| Case ID |
4426ab94-b2e4-4365-838f-e1adf00fc7a4 |
| Body |
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| Case Number |
AT-47 of 2018 |
| Decision Date |
Oct 16, 2018 |
| Hearing Date |
Oct 11, 2018 |
| Decision |
The appeal has been allowed, and the penalties imposed by the Assessing Officer under Table 2 of section 43 of the Sindh Sales Tax on Services Act, 2011, have been set aside. The tribunal found that the department failed to establish the necessary elements of wilfulness, mala fide, and mens rea required to impose the penalty. Consequently, the penalties imposed were deemed excessive and unjustified. The decision emphasizes the importance of the department proving mens rea before levying penalties and ensures that penalties are not imposed without just cause. |
| Summary |
In the appellate case of MESSRS FUMICON SERVICES (PVT.) LTD. versus ASSISTANT COMMISSIONER, SRB, Karachi, the Appellate Tribunal Inland Revenue rendered a pivotal decision on October 16, 2018. The appellant, Fumicon Services, challenged the imposition of significant penalties under Section 43 of the Sindh Sales Tax on Services Act, 2011, specifically citing failures related to the timely filing of sales tax returns. The tribunal meticulously examined whether the department had substantiated claims of wilfulness, mala fide intentions, and mens rea as prerequisites for enforcing such penalties. It was determined that the Assessing Officer did not adequately demonstrate these elements, leading to the conclusion that the penalties were excessively harsh and lacked a legal foundation. Key legal precedents, including Pakistan through Secretary Ministry of Finance and others v. Hardcastle Waud and Commissioner of Income Tax v. Habib Bank Limited, were referenced to underscore the necessity of proving intent behind non-compliance. The tribunal also highlighted the improper calculation of penalties by the Assessing Officer, which did not align with previous rulings and the spirit of the law. Consequently, the tribunal set aside the imposed penalties, emphasizing the taxpayer's right to fair treatment and the state's obligation to provide justifiable reasons for punitive measures. This landmark decision reinforces the principles of equity and due process within the Sindh Sales Tax framework, ensuring that penalties are only levied when there is clear evidence of intent to defraud or evade tax obligations. The ruling serves as a critical reference for future cases involving tax compliance and penalty assessments, promoting transparency and accountability within the taxation system. |
| Court |
Appellate Tribunal Inland Revenue
|
| Entities Involved |
MESSRS FUMICON SERVICES (PVT.) LTD.,
ASSISTANT COMMISSIONER, SRB, KARACHI
|
| Judges |
JUSTICE (RTD.) NADEEM AZHAR SIDDIQI,
AGHA KAFEEL BARIK,
TECHNICAL MEMBER
|
| Lawyers |
Abdul Sattar Adamjee,
Ms. Irfan Sohu
|
| Petitioners |
MESSRS FUMICON SERVICES (PVT.) LTD.
|
| Respondents |
ASSISTANT COMMISSIONER, SRB, KARACHI
|
| Citations |
2020 SLD 2286,
2020 PTD 1980
|
| Other Citations |
Pakistan through Secretary Ministry of Finance and others v. Hardcastle Waud (Pakistan) Limited PLD 1967 SC 1,
Commissioner of Income Tax v. Habib Bank Limited 2007 PTD 901,
Deputy Collector, Central Excise and Sales Tax, Lahore v. ICI Pakistan Limited, Lahore PTD 2006 1132,
Slingshot v. AC Appeal No.AT-92/16 rel.
|
| Laws Involved |
Sindh Sales Tax on Services Act, 2011
|
| Sections |
30,
43,
Second Schedule
|