COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAX OFFICE, FAISALABAD VS MASHA ALLAH PAPER BOARD MILLS, FAISALABAD, 2018 PTD-LAHORE-HIGH-COURT-LAHORE 775 (2017)

Sales Tax Act (VII of 1990)---

----S. 47---Reference---Finding of facts---Jurisdiction of High Court---Scope---Order assailed before High Court was with regard to findings of Appellate Tribunal on facts---Validity---High Court, in exercise of advisory jurisdiction which was last fact finding forum had to decide reference application on facts and circumstances founded by Appellate Tribunal---High Court could not change finding of facts arrived at by Appellate Tribunal, therefore, High Court had no jurisdiction to adjudicate upon proposed questions while exercising its advisory jurisdiction---High Court declined to answer questions proposed in reference application---Reference was dismissed in circumstances.

Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax 2014 SCMR 907; Commissioner Inland Revenue, Zone-II, Regional Tax Office-II v. Messrs Sony Traders Wine Shop 2015 PTD 2287; Messrs Pak Suzuki Motor Company Limited, Karachi v. Collector of Customs, Appraisement Collectorate, Custom House, Karachi 2005 PTD 2600 and Commissioner of Income Tax, Legal Division, R.T.O. v. Messrs Matrix Press (Pvt.) Ltd. 2016 PTD 97 rel.

Sarfraz Ahmad Cheema for Applicant.

Khubaib Ahmad for Respondent-Taxpayer.

ORDER

MUHAMMAD SAJID MEHMOOD SETHI, J.---Through this reference application under section 47 of the Sales Tax Act, 1990 ("the Act"), following questions of law, asserted to have arisen out of impugned order dated 03.04.2013, passed by the Appellate Tribunal Inland Revenue, Lahore Bench, Lahore ("Appellate Tribunal") have been proposed for our opinion:--

i"Whether the learned Appellate Tribunal is justified to validate an illegal claimed refund/input adjustment in contravention to the provisions of sections 2(14), 7, 8, 8A, 10, 22 and 26 of Sales Tax Act, 1990 read with Sales Tax Refund Rules?

iiWhether the learned Appellate Tribunal has considered that the respondent No.1 has claimed input tax adjustment/refund against fake invoices issued by the blacklisted units which were not valid as per provisions of section 8(1)(d) of Sales Tax Act, 1990?

iiiWhether the learned Appellate Tribunal has considered the provisions of section 8(1)(ca) of Sales Tax Act, 1990 according to which the respondent No.1 is not entitled to claim or deduct input tax has not been deposited in the Government treasury by the respective supplier?

ivWhether in the facts and circumstances of the case the learned Tribunal was justified to hold that the effect of blacklisted units cannot operate retrospectively?

v.Whether the learned Appellate Tribunal has ignored that the respondent No.1 could not produce any record or documentary evidence to the effect that the goods were physically acquired and transferred from the supplier to the premises of respondent No.1 and the respondent No.1 has violated the provisions of sections 2(14)(33), 7 and 8 of Sales Tax Act, 1990?

viWhether the learned Appellate Tribunal has considered the provisions of Rule 12(5) of the Sales Tax Rules, 2006 that once the person/supplier is blacklisted, the refund or input tax credit claimed against the invoices issued by him whether prior or after such blacklisting shall be rejected through a self-speaking appealable order?

viiWhether the learned Appellate Tribunal has considered the admitted facts of the case and law applicable?

viiiWhether the impugned judgment is contrary to the provisions of law and is a wrong decision, jeopardizing the collection and recovery of the national exchequer?

2.Brief facts of the case are that respondent taxpayer was served show-cause notice dated 21.05.2010, regarding input tax adjustment claimed at Rs.846,015-, which resulted in passing of order-in-original dated 06.07.2010. Feeling aggrieved, respondent taxpayer challenged the said order through appeal before CIR (Appeals), which was allowed vide order dated 17.01.2011. Being dis-satisfied, applicant-department filed appeal before learned Appellate Tribunal, but the same has been dismissed through order dated 03.04.2013, which has been impugned through instant reference application.

3.Learned counsel for the applicant is confronted with operative part of Appellate Tribunal's order, which is based on finding of fact. He could not rebut the findings of fact arrived at by learned Appellate Tribunal.

4.Heard, record perused.

5.The perusal of impugned order shows that learned Appellate Tribunal gave findings of facts that at the time of transactions the suppliers units were not blacklisted and declared the respondent taxpayer entitled to input tax claim.

6.Record reveals that taxpayer's input tax claim was rejected by the authority on the ground that the supplier was subsequently blacklisted/suspended. The applicant department failed to confront the taxpayer with the specific allegations, in show-cause notice, i.e. (i) tax was not paid against invoices issued by the suppliers; (ii) section 73 was not complied with; (iii) connivance of the taxpayer or knowledge or reasonable suspicion of fake invoices within the contemplation of section 8A; and (iv) taxpayer is guilty of dishonestly and tax fraud. The applicant department has failed to discharge its initial burden of proof. Thus, the impugned findings cannot be displaced by this Court in its advisory jurisdiction.

7.Undeniably, the above findings of learned Appellate Tribunal are of facts, High court has to decide reference application on fact and circumstances founded by Appellate Tribunal, in the exercise of advisory jurisdiction, which is the last fact finding forum. High Court cannot change findings of facts arrived at by the Appellate Tribunal. Reference can be made to Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax (2014 SCMR 907), Commissioner Inland Revenue, Zone-II, Regional Tax Office-II v. Messrs Sony Traders Wine Shop (2015 PTD 2287), Messrs Pak Suzuki Motor Company Limited, Karachi v. Collector of Customs, Appraisement Collectorate, Custom House, Karachi (2005 PTD 2600) and Commissioner of Income Tax, Legal Division, R.T.O. v. Messrs Matrix Press (Pvt.) Ltd. (2016 PTD 97).

8.Since the decision is made on findings of facts, therefore, this Court has no jurisdiction to adjudicate upon the proposed questions, whiel exercising its advisory jurisdiction.

9.For the reasons noted above, we decline to answer the proposed questions.

10.This Reference Application is decided against the applicant.

11.Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per section 47(5) of the Sales Tax Act, 1990.

MH/C-29/L Reference dismissed.