MUHAMMAD HASHIM KHAN KAKAR, CHAIRMAN:---.---

The above titled Sales Tax Appeal has been filed by the appellant calling in question, the Order-in-Original No.884/2023-2024 dated 15.11.2023, passed by the learned Assistant Commissioner (Operations) of the Balochistan Revenue Authority (‘BRA') which has been upheld by the Commissioner (Appeals), BRA, Quetta in Order-in-Appeal No. BRA-CA/AO03/2024 dated 05.03.2024.

2. In the impugned order-in-original, the Assistant Commissioner has compulsorily registered the appellant under section 27(1) of the Balochistan Sales Tax on Services Act, 2015 (‘the Act') on the ground that the appellant has received taxable services in the territorial jurisdiction of Balochistan and withheld tax but failed to get registered with the BRA and to pay the tax deducted in the BRA. Show-cause letter was issued to the appellant on 16.03.2023 followed by reminder notices dated 28.03.2023 and 13.03.2023. In response the appellant contended that she is not required to get registered with the BRA being not resident in Balochistan, having no place of business in Balochistan and already registered with Punjab Revenue Authority. The Assistant Commissioner did not agree with said contention on the grounds that the appellant has received services in Balochistan, withheld sales tax on such services and she has virtual place of business, therefore, the impugned Order-in-original was passed for compulsorily registering the appellant. The appellant challenged the said order before the Commissioner Appeals, BRA, who vide impugned order-in-appeal upheld the order of compulsory registration, passed by the Assistant Commissioner. Being aggrieved with the impugned order-in-appeal the appellant has come up in appeal to this Tribunal.

3. The appellant has prayed for setting-aside both the impugned Order-in-Original, passedby the Assistant Commissioner and the order-in-appeal, passed by the Commissioner Appeals and taken grounds as per memo of the appeal.

4. The relevant facts for disposal of the instant appeal are that the appellant is a BranchOffice of the Coca-Cola Export Corporation, USA and existing in Pakistan under the applicable laws. The appellant is engaged in the manufacturing and import of concentrate/syrup, which is used as a basic ingredient and raw material to manufacture Stated beverages. The appellant's head office and manufacturing facility are situated in the Province of Punjab, hence it is registered with the Large Taxpayers Office, Lahore and with the Punjab Revenue Authority, Lahore. The Assistant Commissioner, BRA observed that the appellant has received taxable services in the territorial jurisdiction of Balochistan and also withheld sales tax on services but she has failed to register itself with BRA and to pay the sales tax deducted from service provider in Balochistan to the BRA. The learned Assistant Commissioner issued notices to the appellant under section 25 read with section 48 of the BSTS Act, 2015 for the registration but the appellant was not willing to get itself registered with BRA on the grounds that she is already registered with the Punjab Revenue Authority; she is not a resident of Balochistan and she has no place of business in Balochistan. The Assistant Commissioner did not agree with appellant's contention and passed impugned Order-in-Original No.884/2023-24 dated 15.11.2023 to compulsorily register the appellant with BRA under section 27 (1) of the BSTS Act, 2015. The said order has also been upheld by the learned Commissioner Appeals, BRA vide order-in-appeal dated 05.03.2024.

5. On behalf of the appellant, arguments were led by Mr. Aimal Khan Kakar, Advocate, whocontested the case mainly on two sets of arguments. Firstly, the learned counsel of the appellant contended that the appellant is already registered with the Punjab Revenue Authority as it's head office is located at Lahore. The appellant is not resident of Balochistan as per definition of "resident person" in the Act. Further the appellant has no "place of business in Balochistan" as per definition provided in the Act. Therefore, the appellant was not required to get registered with the BRA and the learned Assistant Commissioner was not justified to compulsorily register the appellant under section 27 of the Act. The appellant being registered with the Punjab Revenue Authority deducted sales tax on services as withholding agent from the service provider in Balochistan and rightly paid the same to the Punjab Revenue Authority.

6. Secondly the learned counsel of the appellant argued that the Assistant Commissioner,BRA had issued notices dated 11.04.2023 for recovery of sales tax deducted by the appellant from the service providers, which were challenged before the Honorable Balochistan High Court. The Honorable High Court vide orders dated 04.08.2023 in C.P. Nos.506/2023, 507/2023, 508/2023, 509/2023 and 510/2023 remanded back the said notices to the concerned officer for providing an opportunity of hearing to the appellant before taking any legal action. However, in compliance to the Honorable High Court directions the learned Assistant Commissioner re-initiated recovery proceedings and passed Orders No.986/2023-24, No.987/2023-24, No.988/2023-24, No.989/2023-24 and No.990/2023-24 all dated 11.12.2023 without providing an opportunity of being heard. The said orders were challenged before the learned Commissioner Appeals, BRA, who has again remanded back the same for re-adjudicating after providing opportunity of being heard. The learned counsel for the appellant, therefore prayed that the Assistant Commissioner may be directed to adjudicate the recovery proceedings as per directions of the Honorable High Court and as per order of the learned Commissioner Appeals.

7. Mr. Jam Saka, learned counsel appearing on behalf of respondent supported the order ofthe learned Commissioner upholding compulsory registration by the learned Assistant Commissioner and stated that the appellant having virtual place of business in terms of section 2(115)(b) of the Act was required to get registered with the BRA, withhold sales tax on services from the service provider and pay the said amount to the BRA. The learned counsel raised no objection for providing an opportunity of being heard by the learned Assistant Commissioner while adjudicating the recovery proceedings by complying with the directions of the Honorable High Court vide order dated 04.08.2023 and the directions of the learned Commissioner Appeals in order-in-appeal dated 05.03.2024.

8. We have gone through the impugned orders of the Assistant Commissioner and the learned Commissioner Appeals, BRA. We have also examined the relevant provisions of law and relevant record, gone through the decisions of the officers below and considered arguments of both the parties. The crux of the issues involved in the instant appeal is whether the appellant was legally required to get registered with the BRA as service recipient/ withholding agent or not and whether tax withheld from the service providers/ advertisers was recoverable by the BRA from the appellant or not.

9. It is admitted fact that the appellant has received services from advertisers, who displayed advertisements of the appellants on the billboards in Balochistan. It is also admitted that the appellant has made payments to such service providers/ advertisers and also withheld sales tax on services form said service providers/advertisers. However, the appellant has paid such tax to the Punjab Revenue Authority on the grounds that the appellant is registered with the Punjab Revenue Authority and the appellant is not resident of Balochistan. The learned Assistant Commissioner, BRA and the learned Commissioner Appeals, on the basis of said admitted facts and definitions of "Place of Business in Balochistan" and "Resident" provided in the Act held that the appellant was required to get registered with the BRA. The learned Commissioner Appeals has given findings as follows:

"7. Thus, it is evident that the appellant having virtual presence in Balochistan has acquired advertising services from the service providers of Balochistan and thus an economic activity has taken place in the jurisdiction of Balochistan. The appellant has also withheld sales tax on services as shown in the invoices provided by service providers But has not deposited the same with BRA. Whereas, as per Rule 3 of the BSTSP (Withholding) Rules, 2018, it is the duty of withholding agent to deposit the withheld taxes.

8. Keeping in view the above narrated facts and relevant provisions of law, it has been established that appellant on receiving taxable services in the jurisdiction of Balochistan is liable to be registered with BRA as a withholding agent u/s 25 of the BSTS Act, 2015 for payment of withheld amount of Balochistan sales tax on services (BSTS). When the appellant has failed to get himself registered with BRA, the respondent has passed this Order-in-Original No. 884/2023-24 dated 07-11-2023 for compulsory registration of the appellant under section 27 of the BSTS Act, 2015. Consequently, the appellant has been registered with BRA as withholding agent on 1-2-2023.

10. Before deciding the issue, we deem it appropriate to reproduce definitions of "Place of Business in Balochistan" and "Resident" as provided in sections 2(115) and 2(139) of the Act respectively as follows:

"2 (115) "Place of Business Balochistan" means that a person--

(a) owns, rents, shares or in any other manner occupies a space in Balochistan from whereit carries on an economic activity whether wholly or partially; or

(b) carries on economic activity through any other person such as an agent, associate, franchisee, branch, office, or otherwise in Balochistan or through virtual presence or a website or a web portal or through any other form of e-Commerce, by whatever name called or treated, but does not include a liaison office;"

"2 (139) "Resident" means-

(a) an individual who, in a financial year, has-

(i) a place of business, whether whole or part thereof, in Balochistan in any mode, style ormanner; or

(ii) his permanent address, as listed in the individual's national identity card, in Balochistan;or

(iii) a permanent representative to act on his behalf or to provide service on his behalf inBalochistan;

(b) an association of persons or a company which, in a financial year, has-

(i) its registered office is in Balochistan;

(ii) its place of business, whether whole or part thereof, in Balochistan in any mode, style ormanner; or

(iii) a permanent representative to act on its behalf or to provide service on its behalf inBalochistan; or

(iv) the control or management of the association of persons or the company, whether whole or part thereof, situated in Balochistan at any time during the financial year;

11. When read together the above definitions, a company is resident of Balochistan if it hasplace of business in Balochistan, including virtual presence through which it carries on an economic activity. A company being resident of Balochistan is required under section 25 of the Act to get registered with BRA failing which the BRA may proceed to compulsorily register it under section 27 of the Act.

12. Considering the admitted facts and above provisions of the Act we are in agreementwith the findings of the learned Commissioner Appeals that the appellant has conducted economic activity through place of business in Balochistan being virtual presence, hence she was required to get registered with the BRA. Since the appellant has failed to get voluntarily registered under section 25, hence the learned Assistant Commissioner has rightly registered the appellant compulsorily under section 27 of the Act. We find no infirmity in the impugned order-in-appeal on the liability of the appellant regarding registration with the BRA, therefore, we are not inclined to interfere and the appeal filed by the appellant on the issue of registration with the BRA is dismissed.

13. Now we come to the second contention of the appellant's counsel regarding opportunityof being heard while adjudicating recovery proceedings related to tax withheld by the appellant from the service providers but not paid to BRA. From perusal of record we find that in compliance of the Honorable High Court orders dated 04.08.2023 in C.Ps. Nos.506/2023, 507/2023, 508/2023, 509/2023 and 510/2023, the learned Assistant Commissioner has re-initiated recovery proceedings and passed Orders-in-Original No.986/2023-24, No.987/2023-24, No.988/2023-24, No.989/2023-24 and No.990/202324, all dated 11.12.2023 without providing proper opportunity of being heard. The said orders were again challenged by the appellant before the learned Commissioner Appeals, BRA, who has vide Order-in-Appeal No. BRACA/AO-04/2024 dated 05.03.2024 again remanded back the same for re-adjudicating after providing proper opportunity of being heard. Since said re-adjudication proceedings are pending decision by the Assistant Commissioner, therefore we agree with the contention of the learned counsel for the appellant on the issue of providing proper opportunity of being heard. We therefore, direct the Assistant Commissioner, BRA to comply with the directions of the Honorable High Court and the learned Commissioner Appeals while adjudicating remand back proceedings. The Assistant Commissioner, BRA is also directed to provide proper opportunity of being heard to the appellant, examine all the facts and provisions of law and then come up with a judicious order. The appellant is also directed to make timely response to notices issued by the Assistant Commissioner and assist him in coming up with a judicious order.

Appeal dismissed.

Citations:

C.P. Nos. 506/2023 to 510/2023, Balochistan High Court Order dated 04.08.2023

Order-in-Original No. 884/2023-24 dated 15.11.2023

Order-in-Appeal No. BRA-CA/AO-03/2024 dated 05.03.2024

Order-in-Appeal No. BRA-CA/AO-04/2024 dated 05.03.2024 (on recovery)