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Appeal No.7(107)ST/Trf of 2001, decided on 4th May, 2009.

----Ss. 13, 3, 14, 19 & 23---S.R.O. 580(I)191 dated 27-6-1991---S.R.O. 561(I)/94 dated 9-6-1994---S.R.O. 598(I)/90 dated 7-6-1990---S.R.O. 908(I)/92 dated 19-9-1992---S.R.O. 553(I)194 dated 9-6-1994---Exemption---Scope of tax---Manufacturing of Locomotives meant for Pakistan Railways---Supply of same without payment of sales tax leviable thereon as evident from the written statement of the manufacturer---Demand of sales tax---Appellant contended that factory was established in N.-W.F.P. and the sales tax was not payable for five years---Concession was not considered by the department while work carried on should have been also granted exemption---Qualifying condition was not considered meant for exemption and always the manufacturing date was considered and even the date was not considered according to the record of Locomotive Factory---Date of set up could easily be available from the record, which the department did not care to consider---However forum also did not consider that locomotives were neither saleable item nor meant for commercial purposes---Validity--Mandatory condition for exemption was the date "set up" and in accordance with "explanation" embodied in notification S.R.O. 580(I)/91 dated 27-6-1991 as amended vide S.R.O. 561(I)/94 dated 9-6-1994, it was the date on which the industry went into production, including trial production, and the said date was required to be intimated in writing by an intending manufacturer to the Assistant Collector of Sales Tax having jurisdiction in the area at least 15 days before commencing such production---Appellants had failed to satisfy the said mandatory condition of the notification as it neither applied for the exemption nor satisfied the mandatory provisions of Sales Tax Act, 1990---Appellants were not entitled to claim such exemption under said S.R.Os---Appellants were not registered person under Sales Tax Act, 1990, during the currency of such exemption notification, and thus were not entitled to claim such exemption---Appellants avoided registration under S. 14 of the Sales Tax Act, 1990 in spite of repeated notices and were compulsorily registered under S. 19 of the Sales Tax Act, 1990---Appellants in circumstances, were not entitled to claim exemption under S.R.O. 580(I)/91 dated 27-6-1991 as amended vide S.R.O. 561(I)/94 dated 9-6-1994 in circumstances.Collector Customs, Sales Tax and Central Excise and others v. Messrs Sanghar Sugar Mills Ltd., Karachi and others PLD 2007 SC 517 = 2007 PTD 1902; Messrs Bolan Chemicals (Pvt.) Ltd. v. Collector Sales Tax PLJ 1998 Quetta 151; PTCL 1988 CL 257(sic); PLD 1977 Lah. 1327; PTCL 1999 CL 533(sic) and PLD 1996 Lah. 718 rel.2008 PTD 1157 = PLD 2008 SC 446 distinguishable & irrelevant.

----Ss. 3 & 23---Scope of tax---Supply of Locomotives---Levy of sales tax---Appellants contended that manufacturing/assembling Locomotives was for their own usage and not for supplying the same to any other person---Locomotives (Railways Engines) were not independent marketable products, which could be sold in the market and were not liable to sales tax---Validity---Pakistan Railways and Pakistan Locomotive " Factory were both distinct registered persons---Both the registered persons were now under obligation to issue ,sales tax invoices in respect of supplies made to each other under S. 23 of the Sales Tax Act, 1990---Pakistan Locomotive Factory/Appellant had supplied Locomotives to Pakistan Railways without payment of sales tax and had violated S.3 of the Sales Tax Act, 1990---Stance taken by the appellants was not sustainable in the eyes of law and appellants were liable to pay sales tax on the taxable supplies of Diesel Engine Locomotives which were rolled out during the relevant period---Order in original was not suffering from any patent illegality, impropriety or material irregularity warranting any interference---Appeal was dismissed by the Appellate Tribunal. Sheikhoo Sugar Mills Limited v: Government of Pakistan 2001 PTD 2097 and Messrs WAPDA v. Collector of Central Excise and Sales Tax, Tax Forum of March 2002 on page 38 distinguishable. Usmani Associates v. Central Board of Revenue 2001 PTD 2982 rel. Messrs Engro Chemical Pakistan Ltd. v. Additional Collector of Customs 2003 PTD 777 ref.

----S.46(4)---Appeal to Appellate Tribunal---Jurisdiction and scope---Words "in relation to the matter before it"---According to sub-S.(4) of S.46 of the Sales Tax Act, 1990, the Appellate Tribunal, after giving the appellants an opportunity of being heard, may pass such-order in relation to the matter before it as it thinks fit---Words "in relation to the matter before it" apparently confine to the powers of the Appellate Tribunal to the subject-matter of appeal and apparently it cannot travel beyond the scope of the appeal or pass an order or give a direction which would work adversely to the appellant, who had filed an appeal against the decision or order of the lower Court---Appellant cannot be put in a worse position than what he was earlier.

----S.46(4)---Appeal to Appellate Tribunal---Appellate proceedings are the continuation of the original proceedings---Proceedings under the Sales Tax Act, 1990 do not come to an end with the passing of an order, if any of the rival parties files an appeal, the proceedings are kept alive; the appeal being only continuation of the original proceedings---Legal pursuit of a remedy through filing an appeal before the first and second appellate authorities are really but steps in a series of proceedings all connected by an intrinsic unity, are to be regarded as one legal proceeding---Appellate proceedings therefore are the continuation of the original proceedings. 2005 PTD (Trib.) 2262 rel.

---S.46---Appeal to Appellate Tribunal---Re-opening of entire matter---On filing of an appeal the entire matter reopens and becomes sub judice. PLD 1969 SC 1 rel.

---S.46---Appeal to Appellate Tribunal---Powers of Appellate Tribunal--Appellate Tribunal as the final fact finding authority is obliged to consider the question (s) of fact (s) and that is the reason that Appellate Tribunal has been entrusted with vast powers, so as to bring the factual issues involved in the case to surface which will help in arriving at the proper, legal, just and fair decision of a case.

----S.46---Appeal to Appellate Tribunal---Question of law---Pure question of law can be raised at any stage of the appeal depending upon the facts and circumstances of each case. Messrs Gatron (Industries) Ltd. v. Government of Pakistan, reported in 1999 SCMR 1072 and Haji Abdullah Khan v. Nisar Muhammad Khan PLD 1965 SC 6900(sic) rel.

----S.46---Appeal to Appellate Tribunal---Question of law not taken before the lower forum---Allowability---Question of law arising out of the facts of the case relating to the fundamental issues involved therein, even if was not raised before the lower forum, can be allowed to be taken before the higher forum and Appellate Tribunal for doing complete justice may, if the facts and circumstances of the case so demand, allow to raise a question of law which was not as such taken before the lower forum, it is, in fact, the function of the Appellate Tribunal, who is seized of the matter, to apply the correct law to meet the ends of justice. 2005 PTD 480 rel.

----S. 3---Scope of tax---Explanation and meanings of goods, taxable goods and taxable supply---Section 3 (1) of the Sales Tax Act, 1990 is a taxing section and consists of the components/constituents i.e. that the sales tax is to be levied/charged at the rate of 15% (now 16%) of the value of (i) taxable supply (ii) by a registered person (iii) in the course of furtherance of (iv) any taxable activity/business (v) carried on by him---Expressions used in S. 3 (1)(a) of the Sales Tax Act, 1990 and which are relevant for the purpose of resolving the controversy involved in the present case, are (i) taxable supply (ii) taxable activity, and (iii) in the course or furtherance of---Though the first two, but not the latter one and also not the word "business", have been defined directly under S. 2(28) or (41) and S.2(24) or (35), of the Sales Tax Act, 1990 yet for proper appreciation of their meaning, one has to revert back to the definitions of goods, taxable goods", supply and taxable supply"---Goods means and includes moveable property other than money and securities etc., and Taxable Goods means and includes the movable property other than those which have been exempted under S. 13 of the Sales Tax Act, 1990, supply means and includes sale, transfer and other disposition of goods and taxable supply means supply of taxable goods other than supply of goods which are exempt under S. 13 of the Sales Tax Act, 1990. Messrs Mayfair Spinning Mills Ltd. Lahore v. Customs Excise and Sales Tax Appellate Tribunal, Lahore and 2 others PTCL 2002 CL 115; Dawood Hercules Chemicals Ltd. v. Collector of Sales Tax, Lahore 2007 PTD 1161; Messrs Al-Hilal Motors Stores and others v. The Collector, Sales Tax & Central Excise (East) Karachi and others 2004 PTD 868 and Collector of Customs through Additional Collector, Hub v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench and others 2007 SCMR 1705 ref.

----S.13---S.R.O. 580(I)/91 dated 27-6-1991---S.R.O. 561(I)/94 dated 9-6-1994---S.R.O. 598(I)/90 dated 7-6-1990---S.R.O. 908(I)/92 dated 19-9-1992---S.R.O. 553(I)/94 dated 9-6-1994---Exemption---Object behind S.R.O. 580(I)/91 dated 27-6-1991 was to facilitate the new investors after satisfying the qualifying mandatory conditions of the said S.R.O. while specific exemption was available to Pakistan Railways under S.R.O. 598(I)/90 dated 7-6-1990 as amended vide S.R.O. 908(I)/92 dated 19-9-1992, which the appellant availed during the said period of exemption and supplies made by the appellant became liable to sales tax after issuance of the rescinding S.R.O. 553(I)/94 dated 9-6-1994-- Appellants were not entitled to avail general exemption under S.R.O. 580(I)/91 dated 27-6-1991 in circumstances. Collector Customs,. Sales Tax and Central Excise and others v. Messrs Sanghar Sugar Mills Ltd., Karachi and others PLD 2007 SC 517 = 2007 PTD 1902 rel.

----Ss.13 & 19---S.R.O. 580(I)/91 dated 27-6-1991---Exemption---Exemption under S.R.O. 580(I)/91 dated 27-6-1991 was available only to the registered person under Sales Tax Act, 1990 while the. appellants were not registered even in 1993 and they deliberately avoided sales tax registration for almost six years despite repeated notices---As a last resort, the department compulsorily registered the appellants.

----S.13---S.R.O. 580(I)/91 dated 27-6-1991---Exemption---Notification of exemption explicitly mentioned that the same shall be effective for a period of five years commencing from 1st July, 1991 and it was clear that such exemption was available under the S.R.O. 580(I)/91 dated 27-6-1991 i.e. 1st July, 1991 to 30th June, 1996, to those units, who could satisfy the mandatory qualifying conditions---Plea of the appellants that exemption was available to them under said S.R.O. for the period 1993 to 1998 was not tenable because they could not satisfy the qualifying mandatory conditions.

----S.13---Exemption---When exemption in regard to any goods or person is granted subject to fulfilment of certain conditions, the exemption so provided for is not to operate unless the conditions are satisfied---Before claiming the benefit of exemption, the conditions laid down in the exemption granting notification, the claimants have to satisfy the department that their claim strictly falls within the purview of the exemption granting notification. PTCL 1988 CL 257(sic); PLD 1977 Lah. 1327; PTCL 1999 CL 533(sic) and PLD 1996 Lah. 718 rel.

----SS.66, 7(2) & 23---Refund to be claimed within one year---Adjustment of input tax---Limitation---Period of limitation for claiming input tax adjustment/refund was one year under S. 66 of the Sales Tax Act, 1990 and that was also barred by time under the provisions of Sales Tax Act, 1990---Input tax adjustment could only be made during the relevant tax period which the appellants have failed to do so---Appellants were not entitled for the adjustment of input tax at present belated stage---Appellants failed to perform their statutory obligation under the Sales Tax Act, 1990---Input tax adjustment was neither permissible under the Sales Tax Act, 1990 nor the said statute allows right of such delayed input tax adjustment facility to the registered person. Messrs Mayfair Spinning Mills Ltd. Lahore v. Customs Excise and Sales Tax Appellate Tribunal, Lahore and 2 others PTCL 2002 CL 115 ref. Collector, Sales Tax and Central Excise (West), Karachi v. Messrs Al-Hadi Industries (Pvt) Ltd. 2002 PTD 2457; Messrs Cherat Electric Company Limited. Nowsliwera v. The Collector, Sales Tax & Central Excise," Peshawar and another 2002 PTD (Trib) 1525 and Messrs Rainbow Industries v. Collector of Customs and others C.P. 469 of 2004 rel.

----Ss. 34 & 33---Additional tax---Penalties---Appellant contended that they were Government owned enterprise and no wilful evasion of tax was involved---Imposition of additional tax (defendant surcharge) and penalty was uncalled for---Department contended that appellants have violated the explicit provisions of Sales Tax Act, 1990 by not paying the due sales tax on the supply to locomotives and it was a wilful default on their part--Appellants were liable to pay additional tax (default surcharge) and penalty prescribed under the law---Validity---Appellants wilfully and deliberately avoided their statutory obligations under the Sales Tax Act, 1990 as there was abundantly clear indication in the L-1 Licence issued to them by the department in 1993 that their product was chargeable to Sales Tax---Even after compulsory registration, they rolled out thirteen Diesel Engine Locomotives and deliberately avoided to pay leviable sales tax thereon. PLD 1991 SC 963 ref. 2008 PTD 1461 distinguished. Qazi Waheeduddin, Anwar Saeed Dawar, Managing Director of the Appellants for Appellants. Abdul Latif Yousafzai, Muhammad Zubair Shah, A.C., Haroon Khattak, Senior Auditor and Dost Muhammad, Senior Auditor for Respondents. Dates of hearing: 17th, 25th November, 2nd December of 2008, 12th January, 10th, 12th, 19th, 26th of February and 16th March, 2009.

This appeal has been filed by Messrs Pakistan Locomotive Factory, Risalpur (hereinafter called as the appellants) against the Order-in-Original No. 20/2000, dated 6-3-2000, passed by the Additional Collector of Sales Tax & Central Excise, Peshawar (hereinafter called as the respondent No.1). 2. Precisely, the stated facts as recapitulated from the available record of the case are that during the course of audit of the accounts of the appellants, it was observed that they were engaged in manufacturing Locomotives meant for Messrs Pakistan Railways and were supplying the same without payment of sales tax leviable thereon, which was clearly evident from the written statement of Mr. Ikramullah, Khan, Production Manager, dated 9-7-1999, that 23 number of locomotives, each carrying value of Rs.134, 88 million, were supplied but failed to pay sales tax amounting to Rs.38,77,80,000 levied under section 3 of the Sales Tax Act, 1990, without showing any plausible reasons. Hence, the non-payment of sales tax also attracted additional tax (to be calculated at the time of actual payment). They had also not registered themselves as required under section 14 of the Sales Tax Act, 1990. Accordingly, a show-cause notice was issued to the parties and after. hearing them, the then learned Additional Collector of Sales Tax & Central Excise, Peshawar vide his Order-in-Original No.2012000, dated 6-3-2000, ordered as under:-

"6. I have examined the case record and considered the written as well as verbal submissions of the respondents. Supplied required by Pakistan Railways for its operation were exempted from sales tax vide S.R.O. 598(I)/90, dated 7-6-1990 as amended vide S.R.O. 908(I)/92, dated 19.-9-1992. The said exemption was no longer available as S.R.O. 598(I)/90 was superseded by Notification S.R.O. 553(I)/94, dated 9-6-1994 and hence the supplies became liable to sales tax. According to record placed before me, the unit was set up somewhere in September, 1993 when area exemption under S.R.O. 580 (I)/91, dated 27-6-1991, was in the field. The exemption under this notification was available to goods produced or manufactured by the industries which were set up in the N.-W.F.F. and Province of Balochistan except HUB Chowki area between 1st July, 1991 and 30th June, 1996. The qualifying condition for the exemption is the date of set up and an explanation to this effect has been embodied in the notification as reproduced below:--

"Explanation:---For the purpose of, this notification, the expression "set up" shall mean the date on which the industry goes into production including trial production, which date shall" be intimated, in writing by an intending manufacturer to the Assistant Collector of Sales Tax having jurisdiction in the area at least fifteen days before commencing such production.

7. The management despite of the repeated demands could not produce any written evidence showing that they had intimated the date of "set up" to the concerned Assistant Collector within the stipulated period. Thus, the exemption on this score also could not be availed.

8. Moreover, the management"s this contention that Pakistan Railways work on non commercial basis and supply to its own usage is also without any legal force. Section 2(35) defines taxable activities as "any activity which is carried on by any person whether or not for a preliminary profit and involved in whole or in part the supply of goods to any other person whether for any consideration or otherwise and includes any activity carried on in the form of a business or trade or manufacture".

9. It is also important to note that M/s. Pakistan Locomotive Factory was registered compulsorily after serving notice under section 19 of the Act and were registered vide certificate of registration dated 1-6-1999 vide Registration Nc.5-4-8602-001-46, which shows that they have avoided being registered after repeated notices.

10. During the period between December, 1993 to August, 1997, the unit has reportedly supplied twenty three (23) locomotives each carrying value of Rs.134.88 million. According to the data provided by the management, three locomotives serial number 8301, 8302, 8303 were rolled out on 2-12-1993, 30-3-1994 and 9-5-1994 respectively. During this period, the exemption under S.R.O. 598(I)/90 as amended vide S.R.O. 908(I)/90, dated 19-9-1992 was available. Therefore, these three locomotives should enjoy the exemption from sales tax. The remaining units are liable to sales tax as the exemption was no longer available nor the management had fulfilled the mandatory conditions to avail of the exemption under S.R.O. 580(I)/91, dated 27-6-1991. The respondents may be allowed input tax adjustment subject to valid evidence of tax payment on purchase or imports and if it is otherwise due.

11. I therefore, order the respondents to .a sales tax reduced to the tune of Rs.33,7200,000 or the amount to be determined after adjustment of input tax on the basis of valid input documents to twenty (20) locomotives only if it is due. The additional tax is also levied under section 34 of the Sales Tax Act, 1990, which will be calculated till the actual date of payment. The unit has been compulsorily registered under section 19 of the Act. Therefore, violation of the provisions of sections 3, 6, 14, 22, 23, 26 of the Act is established. A penalty of 5% and 10% of the tax involved is also imposed as provide under subsection 2(a) (cc) and Clauses (a) and (b) of subsection (3) of the section 33 of the Act. The Deputy Collector Sales Tax (Recovery) is advised to determine the entire liabilities of the said unit and raise demand notice in accordance with Sales Tax Recovery Rules, 1992." 3. Being aggrieved by the Order-in-Original No.20 of 2000, dated 6-3-2000, the appellants filed an appeal before this Tribunal on, inter alia, the following grounds.

(a) that in pursuance of the show-cause notice dated 23-12-1999 the impugned sales tax was levied by the respondent;

(b) That the respondent failed to look into the reply submitted by the appellants of show-cause notice. The natural hearing, which is provided under every Act/statutes was not afforded to the appellants;

(c) that the alleged tax was imposed on report by the audit of the account of the appellants;

(d) that the appellants were engaged mainly in reconditioning the locomotives engines or the new engines were assembled and the components purchased used in locomotives were already covered with the payment of sales tax and customs duty.

(e) that these locomotives when assembled/produced are used for the convenience of the public utility and thus, are not liable for the payment of sales tax;

(f) that it is wrong notion that the written record does not provide any material in respect of the working of the Locomotive Factory in respect of assembling of partial knocked down locomotives which is not a complete manufacturing process. That mainly factory was established in N.-W.F.P. as the sales tax was not payable under S.R.O. for five years and thus, concession was not all considered by the respondent and the work carried on after 9-6-1994 would have been also, granted exemption. The qualifying condition was not considered vide S.R.O. meant for exemption and always the manufacturing date is considered and the date was not considered according to the record of the Locomotive Factory. The date of set up can easily be available from the record, which the respondent did not care to consider. The lower Court also did not consider that locomotives are neither saleable item nor meant for commercial purposes;

(g) that according to para 3 of the judgment, the amount calculated is misconceived and against the record of the appellants and the supply is also ignored along with the input tax "which clearly means that the order of levying of the sales tax is improper and without any detail and the order is liable to be set aside on this score alone; and

(h) that the impugned order is against the law and facts of the case and the instant appeal of the appellants be accepted. 4. Consequently, the appellants filed additional grounds of appeal, which are reproduced below in verbatim:-

(a) that Section 3 of the Sales Tax Act, 1990, provides that; subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of fifteen per cent of the value of:

(a) taxable supplies made in Pakistan by a registered person in the course of furtherance of any taxable activity carried on by him.

Taxable activity is defined in section 2 (35), which provides:

"any activity carried on by any person, whether or not for pecuniary profit, and involved in whole or in part, the supply of goods to any other person, whether for any consideration or otherwise, and includes any activity carried on in the form of business, trade or manufacture."

Whereas, the appellants are manufacturing/assembling loco-motives for their own usage and are not supplying the same to any other person. It is further submitted that Locomotive (Railways Engines) are not independent marketable products, which could be sold in the market and therefore, are not liable to sales tax.

(b) that the Honourable superior Courts of Pakistan, while interpreting the provisions under consideration, have already held that to decide whether certain goods are leviable to sales tax or not, the marketability of the goods has to be addressed as well, Sheikhoo Sugar mills Limited v. Government of Pakistan (2001 PTD 2097). It is submitted that the goods being manufactured are not marketable. In Usmani Associates v. Central Board of Revenue (2001 PTD 2982), the Honourable Karachi High Court, while addressing the question of marketability of the goods in that case, held that they were not leviable to sales tax as they had been manufactured for a specific purpose and certain specifications. They therefore, could not be used for any purpose other than for which they were manufactured. They further elaborated that no tax should be levied on the sole ground that the goods are capable of being sold in the market;

(c) that there is no mala fide involved on the part of the appellants. Therefore, the demand of additional tax and imposition of penalty is without lawful authority;

(d) that around Rs.1081.985 million sales tax was paid on raw materials and kits purchased/imported by the appellants. The adjustment of the same has not been allowed till date. Asking the appellants to pay sales tax once again without allowing the adjustment would amount to double taxation;

(e) that the abovementioned grounds are very necessary to be considered to meet the ends of justice; and 5. After abolishment of the post of Collector (Appeals) Rawalpindi, the instant appeal was dispatched to Customs, Central Excise & Sales Tax Appellate Tribunal, Islamabad Bench for disposal. The very first hearing was held in the instant case by a Division Bench of Islamabad"s Tribunal on 30-1-2001. Anyhow, the case could not be decided earlier for one reason "or the other and the first hearing was fixed in the instant case before the present Division Bench on 17-11-2008. Subsequently, hearings were held on eight different dates. The final hearing was held on 16-3-2009. During the course of hearings, the D.R. filed parawise comments to the memo. of appeal, which are placed on file" and the learned counsel for the appellants filed written arguments (rejoinder) thereto, which are also placed on file. 6. On the last date of hearing fixed for 16-3-2009, the learned counsel for the appellants along with Managing Director of the unit appeared and almost reiterated the same arguments as advanced in the memo. of appeal as well as in the additional grounds of appeal filed by the appellants. He also referred to a number of citations in different cases in support of his contentions, which are also placed on file and the same will be discussed in the succeeding paras. On the other hand, the learned counsel for the respondents along with representatives of the respondent-department" controverted the arguments advanced by the learned counsel for the appellants and also referred to some citations in other cases, placed on record, in support of their contentions, which shall also be discussed in the succeeding paras. 7. We have carefully perused the available case record and have anxiously considered the written as well as oral submissions made by the learned counsel for the appellants and the respondents. At the outset we would" like to refer to the case of Messrs Engro Chemical Pakistan Ltd. v. Additional Collector of Customs reported as 2003 PTD 777 wherein the Honourable Court has observed that:--

"the law is well-settled, that every judicial order should be a speaking order and particularly in tax matters where the scope of appeal/reference before the High Court is very limited. In the absence of speaking orders the High Court finds it difficult to decide the questions of law, for under section 36-C of the Central Excise Act, 1944 and under the analogous provisions of Customs Act and Sales Tax Act only such questions of law can be raised before the High Court as arise out of the order of the Tribunal. Thus, if the learned Tribunal fails to pass proper judicial order, by considering all the facts and points of law raised before it, amounts to negation of justice. The Tribunal is always required to dilate upon all the questions of facts and law agitated before it, so that, the High Court is not handicapped in deciding the questions of law." 8. In the wake of the above cited judgment, we now intend to go into the deeper appreciation of the factual and 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. However, at the very outset, we would like to discuss comprehensively the background of this case. Messrs Pakistan Locomotive, Risalpur (the appellants) are the Federal Government establishment under the Ministry of Railways. The appellants are engaged in the manufacturing and assembling of Locomotives (Diesel/Electric Engines) and repair of their components and supply the same to Messrs Pakistan Railways. All in house manufacturing of Locomotives in Risalpur (having certain specification) is for its own railway operations, which is a public amenity. These Locomotives are (admittedly) not sold to the public sector, however, like all other Government Departments, the appellants were also liable to pay the federal taxes including sales tax. In fact, the appellants" unit is an independent entity having separate registration number now as compared to Messrs Pakistan Railways, which is an associated person as defined under section 2(3) of the Sales Tax Act, 1990. These two entities operate under common management and control, but now they issue sales tax invoices separately pertaining to the supply made to each other. Reportedly, the appellants had avoided registration under section 14 of the Sales Tax Act, 1990, inspite of repeated notices issued by the Sales Tax Department and ultimately, they were compulsory registered on 1-6-1999 under section 19 of the Sales Tax Act, 1990 and were issued Registration No. 05-048602-001-46. Consequently, the Collectorate of Sales Tax, Peshawar made out a contravention case against the appellants on account of non-payment of massive amount of due sales tax and for violations of various provisions of the Sales Tax Act, 1990. They had made taxable supplies as defined under section 2(41) of the Sales Tax Act, 1990 valuing Rs.2697.60 million and thus, they had evaded the principal amount of sales tax worth Rs.337.200 million in violation of sections 3, 6, 14, 22, 23, 26 ibid. The aforesaid contravention case was decided vide Order-in-Original No.20/2000, dated 6-3-2000, however, being aggrieved, the appellants have tiled the instant appeal. 9. First Issue:--Whether this Tribunal can travel beyond the scope of the subject-matter of the appeal and factual and legal issues neither raised in the show-cause notice nor agitated at the original stage of adjudication nor at the first appeal stage can be considered by it

(a) The learned counsel for the respondents has raised a preliminary objection relating to the jurisdiction of this Tribunal on the ground that it cannot travel beyond the scope of the subject-matter of the appeal and the factual and legal issues neither raised in the show-cause notice nor agitated at the original stage of adjudication nor at the first appeal stage cannot be considered at this stage by the Appellate Tribunal. On the other hand, the learned counsel for the appellants has argued that the points of facts and law can be raised at any stage during the appeal proceedings and a number of judgments by the superior Courts lend credence to his observation in this behalf. We, however, need to examine the aforesaid contentions by the learned counsel for the appellants as well as the respondents to examine its legal standing in the eyes of law.

(b) According to subsection (4) of sections 46"of the Sales Tax Act, 1990, the Appellate Tribunal, after giving the appellants an opportunity of being heard, may pass such orders in relation to the matter before it as it thinks fit. We observe that the word "in relation to the matter before it" apparently confines the powers of the Appellate Tribunal to the subject-matter of appeal and apparently it cannot travel beyond the scope of the appeal or pass an order or give a direction which would work adversely to the appellant, who has filed an appeal against the decision or order of the lower Court. It is well-settled principle in law that an appellant cannot be put in a worse position than what he was in earlier.

(c) It is also well settled principle in law that the proceedings under the Act do not come to an end with the passing of an order. If any of the rival parties files an appeal, the proceedings are kept alive; the "appeal being only continuation of the original proceedings. The legal pursuit of a remedy through filing an appeal before the first and the second appellate authorities are really but steps in a series of proceedings all connected by an intrinsic unity, are to be regarded as one legal proceeding. Thus, the appellate proceedings are the continuation of the original proceedings. In support of our aforesaid observation, we place reliance on the case-law cited in the case, reported in 2005 PTD (Trib.) 2262.

(d) In fact, on filing of an appeal, the entire matter reopens and becomes sub judice. We also place reliance in this behalf on the case law cited in the case, reported in PLD 1969 SC 1. Moreover, Appellate Tribunal as the final fact finding authority is obliged to consider the question (s) of fact (s) and that is the reason that Appellate Tribunal has been entrusted with vast powers, so as to bring the factual issues involved in the case to surface which will help in arriving at the proper, legal, just and fair decision of a case.

(e) We notice that in the case of Messrs Gatron (Industries) Ltd. v. Government of Pakistan, reported in 1999 SCMR 1072, the Honourable Court has observed that a pure question of law can be raised at any stage of the appeal depending upon the facts and circumstances of each case. This view has reaffirmed the earlier view taken by the Supreme Court in the case of Haji Abdullah Khan v. Nisar Muhammad Khan, reported in PLD 1965 SC 6900(sic).

(f) By also placing our reliance on the judgment, reported in 2005 PTD 480, it is now settled principle of law that a question of law arising out of the facts of the case relating to the fundamental issues involved therein, even if was not raised before the lower forum, can be allowed to be taken before the higher forum and this Tribunal for doing complete justice may, if the facts and circumstances of a case so demand, allow to raise a question of law which was not as such taken before the lower forum. It is, in fact, the function of this Tribunal, who is seized of the matter, to apply the correct law to meet the ends of "Justice. Also in the case of Garton (Industries) Ltd. v. Government of Pakistan, reported in 1999 SCMR 1072 the Court has held that even when leave is not granted on a point, the same can be allowed to be canvassed in appeal if it is necessary for doing complete justice in a case or a matter pending before the Court as contemplated by sub-Article (1) of Article 187 of the Constitution.

(g) In view of the above stated position, dicta of the superior Court and extenuating circumstances of the instant case,- we are inclined to agree with the consideration of the learned counsel for the appellants on the said issues. 10. Second issue:-- Whether the appellants were liable to pay sales tax on the supplies of their product i.e. DE Locomotives

(a) The learned counsel for the appellants has raised the contentious issue that supply was not made in furtherance of taxable activity; therefore, the appellants could not be saddled with the liability of paying sales tax. He has also placed his reliance on the judgment of the Honourable Supreme Court of Pakistan in the case of Messrs Sheikhu Sugar Mills Ltd. v. Government of Pakistan reported in 2001 SCMR 1376 = 2001 PTD 2097 (para. 9-G). He has also referred to the judgment of the Honourable Lahore High Court, Lahore in the case of Messrs WAPDA v. Collector of Central Excise and Sales Tax, reported in Tax Forum of March, 2002 on page 38, wherein it has been held that printing material and computer stationery being prepared by the printing press owned by the WAPDA for the exclusive use in the office throughout Pakistan does not attract levy of sales tax.

(b) After careful examination of the aforesaid citations made by the learned counsel for the appellants, we are of the considered opinion that Messrs Pakistan Railways and Messrs Pakistan Locomotive Factory are now both distinct registered persons. So far as supplies to each other are concerned, both the registered persons are now under obligation to issue sales tax invoices in respect of supplies made to each other under section 23 of the Sales Tax Act, 1990. Furthermore, the departmental representative of the respondent department has also invited our attention towards the focal issue and also produced documents in this context showing that another associated person of Messrs Pakistan Railways namely Messrs Kohat Concrete Sleepers which is engaged in taxable activities, is registered under the Sales Tax Act, 1990 and is charging sales tax while supplying concrete sleepers to Messrs Pakistan Railways. In view of the aforesaid legal and factual position, we are inclined towards the submissions made by the learned counsel for the respondent department as well as by the Departmental Representative that Messrs Pakistan Locomotive Factory have supplied Locomotives, to Messrs Pakistan Railways without payment of sales tax and thus, they have violated section 3 of the Sales Tax Act, 1990. Therefore, the "interpretation regarding scope of tax i.e. section 3 made by the learned counsel for the appellants is not tenable in circumstances of the case as enumerated above.

(c) Furthermore, the facts of the instant case of the respondents are not identical with the facts of quoted cases, therefore, .citations referred to by the learned counsel for the appellants are not applicable to the instant case. In this regard, we place reliance on the judgment in the case of Messrs Usmani Associates Sub Proprietary Firm v. Central Board of Revenue and another, reported in 2001 PTD 2982 wherein it has been held that:--

"When sales tax is charged.---Sales tax is charged, levied and paid only when taxable supply is made in the course or furtherance of "taxable activity". Definition of "taxable activity" lays down in clear and unambiguous terms that it involves in whole or in part the supply of goods to any other person, which is the condition precedent for the levy of sales tax." Yet in the case of Messrs Mayfair Spinning Mills Ltd. Lahore v. Customs Excise and Sales Tax Appellate Tribunal, Lahore and 2 others, reported in PTCL 2002 CL 115 (H.C. Lah), it has been held by the Court that:--

"Chargeability of sales tax is provided under section 3 of the Act, which enunciates that there shall be charged, levied and paid a tax known as sales tax at the rate of 15% (now 16%) of the value of taxable supplies made in Pakistan by a registered person in the course or furtherance of any taxable activity carried on by him and goods imported into Pakistan."

Section 3 is the charging section, which creates a charge on all taxable supplies made in Pakistan by a registered person in the course or furtherance of any taxable activity carried on by him and on all goods imported. In other words under section 3 of the Sales Tax Act, 1990 is chargeable on value of taxable supplies.

(e) Likewise, in the case of Dawood Hercules Chemicals Ltd. v. Collector of Sales Tax, Lahore, reported in 2007 PTD 1161, it has been held therein that sales tax is leviable on taxable supply made in Pakistan by a registered person in course or in furtherance of taxable activity.

Similarly, in other case of Messrs Al-Hilal Motors Stores and other v. The Collector, Sales Tax & Central Excise (East) Karachi and others, reported in 2004 PTD 868, it has been held therein that in terms of the provisions contained in section 3 of the Sales Tax Act, 1990, which is the charging section, the sales tax shall be charged, levied and paid on taxable supplies made in Pakistan by a registered person in the course or in furtherance of any taxable activity carried on by him.

Furthermore, in the case of Collector of Customs through Additional Collector, Hub v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench and others, reported in 2007 SCMR 1705 = 2007 PTD 2275, it has been held therein that when liability to pay tax would arise: The quantum of tax liability is determined on the basis of value of taxable supply, while the liability to pay tax under section 3(1) of the Act arises only when such supply is made in the course or in furtherance of taxable activity.

(f) Section 3(1) of the Act is a taxing section. Section 3(1)(a) consists of the components/constituents as follow; the sales tax is to be levied/charged at the rate of 15% (now 16%) of the value of (i) taxable supply (ii) by a registered person (iii) in the course or furtherance of (iv) any taxable activity/business (v) carried on by him. The expressions used in section 3(1) (a) and which are relevant for the purpose of resolving the controversy involved in this case are (i) taxable supply (iv) taxable activity, and (iii) in the course or furtherance of. Though the first two, but not the latter one and also not the word "business", have been defined directly under section 2(28) or (41) and section 2(24) or (35), yet for proper appreciation of their meaning, one has to revert back to the definitions of goods, taxable goods, supply and taxable supply. Goods means and includes movable property other than money and securities etc., and Taxable Goods means and includes the movable property other than those which have been exempted under section 13 of the Act, supply means and includes sale, transfer and other disposition of goods and taxable supply means supply of taxable goods other than supply of goods which are exempt under section 13 of the Act.

(g) In view of the above legal and factual position, the stance taken by the learned counsel for the appellants is not sustainable in the eyes of law and the appellants were liable to pay sales tax on the taxable supplies of DE Locomotives, during the period related to this case. 11. Third Issue:--Whether the appellants were entitled to claim exemption from payment of sales tax under S.R.O. 580(I)/91 dated 27-6-1991

(a) Before dilating upon this issue, it would be appropriate to bring all the facts on record and also the true perspective of S.R.O. 580(I)/91 dated 27-6-1991. Exemption from payment of sales tax in specified areas was available under S.R.O. 580(I)/91 dated 27-6-1991 as amended vide S.R.O. 561(1)/94 dated 9-6-1994 for supply of goods produced or manufactured by industries which were "setup" in the N.-W.F.P. and Province of Balochistan except Hub Chowki area between the 1st July, 1991 and 30th June, 1996. Conversely, supplies required by Messrs Pakistan Railways for its operations were exempted from sales tax vide S.R.O. 598(I)/90 dated 7-6-1990 as amended vide S.R.O. 908(I)/92 dated 19-9-1992: However, the said exemption was no longer available as S.R.O. 598(I)/90 was superseded by notification S.R.O. 553(I)/94 dated 9-6-1994 and hence, the supplies became liable to sales tax: Perusal of the case records reveals that the appellant"s such plea was considered at the original stage of adjudication and the learned Additional Collector held in the order-in-original as follows:--

"According to the data provided by the management of the unit, three locomotives were rolled out on 2-12-1993, 30-3-1994 and 9-5-1994 respectively. During this period, the exemption under S.R.O. 598 (I)/90, dated 7-6-1990 as amended vide S.R.O. 908(I)/92, dated 19-9-1992 was available. Therefore, these three units should enjoy the exemption from sales tax. The remaining units are liable to sales tax."

(b) Under such circumstances, the question arises when specific S.R.O. of exemption was available and the appellants took advantage of the same, then how they can claim exemption available under the general S.R.O. In our opinion, the objective behind S.R.O. 580 (I)/91 was to facilitate the newly investors after satisfying the qualifying mandatory conditions of the said S.R.O. while specific exemption was available to Messrs Pakistan Railways under S.R.O. 598(I)/90, dated 7-6-1990 as amended vide S.R.O. 908(I)/92, which the appellants availed during the said period of exemption and the supplies made by the appellants to Messrs Pakistan Railways became liable to sales tax after issuance of the rescinding S.R.O. 553(I)/94 dated 9-6-1994. By placing reliance on the judgment passed in the case of Collector Customs, Sales Tax and Central Excise and others v. Messrs Sanghar Sugar Mills Ltd., Karachi and others, reported in PLD 2007 SC 517 = 2007 PTD 1902 the Court has held that it is statutory authority under subsection (2) of section 13 which vests in Federal Government the power to exempt any taxable supply or goods or class of goods from whole or any part of tax subject to conditions, limitations. In view of the aforesaid clear position, we .are of the view that the appellants were not entitled to avail general exemption under S.R.O. 580(I)/91 dated 27-6-1991.

(c) We notice that the submissions made by the respondent department on the instant issue of exemption also carry weight to the effect that the mandatory qualifying condition for exemption was the date of "Set up" and in accordance with "explanation" embodied in notification S.R.O. 580(I)/91 dated 27-6-1991 as amended vide S.R.O. 561(I)/94, dated 9-6-1994, it is the date on which the industry goes into production, including trial production, and the said date was required to be intimated in writing by an intending manufacturer to the Assistant Collector of Sales Tax having jurisdiction in the area at least 15 days before commencing such production. The appellants had failed to satisfy the said mandatory condition of the notification as it neither applied for the exemption nor satisfied the mandatory provisions of Sales Tax Act, 1990. Hence, they were not entitled to claim such exemption under the aforesaid S.R.Os. Moreover, the appellants were not registered person under the Sales Tax "Act, 1990, during the currency of the aforesaid exemption notification, therefore, they were not entitled to claim such exemption. It was further argued by the learned counsel, for respondents and Departmental Representative that the appellants avoided registration under section 14 of the Sales Tax Act, 1990 inspite of repeated notices issued by the respondent department. Consequently, they were compulsorily registered on 1-6-1999 under section 19 of the Sales Tax Act, 1990, having sales tax registration No. 5-4-8602-001-46, duly communicated to them vide letter C. No. ST/Reg (U.R) 05/99/377 dated 3-6-1999.

(d) As regards the contention of the learned counsel for appellants that the appellants set up the industry in 1993 and the information was provided to the Assistant Collector Sales Tax, Peshawar through their letter dated 18-2-1993, and hence facility of exemption from payment of sales tax was available to them for five years i.e. from 1993 to 1998, is a failed attempt on the part of the appellants due to the non-fulfilment of the following conditions : -

(i) From the perusal of S.R.O. 580(I)/91, dated 27-6-1991, it is crystal clear the exemption under the said S.R.O. was available only to the registered person under the Sales Tax Act, 1990 while the appellants were not registered in 1993 and they deliberately avoided sales tax registration for almost six years despite repeated notices. As a last resort, the respondent department compulsorily registered the appellants on 1-6-1999 under section 19 of the Sales Tax Act, 1990.

(ii) The appellants vide their letter dated 18-2-1993, addressed to the Assistant Collector, Customs and Central Excise, Sales Tax, Peshawar for issuance of L-1 Licence to the appellants" company did not mention therein regarding availing of exemption under S.R.O. 580(I)/91 dated 27-6-1991, "as amended vide S.R.O. 561(I)/94 dated 9-6-1994, apart from not fulfilling other mandatory conditions of the said S.R.O.

(iii) It has been explicitly mentioned in the said notification that the same shall be effective for a period of five years commencing from 1st July, 1991. In this way, it is clear that such exemption was available under the said S.R.O. i.e. 1st July, 1991 to 30th June, 1996, to those units, who could satisfy the mandatory qualifying conditions. Therefore, the plea of the learned counsel for the appellants that exemption was available to them under the said S.R.O. for the period 1993 to 1998 is not tenable because they could not satisfy the qualifying mandatory conditions.

(iv) Furthermore, in our opinion, this issue has already been settled by the Honourable Balochistan High Court in case of Messrs Bolan Chemicals (Pvt.) Ltd. v. Collector Sales Tax reported as 1998 PLD 3064, on which the learned counsel for appellants has also relied upon. Relevant part of the above referred judgment is reproduced for ease of reference:--

"This facility of exemption from sales tax, can only be enjoyed by the intended manufacturer. up to 30th June, 1996, for the reason that paragraph 3 of the original notification in explicit terms has stated that this notification shall be effective for a period of eight years, commencing from 1st July, J998, therefore, we are of the opinion that notwithstanding the fact that when the industry has gone into production, but as far as the effect of claiming exemption is concerned, that cannot be extended by any methodology beyond 30th June, 1996, thus the arguments advanced by the learned counsel for the appellants are repelled."

(v) Furthermore, the learned counsel for the appellants has misinterpreted the abovementioned judgment of the Honourable Balochistan High Court as in the instant case, the cause of action was that from which date the exemption will take place as in the earlier notification S.R.O. 529 (I)/88 dated 26th June, 1998, the word "set up" was not defined and the same was subsequently defined by amending the said notification embodying the word "Explanation" through subsequent S.R.O. 857(I)/88 dated 26th September, 1988 and the same issue has been settled by the Honourable Balochistan High Court in the above terms as mentioned in the preceding Para. The Honourable High Court has not commented upon their on the issue that fifteen days prior notice as mentioned in the explanation appended at the foot of the said notification is not fatal because the substantive conditions mentioned in the body of the notification have been completely fulfilled.

(iv) Moreover, the facts and circumstances of the cases as mentioned in the judgment of the Honourable Supreme Court of Pakistan reported in 2008 PTD 1157 = PLD 2008 446, as also cited by the learned counsel for the appellants, is clearly distinguishable from the instant case and have no nexus with the point in issue in the present case. Relevant part of the said judgment is reproduced as under:--

"The person getting the benefit of grant of concession in the nature of exemption from payment of duties must satisfy all conditions for such exemptions"

A plain reading of the above-said citation reveals that a person will be entitled to get exemption only after satisfying such conditions. In the instant case, the appellants have utterly failed to satisfy the qualifying mandatory conditions for availing exemption under the said S.R.Os, as has already been explained explicitly in the preceding para(s). In such circumstances, the above referred judgment has no legal effect on the instant case and hence, is considered irrelevant.

(vii) Yet in another judgment reported in PTCL 1988 CL 257(sic) the Court has held that:--

"The charging provisions of a taxing statute are construed strictly in favour of the assessee whereas the provisions relating to exemption are to be" construed in favour of the Government. The assessee is required to prove his entitlement for the exemption."

(viii) Here, we place reliance on the judgment, reported in PLD 1977 Lah. 1327, wherein the Court has held that "there is much difference in taxability or liability" and its payability". The taxability or liability is created by the Legislature while payability follows to be enforced by the executive authority after quantification. The exemption concerns not the liability but only the payability. It means that though an assessee is liable to pay he can be excused payment on account of a power conferred on the subordinate legislative authority. This distinction was. considered and accepted by this Court in other cases."

(ix) We also place reliance on the judgment reported in PTCL 1999 CL 533 (sic) wherein the Court has observed that "the issuance of an exemption notification under section 13 of the Act, therefore, pre-supposes that the goods exempted are already subject to an existing charge of the sales tax."

(x) We notice that when exemption in regard to any goods or person is granted subject to fulfilment of certain conditions, the exemption so provided for is not to operate unless the conditions are satisfied. Before claiming the benefit of exemption, the conditions, laid down in the exemption granting notification, the claimants have to satisfy the department that their claim strictly falls within the purview of the exemption granting notification. We also lend credence in this behalf from the judgment, reported in PLD 1996 Lah. 718.

(e) In view of the above stated position, the arguments advanced by the learned counsel for appellants in this context are irrelevant and of no legal effect as the appellants were not entitled to claim exemption under S.R.O. 580(I)/91 dated 27-6-1991, as amended vide S.R.O. 561 (I)/94 dated 9-6-1994. 12. Fourth Issue:--Whether the appellants are entitled to claim input tax adjustment under the Sales Tax Act, 1990

(a) In the case of Messrs Mayfair Spinning Mills Ltd., Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and 2 others, reported in PTCL 2002 CL 115 (H.C. Lah), the Court has held that, "in order to avoid double taxation and ensure the proper levy of sales tax, a mechanism of input tax and its adjustment is provided under section 7 of the Act. A registered person is entitled to deduct input tax paid during the tax period for the purpose of taxable supply made or to be made by him from the output tax, that was due from him in respect of tax period. The registered person is also provided such other adjustment as was specified in section 9 and under section 10 the registered person is allowed to carry forward the excess amount to seek the refund." It has further been held therein that, "the provisions regarding input as well as out put tax as defined in the definition clause of the Act read with sections 7 and 8 thereof are only the modalities prescribed to protect the interest of the exchequer against any pilferage, evasion or fraud."

(b) The learned counsel for the appellants has contended that the appellants are entitled to claim input tax adjustment and has also presented certain calculations in this regard, while the learned counsel for the respondent department has forcefully rebutted these calculations and adjustment of input tax on the grounds that the facility of input tax adjustment is available under section 7 of the Sales Tax Act, 1990 to the registered person subject to the conditions that he has a valid input tax invoice/bill of entry in the name of such registered person who wants to avail of the facility of the input tax adjustment. In the instant case, the bills of entry produced by the learned counsel for the appellants are in the name of Messrs Pakistan Railways which is separate registered person and not in the name of the appellants i.e. Messrs Pakistan Locomotive Factory, Risalpur. Moreover, the bills of entry clearly show the sales tax registration number of Messrs Pakistan Railways and not that of the appellants.

(c) In the case of Collector, Sales Tax and Central Excise (West), Karachi v. Messrs Al-Hadi Industries (Pvt) Ltd., reported in 2002 PTD 2457 the Court has held that, "the provision contained in subsection (2) of section 7 is mandatory in nature, it is an enabling provision which prescribes the way in which the claim for deduction/adjustment/refund of the input tax is to be preferred. Subsection (2) of section 7 prescribes a particular manner of claiming deduction/adjustment/refund and on plain reading of the provision, it is abundantly clear that the non-compliance disentitles a registered person from deducting input tax from output tax." It has been further observed therein that, "the registered person was not entitled to claim the refund of sales tax on the basis of tax invoice/bill of entry which is not in accordance with the requirement of section 23." Therefore, we feel that they are not entitled for the adjustment of input tax at this belated stage for the aforesaid reason. Besides, the input tax adjustment can only be made during the relevant tax period which the appellants have failed to do so.

(d) The learned counsel for the respondents and Departmental Representative have further argued that besides the aforesaid legal position, the period of limitation for claiming input tax v adjustment/refund is one year under section 66 of the Sales Tax Act, 1990 and that is also barred by time under the provisions of the Sales Tax Act, 1990. We place our reliance in the case of Messrs Cherat Electric Company Limited, Nowshwera v. The Collector, Sales Tax & Central Excise, Peshawar and another reported in 2002 PTD (Trib.) 1525 (CESTAT Lah), wherein the Court has held that the law or the exchequer does not deprive a person of his claim to receive back the input tax paid by him, but it should be done by him as per the tax discipline provided for under the limitations and conditions prescribed by the law. If he fails to avail of his entitlement under section 71(1) of the Act in a tax return for the relevant tax period, he should, at his discretion avail of the facility under section 66 of the Sales Tax Act, 1990.

(e) In this behalf, we also place reliance on the judgment passed in the case of Messrs Rainbow Industries v. Collector of Customs, and others in C.P. 469 of 2004, wherein the Honourable Court has observed that:-

"15. By now, it is well settled that fiscal statutes are to be construed strictly. If the subject is entitled to any relief it must be given to him but at the same time, if he is bound to follow a particular procedure and fails to abide by the same, then the penal consequences will have to follow. In such-like cases, the question of financial loss to the exchequer or the subject are irrelevant. If the statute provides to do a certain thing in a certain manner it must be done in that particular manner and not otherwise."

(f) We are of the considered opinion that the arguments advanced by the learned counsel for the respondents on this specific issues are convincing enough as under the Sales Tax Act, 1990, only a registered person can claim input tax adjustment while the appellants avoided sales tax registration for considerable period and miserably failed to perform their statutory obligations under the Sales Tax Act, 1990. In such circumstances, input tax adjustment is neither permissible under the Sales Tax Act, 1990 nor the statute allows right of such delayed input tax adjustment facility to the registered person. 13. Fifth Issue:--Whether the Additional Tax (default surcharge) and the penalty are attractable in this case

(a) The learned counsel for the appellants has prayed that the appellants are government owned enterprises and no wilful evasion of tax is involved. Therefore, the imposition of additional tax (default surcharge) and penalty are uncalled for. In this context, he also placed his reliance on the judgment of the Honourable Supreme Court of Pakistan, reported in PLD 1991 SC 963. While the learned counsel for the respondents expressly argued that the appellants have violated the explicit provisions of the Sales Tax Act, 1990 by not paying the due sales tax on the supply of locomotives and it is a wilful default on their part, hence they are liable to pay additional tax (default surcharge) and penalty prescribed under section 33 and 34 of the Sales Tax Act, 1990.

(b) The learned counsel for the respondents has further contended that penalty for each offence section 33 is fixed and no discretion has been allowed. As regards the judgment of Lahore High Court, Lahore, reported in 2008 PTD 1461 referred to by the learned counsel for the appellants the same is not applicable in the instant case being irrelevant. According to him, in the said judgment, the subject-matter of appeal was the payment of principal amount of sales tax and request of appellant for disposal of appeal regarding penal amount in the light of amnesty envisaged under S.R.O. No.463(I)/2007 was acceded to and all the facts and circumstances of the said judgment are distinguishable from the instant. Moreover, according to him, neither the appellants have deposited the entire principal amount of sales tax nor any S.R.O. granting amnesty like the aforementioned S.R.O. is currently in the field, thus, the appellant"s contention is not sustainable.

(c) In our opinion, the appellants wilfully and deliberately avoided their statutory obligations under the Sales Tax Act, 1990 by not registering themselves with the Sales Tax Department for almost six years inspite of repeated notices and clear indication in the L-1 Licence issued to them by the department in 1993 that their product is chargeable of sales tax and thus, deliberately avoided to pay sales tax on the taxable supplies of DE Locomotives, therefore, they are not entitled for grant of relief in this regard. 14. In view of the above stated facts, dicta of Superior Courts and circumstances of the instant case, we are not inclined to accept the pleas raised by the learned counsel for the appellants. We find that the impugned Order-in-Original does not suffer from any patent illegality, impropriety or material irregularity warranting any interference by this Tribunal. The instant appeal thus, does not succeed and the same, therefore, stands dismissed. 15. Announced on 4-5-2009. 16. Attested copy of this judgment be dispatched to the concerned parties within ten (10) days of passing of the same. C.M.A./83/Tax(Trib.) Appeal dismissed.

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