MULTAN: The Appellate Tribunal Inland Revenue (ATIR) has withdrawn a penalty of Rs1,000,000 from a retailer, who failed to integrate its all-retail Points of Sales with the Federal Board of Revenue’s computerized system.
In this connection, the Appellate Tribunal Inland Revenue (Divisional Bench-I), Multan has recently issued an order against the Commissioner Inland Revenue Regional Tax Office Multan. The crux of the order is that the FBR cannot impose the penalty under section 11 (2) of the Sales Tax Act 1990 which according to the tribunal deals with the assessment process. The provision of the penalty has been separately given under section 33 of the Sales Tax Act which was not properly being invoked and adjudicated by the FBR.
Brief facts of the case were that the registered person has failed to integrate its all-retail points of sale with the FBR’s computerized system for real-time reporting of sales, which attracted a penalty of Rs1,000,000 as prescribed in serial number 25 of section 33 of the Sales Tax Act, 1990.
Therefore, show cause notice was issued and proceedings were initiated and a penalty of Rs1,000,000 was confirmed and held recoverable. The registered person filed the appeal with the Commissioner Appeal, who decided to appeal against the taxpayer.
Being aggrieved, the registered person has approached the Inland Revenue Appellate Tribunal, Multan.
Inland Revenue Appellate Tribunal ruled that the section 11 of the Sales Tax Act, 1990 does not allow recovery and imposition of penalty as prescribed at serial number 25 of section 33 of the Sales Tax Act, 1990 alone where liability on account of principal amount of sales tax discharged.
If the amount of penalty is considered a part of “tax” as used in the provisions, then there was no need for legislature to use the words penalty and default surcharge separately and independently. The intention of the legislator is clear that the said registered persons, who deposit the due amount of sales tax, the provisions of the section 11 of the Sales Tax Act, 1990 are thereby ab-initio not attracted. Therefore, the appeal of the appellant is accepted and the order passed by lower authorities is annulled, the tribunal added.
