases, operated into different fields and their area of operation was distinct, then the question of double jeopardy would not arise. If after the enforcement of demand on account of short levy, the Authority, through separate proceedings, again called upon the importer to pay the short levied amount, then the same would be a case of double jeopardy."

(b) Similarly, the superior judiciary has laid down certain principles which were well taken by the Honourable Sindh High Court at Karachi in a case reported as 2004 PTD 3020, in the following manner:--

"Neither any appeal was preferred by the Sales Tax Department assailing the findings nor any revisional proceedings were -initiated. The effect was "that the order passed by the Additional Collector Adjudication, attained finality having binding effect on the Sales Tax Department. Re-agitating of same issue by the Sales Tax Department is against all the principles of administration of justice and fair play. This course of action cannot be allowed because, firstly, it is against the principles of the administration of justice, secondly, it is discriminatory in nature, as any order passed in adjudication not assailed in appeal by an assessee, is always treated to be final and the same principle should be applicable to the Department; thirdly, it militates against the principles applicable to the tax matters, that the issues once settled and accepted by the Department shall not be allowed to be deviated, because it will create uncertainty which has always been deprecated and disapproved by the Superior Courts, Legislature, as well as the Board itself. Fourthly, in the present case the issue stands decided by an adjudicating order."

(c) At the very outset, the learned counsel for the appellants has contended that in view of the" recommendations of ADR Committee in the identical case of the appellants, the sales tax liabilities pertaining to the tax periods between November, 1998 to February, 1999 have already been discharged by the appellants, therefore, the said period may be expunged from the impugned order. In this context, he has produced a copy of Order issued by the C.B.R. (now FBR) and also referred to the reconciliation report submitted by the respondent-Department during the hearing proceedings at the first appellate stage. At this juncture, it would be appropriate to reproduce in extenso hereinunder, the relevant para of C.B.R. Order No. 4/2005, dated 11th January, 2005, which was issued in the wake of the recommendations of ADR Committee in the identical case of the appellants:

"It is abundantly clear that the matter pertaining to the sales tax liability for the tax periods of November, 1998 to February, 1999 have already been settled by the ADR Committee and the appellants have already deposited the due amount of tax as determined by the ADRC, therefore, it would be a case of double jeopardy, if the appellants are charged with the same allegation which has already been settled by depositing the due amount of .tax and thus, it has attained finality. The DR also conceded that sales tax liabilities pertaining to the tax periods of November, 1998 to February, 1999 have already been discharged by the appellants as determined by the ADR Committee."

(d) In view of the above stated position, the sales tax liabilities pertaining to the tax periods of November, 1998 to February, 1999 are ordered to be excluded from the impugned period involved in the instant case. 10. Second Issue:

Whether, the show-cause notice is barred by time under section 36 of the Sales Tax Act, 1990:---

(a) The learned counsel for the appellants has raised the contentious issue that the impugned show-cause notice is barred by time as the same has been issued on 31-12-2005 for the tax liabilities beyond" the statutory period of five years as provided under section 36(1) of the Sales Tax Act, 1990, and thus, all the subsequent proceedings are illegal and of no legal effect and the adjudged amount has no validity in the eyes of law. On the other hand, the Departmental Representative has rebutted the aforesaid argument of the learned counsel for the appellants by stating that during the impugned period, proviso to, section 36 of the Sales Tax Act, 1990, prevailed whereunder the period of five years was to be extended from the date of audit observations sent to the party. He has further asserted that the partial audit observations were issued to the appellant on 15-10-2004, as also admitted in the additional comments filed by the respondent-Department, therefore, the impugned show-cause notice is not entirely hit by time limitation as provide under section 36(1) of the Sales Tax Act, 1990. He has also produced a copy of partial audit observations along with his written arguments (placed on record). In this context, he has also referred to the judgment of Honourable Supreme Court of Pakistan in C.P.L.A. No. 1098 of 2006 in the case of Messrs West Pakistan Tanks Terminal (Pvt.) Ltd.

(b) At this juncture, it would be appropriate to reproduce the proviso to section 36(1) of the Sales Tax Act, 1990, hereinbelow which was enforced during the relevant period:

"36 (1). Where by reason of some collusion of a deliberate act, any tax or charge has not been levied or made or has been short-levied or has been erroneously refunded, the person liable to pay any amount of tax or charge or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show cause of payment of the amount specified in the notice.

Provided further that where a registered person is served with audit observations, the period of five years in subsection (1) and three years prescribed in subsection (2), for the issuance of show-cause notice shall be treated as extended from the date of serving of audit observation (s) to the date of issuance of show-cause notice.

(c) We are of the considered opinion that the arguments of the Departmental Representative on this issue are convincing enough as there is no denial of the fact that the partial audit observations were issued to the appellants by the respondent-Department on 15-10-2004, which has the same legal sanctity as of the show-cause notice under section 36 of the Sales Tax Act, 1990. However, if the period of time limitation as provided under section 36(1) of the Sales Tax Act, 1990, is reckoned from the date of partial audit observations i.e., 15-10-2004, then in such a situation the respondent-Department an raise their demand upto the period of October, 1999 and in this way, the impugned period beyond October-1999 is badly barred by time limitation as provided under section 36(1) of the Sales Tax Act, 1990, and hence, not sustainable in the eyes of law. So far the judgment of the Honourable Supreme Court of Pakistan is concerned, it is distinguishable from the facts and circumstances of the instant case, therefore, the same is not applicable.

(d) In view of the foregoing position, the sales tax liabilities beyond October, 1999, are barred by time limitation and, therefore, the t impugned Order-in-Appeal to the aforesaid extent is set aside. 11. Third Issue:

Whether the appellants are entitled to claim input tax adjustment of the tax paid at import stage which was not claimed in their monthly sales tax returns when pressed by the respondent-Department to pay the output tax due on their supplies

(a) The learned counsel for the appellants has taken the" plea that input tax is the vested right of the appellants due to the very reason that they have paid due tax at the time of importation. He however, conceded that the appellants have not filed the sales tax returns for the respective periods and therefore, they could not claim and adjust input tax in their monthly sales tax returns. On the other hand, the Departmental Representative has strongly opposed his aforesaid contention by slating that the appellants wilfully and deliberately did not declare their imports in the monthly sales tax returns in order to suppress their local taxable supplies. He has further asserted that in this way, they did not deposit the due tax on taxable supplies which was otherwise payable in accordance with the provisions of Sales Tax Act, 1990

(b) As regards tire input tax adjustment, the Departmental Representative is of the view that sales tax is payable in VAT mode and the whole system is based on self assessment mode. He has further argued that the appellants were required to claim their input tax adjustment in the relevant tax periods but they failed to do so and now at this belted stage, the input tax adjustment is not only barred by time in accordance with the expressed provisions of section 7 but the appellants are not even entitled to claim the same under the provisions of section 66 of the Sales Tax Act, 1990, as the statutory period for the input tax adjustment/claim of refund has already lapsed due to slackness of the appellants. He has further lamented that "equity aids the vigilant and not the indolent" and the appellants" claim of input tax adjustment has already lapsed due to their own slackness.

(c) After having anxiously heard the rival parties on this issue, we are of the" opinion that there is no denial on behalf of the respondent department that due tax was not paid * "the import stage. The retrieval of PRAL data" by the respondent department has further confirmed that the appellapts had paid tax" at the import stage. At this juncture, we would like to refer to subsection (1) of section 26 of the Sales Tax Act, 1990, which is reproduced in verbatim hereinunder for sake of convenience:--

"26(1). Every registered person shall furnish not later than the due date a true and correct return in the prescribed form to a designated bank or any other office specified by the Board, including the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed:

Provided that the Board may, by notification in the official Gazette, require any person or class of persons to submit returns on quarterly basis:

Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return of quarterly return:

Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of subsection (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures."

(d) It is obvious from the perusal of the case records that the appellants have not filed their true and correct sales tax returns indicating the purchases and supplies of the relevant tax periods and therefore, they could not claim their input tax in the relevant tax periods. The original Adjudicating Authority as welt as the learned Collector (Appeals) were required to invoke the penal provisions as provided under section 33(19) of the Sales Tax Act, 1990 for not filing the correct and true return for the relevant tax period but denial of input tax adjustment on this ground will amount to double taxation which is neither permissible nor maintainable in the eyes of law. Furthermore, the ADR Committee had already allowed input tax adjustment in the identical issue of the appellants for the tax periods of November, 1998 to February, 1999 and the respondent-Department had already implemented the F.B.R. Order No.4/2005, dated 11-1-2005, based on the recommendations of ADR Committee (placed on record). Therefore, denial of input tax adjustment in the subsequent periods of the instant case of the appellants will amount to discrimination, which is not sustainable in the eyes of law, being contrary to the principles of natural justice.

(e) The resume of the above deliberations is that the appellants are entitled to input tax adjustment subject to payment of tax due on their taxable supplies, which has been adjudged in the subsequent para, and by depositing a penalty of Rs.5000 per return for not filing the true and correct sales tax returns for the tax periods of November, December, 1999 and January, February, 2000 under section 33(19) of the Sales Tax Act, 1990.

12. Fourth Issue:

What should be the criteria of value addition

(a) That last but not the least issue involved in the instant case is the criteria of value addition. The learned counsel "for the appellants has reiterated his arguments that the respondent department has made 14% value addition on their DPV (Duty Paid Value) in order to arrive at the value of taxable supplies and the tax has been calculated on this value. He has further contended that the value addition made by the respondent department is arbitrary and capricious in nature. He has asserted that the goods were sold at lowest price due to stiff competition and market conditions. He has also invited our attention to the fact that presently F.B.R. has fixed 2% value addition for, commercial importers. On the other hand, the Departmental Representative has rebutted the arguments of the learned counsel for the appellants by stating that 14% value addition has been made after taking into consideration the post importation expenses incurred by the appellant such as LC margin, freight charges and nominal profit margin. He has also referred to the judgment of this Tribunal in the case of Messrs Moharaja Traders, wherein it has been declared that 14% value addition is reasonable and lawful. Contrary to the claim of the learned counsel for appellants, the learned DR has apprised this forum that F.B.R. has fixed 2% of the tax at the DPV for commercial importers rather than value addition as contended by the learned counsel for the appellants, besides the normal amount of tax through S.R.O. 645(I)/2007, dated 27th June, 2007. He has further asserted that since the said S.R.O. is effective from 27th June, 2007 and it is not relevant to the impugned period, therefore, the appellants cannot get the benefit of the said S.R.O.

(b) After having anxiously heard both the rival parties on this issue at length, we have no hesitation to observe that the impugned order passed by the learned Collector (Appeals) is vague so far as the actual liability of the appellants is concerned, as neither the respondent-Department is aware how much liability has been adjudged against the appellants nor the appellants are in comfortable position to explain how much tax is required to be paid by them. In order to resolve this controversy, the respondent-department was directed to come up with workable solution of the dispute and calculate actual liability of sales tax of the appellants and the case was adjourned for further arguments. On 23-6-2009, the respondent-Department filed their further written arguments along with payable liability of the appellants in the following two different modes:-

(i) Calculation @ 2% of tax on the value of taxable supplies; and

(ii) 14% value addition on the DPV (Duty Paid Value).

(c) The relevant calculations by the respondent-Department are reproduced below in extenso for ease of reference:--

Calculation @ 2% of tax on the value of taxable supplies:

14% value addition on the DPV (Duty Paid Value):

(d) After going through the overall circumstances of the case, we are of the considered opinion that section 7A was inserted in the Sales Tax Act, 1990, through Finance Bill 2003, assented on 16th June, 2003, enabling the Federal Government to fix percentage of value addition for certain class of persons. In this way, for the first time, "Special Procedure for Payment of Sales Tax by Commercial Importers on value addition" was prescribed by the Federal Board of Revenue in 2004-2005, whereunder the commercial importers were required to pay sales tax @ 14% value addition on the taxable supplies. Furthermore, according to the aforesaid procedure, 14% was a minimum value addition. Prior to this period, there was no prescribed procedure for commercial importers and different practices were prevalent in the department for the purpose of value addition. The case records transpire that the respondent-Department made out the instant case in the year 2004-2005, therefore," 14% value addition was taken into account for the purpose of taxable supplies. Thus, the value addition @ 14% worked our by the respondent-Department is reasonable and is in accordance with law and does not call for any interference. Furthermore, our this view is further strengthened by the fact that the appellants have already discharged their sales tax liabilities @ 10.39% value addition on their taxable supplies during the periods of November, 1998 and February, 1999, as determined by the ADRC, duly approved by the F.B.R. and accepted by the respondent-Department. 13. In view of the foregoing deliberations on the factual and legal issues involved, we are inclined to direct the respondent-Department to recover the sales tax @ 14% value addition on the taxable supplies of the appellants for the tax periods of November and December-1999 and January and February-2000, after allowing the input tax adjustment of the relevant period, which the appellants have already paid at the import stage. Since additional tax (now default surcharge) has already been remitted by the Board vide Order No.4/2005; dated 11th January, 2005, on the recommendations of ADR Committee, in the identical case of the appellants, therefore, the same is also remitted in the instant case, except the amount of penalty of Rs.5000 per return for not filing the true and correct sales tax return for the tax periods of November and December, 1999 and January and February, 2000, as discussed in the preceding Para. The impugned order-in-Appeal is, thus, modified to the aforesaid extent only. 14. This judgment consists of fourteen (14) pages, and each page bears out seals, signatures and corrections where found necessary. 15. Announced on 16-7-2009. 16. Attested copy of this judgment be dispatched to the concerned parties within ten (10). days of passing of the same. C.M. A./111/Tax(Trib.) Order accordingl

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