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11.

Without prejudice to aforesaid legal submissions, it is further submitted that prior to date
of its registration with sales tax department i.e. 23.12.2013, our Client has neither
collected any sales tax from its customers nor its customers had paid sales tax to it on
account of its non-registration with sales tax department. Therefore, any demand from
our Client to pay sales tax which it had not collected from its customers is illegal as held
by the Honourable Appellate Tribunal in case of “Z.U. Enterprises, Deska, Sialkot v.
Collector Sales tax, Gujranwala” (GST 2002 CL 236) and many other cases.

12. Without prejudice to foregoing, it is respectfully submitted that the Show Cause Notice
dated: 03.12.2018 for tax periods of 07/2011 to 06/2012 is clearly barred by limitation
period as provided under Section 11 of the Act of 1990 and is therefore, void ab initio
and liable to be set aside on this score alone. It is further submitted that reference made to
the directions of the Honourable Appellate Tribunal’s order dated 19.09.2018 passed in
STA No. 400/LB/2017 is also illegal and is based upon the misinterpretation of the
judgment of the Appellate Tribunal.

13. Without prejudice to the foregoing, it is submitted that no ground for the imposition of
default surcharge under Section 34 and penalty under Section 33 has been made out
against our Client. It is well established principle of law recognized by the superior courts
of Pakistan that additional tax and penalty can also be imposed only if there appears a
deliberate intention on the part of taxpayer to evade its tax liability and revenue must
have to establish that it was dishonest, willful or malafide. The Honourable Lahore High
Court in the case reported as 2017 PTD 2380 has held that that “default surcharged and
penalty can only be imposed where there is willful evasion of duties and taxes. In
“Pakistan, through the Secretary, Ministry of Finance, Rawalpindi etc. v. Hardcastle
Waud (Pakistan) Ltd., Karachi” (PLD 1967 Sc 1), while dilating on Item 3-B of Section
167 of the Sea Customs Act, 1878, the Hon’ble Supreme Court held that it was incorrect
to say that the said Item created an offence of absolute liability and was an exception to
the general rule that mens era was an essential element in the commission of a criminal
offence. It ruled that “even in the case of a statutory offence the presumption is the mens
rea is an essential ingredient unless the statute creating the offence by express terms or by
necessary implication rules it out.” In “Ms D.G Khan Cement Company Ltd., etc. v.
The Federation of Pakistan, etc.” (PTCL 2004 CL 224), the Apex Court held that in
order to impose addition tax it should be seen whether the evasion or non-payment of tax
was willful or malafide. Therefore, every case should be decided on its own merits. Every
default on the part of the registered person would not ipso facto make him liable for
penalty or additional tax/default surcharge. The Revenue must establish that it was
dishonest, willful or malaide.”

PRAYER

In the light of the afore-made submissions, it is clear that the Show Cause Notice under
reply lacks any factual or legal foundations and is liable to be withdrawn in the interest of justice.

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