1980 PLP (Trib (PTD)

MUHAMMAD MAZHAR ALI (MEMBER).‑These three appeals, pertaining to the charge years 1964‑65, 1965‑66 and 1966‑67, are directed against the order passed under section 10(3) of the Sale Tax Act by the Sales Tax Officer, companies Circle .K ..These were presented before the Appellate Assistant Commissioner, Range, ....,...who heard them on 6‑8‑1980 and passed an order on 21‑8‑1970, directing the Sales Tax Officer to submit a report on certain given points. Before the Sales Tax Officer could submit his report, the jurisdiction of the Appellate Assistant Commis sioner was abolished by Finance Ordinance, 1971 an all the pending appeals before the Appellate Assistant Commissioner's on 1st day of July, 1971, stood transferred to the Appellate Tribunal for decision. It is in these circums tances that these appeals have come up before us. The inordinate delay in their hearing occasioned on account of the fact that remand report was not received in the office of the Tribunal. The Sales Tax Officer, when contacted by our office, forwarded a copy of the remand report stating that it had already been sent to the Departmental Representative as far back as 9thMarch, 1973. The Departmental Representative even today state that neither the departmental record has been sent to him, nor the remand report was avaiLahle on the record. A copy of the remand report submitted by the Safes Tax Officer, Companies Circle is, however, now avaiLahle on our record. We, have therefore, heard the parties' representatives and proceed to decide these appeals on merits as under.

2. The relevant facts are these. Quarterly returns of the respective turn over on Form SST‑5, for all the relevant quarters of the three years under appeal were submitted by the assessee, who is manufacturer of `KIWI' Shoe Polish, KIWI Cream, KIWI white Cleanser 'CHAKMAK Polish' and 'CHAKMAK Cream' etc. All those products are chargeable to Excise Duty. It also manufactures metal polish, furniture polish and car polish but they are not chargeable to Excise Duty. The disclosed sales for these years were as under:‑ Asstt : Year Sales of goods chargeable with Excise Duty Sales of goods not chargeable with excise Duty Export sales Total sales Rs. Rs. Rs. Rs. 1964‑65 26,52,946 26,354 3,58,976 30,38,256 1965‑66 25,41,651 71,205 6,36,673 32,49,529 1966‑67 29,74,230 1,79,990 9,12,790 40,67,010

3. However, subsequently the Central Excise authority informed Sales Tax Officer that while determining the sales‑price of the goods chargeable to Excise Duty manufactured by the assessee, the trade discount to Stockists and extra packing charges in the shape of Cartons etc, had been wrongly omitted to be added to the value of the said goods determined under section 4 of the Central Excises and Salt Act, 1944, as amended by Finance Act, 1967 (wrongly mentioned for 1966), (which was made effective retrospectively from 28‑1‑1961). The Excise authority also communicated to the Sales Tax Officer the revised value structure per Gross of each commodity declared and cleared by them, but they did not themselves admittedly revise the originally estimated price structures. The Sales Tax Officer, thereupon, while framing the assessments under section 10(3) of the Sales Tux Act for all these years under consideration, himself revised the `sale‑price' as indicated by the Central Excise authority and accordingly added the difference of the revised sales-price and the declared sales of exciseable goods in the three years under appeal at Rs. 2.94,468, Rs. 2,81,007 and Rs. 3,30,108 respectively. The assessee went in appeal before Appellate Assistant Commissioner who as already stated, making the remand order observed that he had gone through the records of the case but did not find any documents containing the re‑assessment or re valuation proceedings initiated and completed by the Central Excise authori ties in regard to the assessment years under appeal. The Sales Tax Officer in his remand report has also confirmed that the Excise authorities had, in fact, not revised their assessment values but they had simply forwarded the report of the Department showing the revised structure of the valuation of excisable goods manufactured by the assessee. 3‑A. The main plank of the arguments of the learned counsel for the appellant is that the Sales Tax Officer has erred in invoking the provisions of section 4 of the Central Excises and Salt Act, 1944 as amended by Finance Act, 1967. He further urged that since no redetermination of the value of the excisable goods was done by the Central Excise Authority it was not within the competence of the Sales Tax Officer to do so himself. The Sales Tax Officer, the counsel so maintained, bad to adopt the sale‑price of the excisable goods at the values determined under section 4 of the said Act plus the duty, as defined by section 2(6)(i) of the Sales Tax Act, 1951. The learned Departmental Representative, as already stared, notified, as usual, that the relevant record was not made avaiLahle to him. He cannot help expressing our regrets for the lack of interest being shown by the revenue authorities for sometime past in pursuing appeals before the Appellate Tribu nal. However, the Departmental Representative supported the impugned orders and argued that the Sales Tax Officer acted properly and legally in adopting the values of excisable goods as suggested by the Excise Authority.

4. I have given my earnest consideration to the submissions made at the bar and carefully perused the relevant provisions of law and I am clearly of the view that the point taken by Mr. Pasha is well‑founded. From the facts narrated above, it is distinctly clear that the real dispute in these appeals centres round the adoption of value of the goods which are chargeable with the duty of excise under the Central Excises and Salt Act, 1944 (hereinafter referred to as `the 1944, Act'. The question is, whether the value under section 4 of the 1944 Act could be determined even at the instance of the Excise Authority, by the Sales Tax officer himself instead of the con cerned Central Excise Officer himself, who is empowered to do so under the 1944 Act. The work `Sale‑price' is defined by section 2(16) of the Sales Tax Act. It reads as under:‑ "2(16) : `Sales‑price' means‑‑‑ (i) as respects goods chargeable with the duty of excise under the Central Excise and Salt Act, 1944 (1 of 1944) the value determined under section 4 of the said Act plus the said duty . . . . . . . . . " (Rest omitted being not relevant for our purpose). The changing section 3 of the Sales Tax Act, as it stood at the retirement time, in so far it is relevant for our purposes, is also reproduced as under:‑ " Section 3.‑‑‑(i) There shall be levied and collected a tax on the value of

(a) all goods produced or manufactured in Pakistan payable by the manu facturer or producer. (b)

(e) ‑

‑ (d) ‑‑

(2) The Tax shall be a tax of twelve and a half per cent. of the value of the goods as aforesaid except‑ (3) The value of goods shall be‑ (i) in the case of goods falling under clause (a) of subsection (I) the sale -price ; (iii) ‑‑

(iv) ‑‑

(4) The tax in respect of the goods mentioned in clause (a) of subsec tion (I) shall be payable on the occurrence of the first of the following events‑ (i) When the goods are delivered to the purchaser, Or (ii) When the property in the goods passed to the purchaser, or (iii) ‑‑

! Provided, in the case of goods specified in the first schedule to the Cen tral Excise and Sale: Act, 1944 (I of 1944), the tax shall be payable at the same time and in the same manner as the duty of excise and the provisions of the said Act relating to the payment of duty and the removal of the goods shall, so far as may be apply to the payment of tax under this Act as they apply for the said Act." A perusal of the provisions of section 3 of the Sales Tax Act makes it explicitly clear that the value of all exciseable goods produced and manufac tured in Pakistan for the purposes of levy of sales tax is their "sales price" as defined in section 2(16) of the Sales Tax Act, that is, the value as determined for the purposes of excise duty under section 4 of the 1944 Act plus the excise duty. Now by virtue of the Proviso attached to section 3 of the Sales Tax Act, the sales tax in respect of exciseable goods is payable at the same time and in the manner as the duty of excise. It further provides that the provisions of the 1944 Act relating to payment of duty and the removal of goods shall, so far as may be apply to the payment of tax under the Sales Tax Act as they apply for the 1944 Act. How and in what manner the excise duty is to be levied and recovered is provided in Chapter III of the I Central Excise Rules, 1944. Rule 9 of the said Rules prescribes the time and manner of payment of duty while rule 10 specifically provides that 'when for any reason the duty has not been levied or paid, or has been short levied or/short paid or when any duty has been erroneously refunded or when abatement in duty has been erroneously allowed, the person liable to pay the duty or the person to whom such refund has been erroneously made or in whose favour such abatement has erroneously allowed shall pay the duty on written demand being made within 3 years from the date on which the duty became due or was paid or adjusted in the owner's account‑current, if any, or from the date on which the refund is made or the abatement is allowed: From the provisions referred to above, it is clearly discernible that the Central Excise Authority are competent to raise additional demand of sales tax within the prescribed time limit of 3 years when short levy of tax is detected even when there is no additional demand of central excise duty inasmuch as the Proviso to section 3 of the Sale Tax Act, as already stated, clearly provides that in they case of excisable goods the tax shall be payable at the same time and in the same manner as the duty of excise. Now there can be no quarrel to the; proposition that it is the function or duty of the Central Excise Authority to determine the value of any article which is chargeable with duty and it is the obligation of the Sales Tax Officer to accept the declared value of excisable goods if it is based on the value determined under section 4 of the 1944 Act plus the excise duty. The Sales Tax Officer can under no circumstances determine or revise the value of exciseable goods. And if he does even a the instance of the learned Central Excise Authority, he definitely exceeds his jurisdiction and it, consequently, renders his order invalid.

6. There is yet another reason which strongly lends support to the view I have taken. And it is that section 35 of the 1944 Act clearly lays down that it gives a right of appeal to any person deeming himself aggrieved by any decision or order passed by a Central Excise Officer under that Act, or the rules made thereunder may, within 3 months of such decision order, prefer an appeal therefrom to the Central Board of Revenue, or, in such cases as the Central Board of Revenue directs, to any Central Excise Officer not inferior in rank to Assistant Collector of Central Excise and empowered in that behalf by the Central Board of Revenue. Then section 35‑A ibid, as it stood at the relevant time, conferred powers in the Central Board of Revenue to suo moto call for and examine the record of any departmental proceedings under that Act, or the Rules made thereunder for the purposes of satisfying itself as to legality and propriety of any decision or order passed thereunder by any officer subordinate to the Board, Then comes section 36, which provides that Central (now Federal) Government may, on the application of any person aggrieved by and decision or order passed under section 35 or section 35‑A, pass such order in relation thereto as it thinks fit. If, therefore, we were to hold that the order of the Sales Tax Officer revising the value of goods chargeable with exciseable duty was valid in law, then we, would be definitely undermining or ignoring the relevant provision‑S of law with regard to appeals etc., as laid down in the 1944 Act and consequently rendering them ineffective or, to put it otherwise, the appellant would be deprived of the legal remedies avaiLahle to him under the 1944 Act, if he feels aggrieved by the revised value determined by the Sales Tax Officer.

7. I would, therefore, hold that the Sales Tax Officer was under legal obligation to accept the declared sale price of the exciseable goods of the assessee in all these years, as it was admittedly in accordance with the value determined by the Central Excise Authority under section 4 of the 1944 Act plus the said duty. The Sales Tax Officer, in my opinion, definitely exceeded his jurisdiction in revising the said values and adopted them at figures other than those as determined by the Central Excise Authority under section 4 of the 1944 Act. For the foregoing reasons, I would allow these appeals with a direction to the Sales Tax Officer to adopt the value of goods chargeable to excise duty as returned by the assessee for each of the three years in question at Rs. 26,52,946, Rs. 25,41,641 and Rs. 29,74,230 respectively. In the result, all the three appeals succeed and I would allow them to the extent and in the manner indicated above. Appeals allowed.