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No.ST-329/PB of 2008, decided on 3rd November, 2008.

----Ss.10 (2), 2(14), 4,7,8(1), 10 & 26---Sales Tax Rules, 2006---Excess amount to be refunded---Refund was rejected on the ground that invoice summary had not been submitted by the supplier of the appellant/ taxpayer---On examination, invoices stood verified and objection raised with regard to non-filing of summary invoice showed that certain objections were raised in vacuum---Department once again asked the quarter concerned for verification of documents. in question, so that the ambiguity in the light of objections raised was removed so as to make him firm in standing before Appellate Tribunal---Validity---Contention on the part of department would reflect nothing but one thing that either RTO or concerned staff had prevailed upon the traditional slackness by rolling the stones down-earth and that way one should not left to fall a prey to such a doldrums, particularly when once Assistant Collector had made proper verification of the documents in question and had verified the said invoice(s) by having furnished the requisite report---When performance of respective regional offices were so poor, want of co-ordination and latitudinarian type of sense of responsibility and discharge of duty, then how could one think of an overall positive results, such was an eye opener for the hierarchy of the department concerned, calling for immediate redressal---Order was set aside by the Appellate Tribunal and ordered to refund the amount in terms of claim by the appellant with the condition that department was at liberty to proceed against the appellant for return of refund claimed if same could be proved fake at any subsequent stage within the permissible period of time. Danish Ali Qazi for Appellant. Dost Muhammad Khan, Senior, Auditor for Respondents. Dated of hearing: 3rd November, 2008.

This appeal filed by Messrs. Zahoor Ahmad & Co., New Grain Market No.2, Shop No 39, Hashtnagri, Peshawar (appellant), is against the Order-in-Appeal No.375 of 2008 dated 16-6-2008 by Mr. Khan Sarwar, the Collector Customs, Sales Tax and Federal Excise (Appeals), Peshawar whereby he while maintaining the Order-in-Original No. 579/2008, rejected the refund claim of Rs. 133713 of the appellant. 2. Brief facts of the case as recapitulated in the impugned order-in-appeal are that Messrs. Zahoor Ahmad & Co. (the appellant) New Grain Market No.2, Shop No.39, Hashtnagri, Peshawar having Sales Tax Registration No.0501-999971773 "filed refund claim amounting to Rs.1,33,713 for the Tax Period of April, 2006 under section 10(2) of the Sales Tax Act, 1990. During verification, CRRAS raised the following objections of purchase invoices of the appellant/claimant:--

3. The notice C.No.T050406100025/25 dated 10-8-2007 on the basis of aforesaid facts was issued to Messrs. Zahoor Ahmad & Co. Peshawar for violation of sections 4, 7, 8(1), 10, 26 of the Sales Tax Act, 1990 read with section 2(14) and Refund Rule (The Sales Tax Rules, 2006 notified vide S.R.O. 555(1)/2006 dated 5-6-2006) calling up on the appellant as to why input tax/refund amounting to Rs.133713 should not be rejected under the law. 4. The case was decided by the Assistant Collector (Refunds), Peshawar vide his Order-in-Original No.579/2008 dated 3-4-2008 whereby the refund claim of the appellant amounting to Rs.133713 was rejected. Aggrieved of the said order, the appellant preferred appeal to Mr. Khan Sarwar, the Collector Customs, Sales Tax and Federal Excise (Appeals), Peshawar, who also rejected the same vide his Order-in-Appeal No.375 of 2008 dated 16-6-2008. 5. Aggrieved of the Order-in-Appeal No. 375 of 2008 dated 16-6-2008, the appellant has filed appeal before this Tribunal, inter alia, on the grounds:--

(i) That impugned order-in-appeal is erred both in law and facts, hence, not sustainable in the eyes of law;

(ii) That impugned order is bad in law for not only being vague and non-conclusive but is also based on presumption and surmises rather supported by any cogent evidence;

(iii) That order of the learned Collector Appeals is not sustainable for being ex parte in nature as the last hearing was held on 3-6-2008 whereas the appeal has purportedly been decided on 16-1-2008 on the basis of the respondent"s report dated 16-1-2008 which was submitted on 16-1-2008 to the learned Collector appeals whereafter neither a copy was served on the appellant nor any hearing was granted and the Order-in-Appeal dated 2-7-2008 was issued;

(iv) That after producing relevant documents for reconciliation and most importantly after verification report dated 11-3-2008 of the RTO Faisalabad, there was no cause to refuse the appellant refund claim;

(v) That without prejudice to the above it is, humbly submitted that report dated 1676-2008 per se is not only frivolous but also arbitrary where the appellant produced documents were rejected on a very generic ground more than the impugned Order-in-Original, thus, order of the learned Collector (Appeals) is not sustainable;

(vi) That without prejudice to the above, that in report dated 10-1-2008, instead of appraising the documents submitted by the appellant objectively, the claim under appeal was rejected on a very general ground rendered the report per se mala fide and non-entertainable for lack of objectively;

(vii) That the impugned order of dismissing refund claim of the aforesaid supplier on the basis of STARR objection is highly misconceived and not tenable in the eye of law, for the reason that the objections per se should not have any adverse impact upon the claim of the appellant as at the most, it spells out a lapse on the part of the appellant"s suppliers;

(viii) That the impugned objections are not sustainable as the appellant can not be held liable for the short comings on the apart of the other registered person as long as the appellant could prove that he has performed his part as stipulated by law as in the instant case appellant provided all the supportive documents as per Rule 38 of the Sales Tax Rules 2006 such as input and output invoices, Diskettes along with proof of payment to the respective suppliers in accordance with law.

(ix) That in the impugned order, relating to the cause of the subject matter of this appeal, the appellant has unduly been burdened with the liability of the supplier and duties of the department;

(x) That in case of Messrs Azhar Corporation (Pvt) Ltd. the STARR objected as "Invoice Summary not submitted" which objection per se casting duty upon the department to carry out a requisite audit and if there is any short coming on his part compel him to fulfil his obligation, instead the refund relating to the said supplier was rejected on a very flimsy ground: "The respondent failed to provide any documentary evidence against STARR Objection" which ground humbly submitted per se is hot sustainable. Besides, it may please also be noted that in Para.6 of the Order-in-Original it is confirmed by the learned Assistant Collector Refund that appellant has provide the Sales Tax Return and sales/purchase summary of Messrs Azhar Corporation (Pvt.) Ltd.;

(xi) That without prejudice to the above, in the impugned Order-in-Appeal and Order-in-Original, instead of appraising the documents submitted by the appellant objectively, the claim under appeal was rejected on a very flimsy ground rendered the impugned Order-in-Appeal and Order-in-Original per se mala fide and not- sustainable in the eyes of law for lack of objectively;

(xii) That most regretfully, though appellant was under no obligation, yet produced all the requisite documents, however, the respondents have the heart to conveniently ignore and misreport the non-submission of documents. For instance in case of Messrs Azhar Corporation in Para. 6 of the Order-in-Original the learned Assistant Collector admits submission of Sales Tax Return and Sales Register but in same impugned Order-in-Original it is ironically reported that appellant failed to provide documentary evidence;

(xiii) That it is pertinent to mention here that the Assistant Collector (Verification Cell) Faisalabad vide letter dated 11-3-2008 has verified appellant"s transaction with Messrs Azhar Corporation, therefore, genuine refund claim of appellant could not be denied;

(xiv) That without prejudice to the above unless and until the respondent carry out its part of verification and reach to any adverse conclusion, the refund claim on the aforesaid ground can not be rejected rather at the most the said refund claim can be deferred till the time such verification is conducted by the respondent;

(xv) That in this respect, it is humbly submitted that appellant claimed the refund on the strength of invoices issued by duly registered persons which have declared the aforesaid suppliers to the appellant in their monthly sales tax returns and declared the output tax liability against it, hence, appellant is entitled to refund claim;

(xvi) That without prejudice, if invoice summary has not been submitted by the appellant"s aforementioned supplier, even then it does not provide any cause against the appellant and can not be ground of rejection of appellant"s genuine refund claim;

(xvii) That without prejudice, if sales tax has not been deposited by the appellant"s aforementioned supplier on the invoices issued to the appellant, the same is recoverable from the appellant"s supplier and can not be ground of rejection of appellant"s genuine refund claim;

(xviii) That kind attention is invalid to .the Sales Tax Refund Rules, whereas, it has been stipulated that refund to the manufacturer/ exporter specifically be made within a period of a month or otherwise, if there is any objection that is to be intimated within that stipulated period but in the instance case those rules were not followed at all;

(xix) The impugned order is mala fide, arbitrary and blatantly illegal and violative to the principle laid down by the Supreme Court of Pakistan in Messrs Pfizer Lab, of Pakistan v. Federation of Pakistan wherein the august Court has held that:--

"latest judicial trend is to deprecate and discourage withholding of citizen money by a public functionary on the plea of limitation or on any other technical plea if it was not legally payable by him."

(xx) That in spite of having paid of Sales Tax on its input, which if not allowed to be refund would create a cascading effect; which would be against the spirit and genesis of thee value added based Sales Tax Act 1990. 6. I have heard Mr. Danish Ali Qazi, Advocate on behalf of the appellant and Mr. Dost Muhammad, Senior Auditor on behalf of the respondents/department and gone through the record with their assistance. 7. Perusal of the record would reveal that the main controversy involved in this case is that the invoice summary has not been submitted by the supplier namely Messrs Azhar Corporation, Faisalabad whereas vide annexure "S" (page 30) Salim Akhtar, Assistant Collector (Verification Cell) Faisalabad vide his letter C.No.RTO/IVC/03/07/29718 dated 16-3-2008 has reported that on examination of the record supplied of Messrs. Azhar Corporation (Pvt) Limited Gole Subhan Wala, Faisalabad, (Sales Tax Registration No.0403152200673) detected that invoices mentioned in your letter except following rectifications have been issued, entries are made in the supply register and sales tax returns filed for the respective tax period in respect of Messrs Zahoor Ahmad and Co., Shop No 39, New Grain Market No.2, Hashtngri, Peshawar, whereby invoices bearing No.5079 pertaining to the appeal in hand stands verified and that way the objection raised with regard to non filing of the summary invoice appears to be certain objection raised in vacuum. 8. Mr. Dost Muhammad, Senior Auditor/representative of the respondent-department, however, submitted that the respondents/ department once again vide its letter No. ST (Refund)/Zahoor/671/071/6151 dated 10-10-2008 followed by a reminder No. ST(Refund)Zahoor/671/071/7339 has asked the quarter concerned for the verification of the documents in question, so that the ambiguity in the light of the objections raised is removed so as to make him firm in standing before this Tribunal. When enquired as to when the said query made by the respondents/department would be answered, the representative of the respondent-department was unable to mention the exact time, however, made reference to the fore-mentioned letter and subsequent reminder with further emphasis laid that they have been asking Regional Tax Officer (RTO), Faisalabad to expedite the process but with no response from him. This much contention on the part of the respondent/ department would reflect nothing but one thing that either RTO, Faisalabad or the concerned .staff have prevailed upon, the .traditional slackness by rolling the stones down-earth and that way one should not be left to fall a prey to such a doldrums, particularly when once, Mr. Salim Akhtar, Assistant Collector (Verification Cell) has made proper verification of the documents in question vide Annexure-X (page-30) had has verified the said invoice (s) by having furnished the requisite report. 9. Keeping in view of the aforesaid background of the case, one get irritates that when the performance of the respective regional offices are so poor, want of co-ordination and latitudinarian type of sense of responsibility and discharge of duty, then how we could think of an overall positive results, an eye opener for the hierarchy of the department concerned, calling of immediate redressal. 10. For what has been stated above I hereby allow this appeal, set aside the impugned order and hereby order the refund of the amount of Rs.133713 in terms of the refund claim filed by Messrs Zahoor Ahmad and Co., the appellant. The respondents/department is at liberty to proceed against the appellant for the return of the Refund claim (so paid) of the claim of the appellant if could be proved fake at any subsequent stage within the permissible period of fine. The appeal stands disposed of accordingly. C.M.A./6/Tax(Trib.) Order accordingly.

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