2015 PLP (Trib (PTD)

Vide this sales tax appeal, the registered person has assailed Order-in-Appeal No. Ex.28/2007 passed by the learned Collector, Customs, Sales Tax, and Federal Excise (Appeals), Lahore dated 31-10-2007 on the following grounds:- (1) That the learned Collector (Appeals) was not justified to issue order after inordinate delay of six months. (2) That an identical order was earlier passed by the Deputy Collector (Adjudication) on 24-5-2004 almost on the strength of same facts which was ultimately set-aside by the learned Collector (Appeals-III), Lahore vide her order dated 10-8-2005 which is not considered by the learned Collector (Appeals). (3) That the Order-in-Original was passed in utter disregard of the specific directions of the Learned Collector (Appeals-Ill) contained in her order dated 10-8-2005 and even without making any reference to the findings contained in the said order of the Learned Appellate Authority which has also been light heartedly ignored by the Learned Collector (Appeals). (4) That no fresh ground, evidence or facts were brought on record by the respondent No.3 and entire super structure has been erected on the earlier facts which have already been considered and turned down by the Learned Collector (Appeals-III), Lahore. Hence order under appeal was not liable to be maintained. (5) That no proper opportunity of being heard was afforded to the appellant by the Learned Deputy Collector (Adjudication), hence the appellant has literally been condemned unheard. (6) That the allegations of the respondent No.3 are incorrect and baseless having no legal footing whatsoever. The appellant has rightly been declaring the price of wrapping paper and did not indulge in any type of mis-declaration. Further the appellant did not maintain any private record as alleged in the order-in-original. Moreover, the appellant did not supply wrapping paper to Messrs Accord Processing and Trading Works (Pvt.) Ltd., Lahore.

2. Facts in hand are that as reported by the Superintendent Intelligence and Investigation, Central Region, Lahore that in the month of October 2002 a contravention case No.32/2002 pertaining to under valuation committed by Messrs AI-Aziz Paper Mills (Pvt.) Ltd., Muridke was made on the basis of private sale invoices showing the actual price as Rs.29.00 per kg, after deducting the element of central excise duty and sales tax the assessable value comes to Rs.24.02. It left no doubt that the actual assessable value of declared wrapping paper of the subject unit was Rs.24.02 per kg. The scrutiny of monthly returns reveals that the registered person are still assessing their wrapping paper @ Rs.14.00 per kg instead of actual value of Rs.24.02 per kg. During the period from September, 2002 to April, 2003 the registered person declared 104299-kgs-wrapping paper and assessed it @ Rs.14.00 per kg instead of actual assessable value of Rs.24.02 per kg, resulting in short payment of central excise duty and sales tax amounting to Rs.52,254 and Rs.1,64,599 respectively. On the basis of the above facts, the registered persons were directed vide Order-in-Original No.22/2006 dated 18-11-2006 passed by the Deputy Collector Sales Tax and Federal Excise (Adjudication) Lahore to deposit Rs.52,254 and 1,64,599 as central excise duty and sales tax respectively along with additional duty/tax (to be calculated at the time of deposit) under section 3-B of the Central Excise Act, 1944. A penalty was also imposed under rule 210 of the Central Excise Rules, 1944 and section 33(11)(c) of the Sales Tax Act 1990. Feeling aggrieved with this order, the registered person filed appeal before the learned CIR(A) Lahore, who by virtue of his order dated supra rejected the appeal of the registered person. Against this treatment, the registered person preferred appeal before this Tribunal.

3. At the time of hearing, the learned counsel for the appellant at the very out set raised legal issues that the Order-in-Original was passed by the Deputy Collector beyond the scope of show-cause notice. The grounds taken in the order were not mentioned in the show-cause notice and the penalty was imposed upon the appellant under Rule-210 of the Central Excise Rules, 1944 whereas show-cause notice was issued under section 36(1) of the Sales Tax Act, 1990 without invoking the penal section 33 applicable at the relevant time and the original order was also barred by limitation prescribed under Section 36(3) of the Sales Tax Act, 1990. He also contended that since the show-cause notice was issued only under Section 36(1) of the Sales Tax Act, 1990 and according to Proviso of Section 36(3), the original order should be passed within a period of ninety days and in exceptional circumstances such period can be extended by the Collector for further ninety days after recording reasons in writing. The learned counsel for the registered person further agitated that in the instant case the show-cause notice was issued on 9-10-2004 whereas the Order-in-Original No.22/2006 was passed on 12-11-2006 after three hundred and ninety eight days from the date of issuance of show-cause notice. The original order was to be passed on or before 8-4-2005 whereas it has been passed on 12-11-2006 after lapse of 218 days from the limitation prescribed under Proviso to subsection (3) of Section 36 of the Sales Tax Act, 1990. The limitation prescribed under Section 36(3) of the Sales Tax Act, 1990 was 90 days at the relevant time and no extension was sought by the adjudicating officer and as such the original order has no legal sanctity in the eyes of law. To strengthen his arguments, the learned counsel for the appellant has also submitted the relevant documents and the plethora of reported and un-reported judgments cited as 2011 PTD (Trib.) 2216, 2010 PTD (Trib.) 2670; 2010 PTD (Trib.) 2117, 2009 PTD (Trib.) 1263, 2008 PTD 2025 (Islamabad High Court), 2008 PTD 60 and STR No.68 of 2006. For convenience and ready reference the relevant extract of some reported judgments are as follows:-- 2008 PTD 60 The claim of the Revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is settled law that where inaction on the part of the public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deeded directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time it is mandatory. The acceptance of contention of the Revenue in that regard will make a provision of law redundant and nugatory. Redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the moreso, when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a taxpayer thereby creating certainty that after its expiry if there was a good case for creation of liability he will not be dragged in. 2011 PTD (Trib) 2216

Ss.36(3) & 45B (2)

Recovery of tax not levied or short-levied or erroneously refunded

Limitation

Taxpayer contended that Order-in-Original should have been passed within 90 days of the issuance of show-cause notice or within such extended period as the Commissioner may, for the reasons to be recorded in writing, provided that such extended period should in no case exceed 90 days; admittedly the show-cause notice was issued on 9-10-2004 and the Order-in-Original was passed on 15-11-2006; which was clearly time barred having not been passed within the prescribed time limit by law

Validity

Limitation provided by in law under S.36(3) of the Sales Tax Act, 1990 was mandatory and the order under said section should have been passed within such time period

Since the Order-in-Original was passed beyond the limitation provided law, it was not sustainable and had to be struck down

Show-cause notice as well as orders were set aside by the Appellate Tribunal; and orders of the authorities below were vacated and the demand created was deleted. 2010 PTD (Trib) 2670

Ss. 11(2), 13, 36(3) & 46

Refund claim

Collector (Refund) after examination of supportive documents in respect of refund claims, partly accepted said claim of assessee

Assessee being aggrieved had filed appeal before the Collector who upheld treatment given by Assistant Collector (Refund)

Validity

Order of Collector (Refund) was filed after about 5 months of issuance of notice, whereas under provisions of S.36(3) of Sales Tax Act, 1990, time limit was 90 days which had expired

Where inaction on the part of a public functionary within the prescribed limit was likely to affect the right of a citizen, the prescription of time was deemed directory

Where a public functionary was empowered to create liability against a citizen only within the prescribed time, it was mandatory

When the prescribed limit was beneficial for the citizen and restricted the executive power to touch the pocket of a taxpayer thereby creating certainty that after its expiry even if there was a good case for creation of liability, he would not be dragged in

In the present case, order-in-original was passed beyond the prescribed time limit of 90 days, moreover the adjudicating authority had neither sought any extension from the competent Authority nor had recorded any reason for passing of order after 90 days, order passed by the Collector being made after the lapse of statutory period was declared to have been made without lawful authority

Order was annulled by the Tribunal. The learned DR strongly opposed the contentions of the learned counsel and defended the orders passed by the learned fora. Despite affording of opportunity, she failed to rebut the contentions of the learned AR or to produce any judgment by the superior courts contrary to the decisions cited by the learned counsel.

4. We have given anxious thought to the arguments advanced by the rival parties and the relevant available record perused. After having gone through the relevant record aforementioned discussion as well as bare reading of the reported judgments cited surpa and the annexed documents produced by the registered person, we are of the view that the contentions raised by the learned counsel for the registered person carries weight. It is significant to state here that where basic action/order is without lawful authority, then superstructure built on it have to fall on the ground automatically. Further observed that the order-in-original in the present case was passed beyond the prescribed time limit of 90 days. Moreover the DR has failed to produce any evidence showing that the adjudicating authority had sought any extension from the competent authority. Even if it is presumed that the extension for the permissible period of 90 days had been obtained, still the order-in-original was issued much beyond than the statutory period. Consequently, we have no ambiguity in our mind that the order-in-original was passed after the prescribed time limit as provided under Section 36(3) of the Sales Tax Act, 1990 therefore, the appeal of the registered person is accepted, Order-in-Original No.22/2006 dated 18-11-2006 as well as order-in-appeal dated 31-10-2007 are set aside. Hence, this would result into acceptance of the registered person's appeal on legal plane.

6. Ordered accordingly. HBT/122/Tax(Trib.) Appeal accepted.