2025 PLP (Trib (PTD)

RAO MUHAMMAD NASIR JAMIL, MEMBER.

Titled appeal preferred by M/s Pakistan Railways (hereinafter the appellant) is re-fixed for decision in pursuance of the order of Hon'ble High Court passed in STR No.66832/2023 dated 12.10.2023 whereby, the order passed by the ATIR bearing STA No.1977/LB/2022 dated 17.07.2023 has been set aside and the matter is remanded back to the Tribunal to decide the appeal afresh preferably within a period of 3 months. In light of directions issued by the Hon'ble High Court, the case was fixed for hearing on 05.08.2025 on which date Barrister Mr. Nabeel Malik appeared as an authorized representative of the appellant whereas Hafiz Qasim Raza tendered appearance on behalf of the department.

2. Facts of the case in brief are that the appellant rendered services on account of travel by train in AC sleeper class, AC parlor class (sitter) and First class sleeper classified under PCT Headings 9803.2010, 9803.2020 and 9803.2023 respectively on which Central Excise Duty (hereinafter the 'CED') was chargeable in VAT Mode @12.5%. However, on scrutiny of record relating to tax periods July, 2001 to June, 2005 it has allegedly been observed that the appellant has failed to deposit due CED which was collected or required to be collected on services rendered against the sale of tickets. Accordingly, the payment challans for the lax periods under reference were compared with Abstract-X (official account of revenue earning) and observed that the appellant has not declared its total tickets sale in accordance with the Abstract-X and as a result of which it revealed that the appellant had illegally evaded CED amounting to Rs.61,416,117/- which was recoverable along with default surcharge of Rs.121,060,252/- and penalty of Rs.3,057,306/-. Accordingly, the appellant was called upon to show cause vide notice dated 20.08.2007 as to why the aforesaid amount of CED may not be recovered from him under sections 11(2) and 36(1) of the Sales Tax Act, 1990 along with default surcharge and penalty. The reply furnished by the taxpayer was considered unsatisfactory, hence ONO No.08/2007 dated 20.09.2007 passed.

3. Being aggrieved with the treatment accorded by the Assessing Officer the taxpayer filed appeal, the CIR(A) after considering submissions made before him remanded the case to the assessing office for re-assessment. As per impugned order this treatment of levying CED and its remand in first appeal continued at number of rounds of litigation mentioned in the Impugned order. However, on second last time the Assessing Officer repeated his earlier action vide ONO.1785 dated 06.04.2021, but on appeal, the CIR(A) has observed that the appellant has filed an amended Abstract-X on 03.12.2021 this copy of Abstract-X has altogether changed the scenario, therefore, this needs to be reconciled with the original sale record. As such the CIR(A) remanded the case vide his order dated 10.12.2021 with specific directions which reads as under: "5.1. As evident from the above the Abstract-X has been amended by Pakistan Railways (the appellant) on 03.12.2021 this copy of Abstract-X has altogether changed the scenario of the case as this needs to be reconciled with the original sale of record to the DCIR in view of these facts I am left with no option but to remand the case with the following directions.

1. Reconcile the revised abstract tax with sales record of the stations (stations balance sheet) and monthly traffic book.

2. Pass a speaking and judicious order after covering all legal and factual aspect of the case within 30 days.

3. The registered person/AR is directed to cooperate with the department and ensure proper compliance in providing the requisite information/documents before the DCIR."

4. Accordingly fresh proceedings were initiated by issuing notices to the appellant but on the date fixed neither anyone appeared on behalf of the appellant nor submitted any explanation/reply, therefore, the earlier action regarding levy of FED along with default surcharge and penalty has been repeated.

5. The taxpayer again filed appeal before the CIR(A) but on this occasion he has held that matter of reconciliation is pending for more than 15 years. Since the appellant could not reconcile the deficiency despite allowing multiple opportunities the order passed by the Assessing Officer does not warrant any Interference. When this order was challenged in further appeal the ATIR has also upheld the action of the authorities below vide order dated 17.07.2023, which is set aside by the Honorable Lahore High Court and now the taxpayer's appeal is being re-fixed for fresh decision.

6. The main issue involved in the matter was whether CED accrued during the years when CEA, 1944 (repealed enactment) was in force can be recovered under the provisions of FEA, 2005 (repealing enactment), especially in absence of any saving clause in the Act of 2005.

7. The learned AR contended that since at the time of tax years in issue (July 2001 June 2005) the CED was recoverable under the provisions of Central Excise Act, 1944 which has since been repealed and new law i.e. Federal Excise Act, 2005 has been promulgated without any saving clause therein regarding levy of CED accrued under the provisions of the CEA, 1944, therefore, very initiation of proceedings through show cause notice issued are illegal and void ab initio. He has argued that since Section 48 of the FEA 2005 is silent about levy of CED and further the charging provision also enlarged limitation from three years to five years, the legislative intent is inconsistent with that of the repealed law. Consequently, the recovery of CED under the repealed enactment cannot be sustained by invoking Section 6 of the General Clauses Act, 1897, since that provision preserves prior rights and liabilities only in the absence of a contrary intention, whereas here the Federal Excise Act, 2005 manifests a different intent and thus precludes continuation of the repealed Central Excise Act. When we specially confronted Sections 6 and 8 of the General Clauses Act, 1897 and Article 274 of the Constitution of Pakistan, the learned AR strongly contended that these sections in the facts and circumstances have no application in the instant case. To further strengthen his arguments the learned AR has submitted following written rebuttal against applicability of Sections 6 and 8 of General Clauses Act, 1897 and Article 274 of the Constitution of Pakistan:- "

1. In order to rebut the sections 6 and 8 of General Clauses Act 1897 and Article 274 of The Constitution of Pakistan 1973. We are reproducing the above-mentioned sections for assisting the Honourable Court: "(6) Effect of repeal. Where this Act, or any 2 (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then unless a different intention appears, the repeal shall not- (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed, or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." "[

8. Construction of references to repealed enactments.- (1)] 6 Where this Act, or any 2[ Central Act] or Regulation made after the commencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re-enacted." 274. (1) All property and assets which, immediately before the commencing day, were vested in the President or the Federal Government shall, as from that day, vest in the Federal Government unless they were used for purposes which, on that day, became purposes of the Government of a Province, in which case they shall, as from that day, vest in the Government of the Province. (2) All property and assets which, immediately before the commencing day, were vested in the Government of a Province, shall, as from that day, continue to be vested in the Government of that Province, unless they were used for purposes, which on that day, became purposes of the Federal Government in which case they shall, as from that day, vest in the Federal Government. (3) All rights, liabilities and obligations of the Federal Government or of the Government of a Province, whether arising out of contract or otherwise, shall as from the commencing day, continue to be respectively the rights, liabilities and obligations of the Federal Government or of the Government of the Province, except that- (a) all rights, liabilities and obligations relating to any matter which, immediately before that day, was the responsibility of the Federal Government, but which under the Constitution, has become the responsibility of the Government of a Province, shall devolve upon the Government of that Province; and (b) all rights, liabilities and obligations relating to any matter which, immediately before that day, was the responsibility of the Government of a Province, but which under the Constitution, has become the responsibility of the Federal Government, shall devolve upon the Federal Government. "Unless a different intention appears" Different intention DOES appear in Federal Excise Act, 2005 (FEA, 2005).

3. Section 6 applies where the repealing law is silent- here, it is not silent; the FEA 2005 has a repeal provision with no savings, which is an express legislative choice Section 8 (Construction of references to repealed enactments) Not applicable

4. Section 8 only applies if the later Act "repeals and re-enacts" the former provisions -FEA 2005 does not re-enact the CEA 1944; it introduces a completely new regime with a different charge, scope, and procedure. a. The definitions, taxable events, exemptions, and machinery provisions are substantially different. b. Therefore, references to old provisions cannot be "read into" the new Act.

5. Section 8 applies to cross-references in other enactments or instruments. a. The dispute here concerns liabilities under the repealed Act itself, not interpretation of another Act that refers to it. b. Since the FEA 2005 has no clause importing pending liabilities from CEA 1944, Section 8 has no work to do.

6. Unless a different intention appears" Different intention DOES appear in Federal Excise Act, 2005 (FEA, 2005). Even if the former act re enacts the CEA 1944 while repealing it but if we look carefully last line of section of General Clauses Act 1897 which is reproduced below and bold above in this rebuttal for the assistance of the court: "unless a different intention appears, be construed as references to the provision so re-enacted."

7. This last line of section 8 General Clauses Act, 1897 clearly tilts in my favour with my earlier submission that different intention does appears in FEA, 2005 when CEA, 1944 is expressly repealed through section 49 of FEA, 2005. Hence section 8 does not apply to our case. Article 274 of the Constitution Not applicable to tax

8. Contextual scope. Article 274 is a transitional provision for property, assets, rights, and liabilities of the Federal and Provincial Governments at the commencement of the Constitution of 1973. It deals with inter-governmental transfers of assets and liabilities due to constitutional restructuring, not the repeal of ordinary statutes like CEA, 1944.

9. The "commencing day" in Article 274 is in 1973. The repeal of CEA 1944 by FEA 2005 happened decades later. Article 274 cannot be stretched to post-2005 events; it is not a general saving clause for all future repeals. Even if Article 274 were relevant, the "liabilities" it saves are governmental obligations in the constitutional framework not tax liabilities of citizens under a repealed fiscal statute.

8. With the help of above arguments, it is contended by the learned AR that after repeal of the CEA, 1944 without saving clause in the new enactment the Central Excise Duty recoverable for the prior tax periods cannot be recovered at all through issuance of show cause notice under the provisions of FEA, 2005. He, therefore, prayed for annulment of the impugned orders.

9. The learned AR has pointed out that the proceedings in the instant case are not sustainable because the matter of short payment of CED relating to tax periods July 2001 to June 2005 is involved but the show cause notice was issued under sections 11(2) and 36(1) of the Sales Tax Act, 1990 (STA, 1990) and that too without making any reference to Section 14 of the FEA, 2005. Since the show cause notice is legally defective the whole proceedings and thereafter super structure is not legally sustainable. Reliance was placed upon 2021 PTD 2002 and 2005 PTD

480. He pleaded that the show cause notice is the basic document, which in the instant case has been issued under the wrong provision of law, hence the consequential orders passed on the basis of said show cause notice are not sustainable in the eyes of law. It was further contended that Section 11(2) and Section 36 deal with a deliberate act or collusion on the part of the taxpayer but however, in the show cause notice no such allegation was confronted. According to him, the show cause notice was issued on the charge of inadvertent mistake in the Abstract-X. Further contended that since, no allegation of deliberate act or collusion was levelled through the show cause notice very initiation with its all consequential orders and superstructure have no legal sanctity. The AR has further pointed out that the limitation to recover the CED through Central Excise Act, 1944 was one year; the limitation to recover the FED through FEA, 2005 was three years at the time of issuing of show cause notice; whereas in Section 11 or 36 of the STA, 1990 the amount erroneously evaded could be recovered by serving the notice within 5 years. The learned AR further submitted that even if the CED could be recovered under FEA, 2005, the omission of not mentioning section 14 of FEA 2005 in the show cause notice was a cunning act of the authority to bypass the time limitation of 3 years, which would have made the proceedings in regard to CED till June 2004 time barred.

10. On factual ground it is pointed out that the CIR(A) vide its order No.116-ST/A IV dated 10.12.2025 has observed that now the Abstract-X has been amended by the appellant therefore the department is specifically directed to reconcile the Abstract-X and then pass a speaking order. It is stated that despite filing amended Abstract-X by the taxpayer the Assessing Officer repeated the earlier action without making any reconciliation as directed by the CIR(A). It is stated that neither the observations of the CIR(A) has been challenged in appeal before the ATIR neither any reconciliation whatsoever was made, therefore the orders of the authorities below merit cancellation on this ground too. In support of his contention the AR has produced copy of amended Abstract-X along with reconciliation and other allied supporting documents for our perusal. It is therefore submitted that even the impugned order on this factual ground is not sustainable.

11. The learned DR on his turn supported the impugned order for the reasons recorded therein. He stated that matter of reconciliation is involved in the instant case which the taxpayer failed to satisfactorily reconcile despite allowing him ample opportunity, therefore, no interference to the impugned order is warranted.

12. We have considered the rival contentions and also minutely gone through the available record. So far as the first contention of the learned AR that recovery of CED relating to prior tax periods through show cause under FEA, 2005 is absolutely illegal as the same cannot be done in the absence of any saving clause in the FEA, 2005, we cannot subscribe to this proposition keeping in view the earlier judgments of superior courts whereby it is held that notifications or orders under the repealed Act continue if not inconsistent with the new Act, unless expressly superseded. While holding so we have taken guidance from the reported judgments one enunciated by the Hon'ble Lahore High Court cited as 2019 PTD 1414 relied upon by the learned AR and the other by the Hon'ble Peshawar High Court reported as 2025 PTD 433. 2019 PTD 1414: In this case Income Support Levy has been charged in terms of section 3 of Income Support Levy Act, 2013. Upon promulgation of the Act, 2013 vires thereof was challenged through numerous writ petitions which were ultimately dismissed vide order (2017 PTD 83). There after demand notices were issued for recovering the levy along with surcharge accrued there upon. Meanwhile, the Act, 2013 was repeal through the Finance Act,

201. Thus the matter came before the Lahore High contended that Finance Act 2014 had repealed Act, 2013, which completely obliterated the Act 2013 causing it to seize to be a part of body of law, in the absence of any saving clause. The Hon'ble Court has deliberated on this issue in detail manner and has held that it is well settled legal principal that substantive rights vesting in anyone under the repealed enactment are not lost or affected in the least by the repealing enactment. This is clearly provided in clause 6 of the General Clauses Act, 1897. Even the proceedings pending on the date of repeal stand protected by the said Act. Thus, there is no substance in the above contention of the Learned Council. The Hon'ble Lahore High Court after placing reliance on the various Judgments has held as under: "

25. Under the circumstances, irrespective of repeal of Act, 2013, the liability to pay the levy subsists and the Officer of Inland Revenue-Officer(s) who had issued notices impugned has the jurisdiction to issue notices, assess payment of levy in accordance with the rate prescribed and collect the same accordingly." 2025 PTD 433: In this case the Revenue Authorities alleged that the petitioner under paid excise duty by treating cyrup as raw material for soft drinks and paying duty at a reduced rate. Rather than at the higher rate for concentrate or cyrups under the Federal Excise Act, 2005. The legal question involved was whether the options provided in CEGO No. 4 of 2002 remain valid and consistent with the Federal Excise Act, 2005, or whether they were repealed or rendered Inconsistent by the new Act. The ATIR on his turn had held that CEGO No. 4 of 2002 conflicted with the scheme of 2005 Act, and thus did not continue enforce. The Hon'ble Court reviewed the power of FBR to issue such orders under both the repealed Central Excise Act, 1944 and Federal Excise Act, 2005 after. The Court has also taken into consideration section 24 of the General Clauses Act and section 48 of the Federal Excise Act, 2005 and recorder following findings: i. The Court find that FBR had the authority to issue CEGO No. 4 of 2002, and that the notification was not inherently inconsistent with the Federal Excise Act, 2005. ii. Since the 2005 Act does not expressly repeal such notifications, and section 24 of the General Clauses Act allows their continuation if not inconsistent, CEGO No. 4 of 2002 remains valid. iii. The Court emphasized that unless a new notification or order is issued under the 2005 Act to supersede CEGO No. 4 of 2002, its procedures and options remain available. Keeping in view the findings recorded by the Hon'ble Courts and by application of section 6 of the General Clauses Act, 1897, we feel no hesitation to hold that the repealing of CEA, 1944 by FEA, 2005 does not affect any liability incurred upon the appellant and notifications and orders issued under the repealed CEA, 1944 shall remain active and alive irrespective of its repeal through FEA, 2005 unless specifically rescinded.

13. The learned AR further submitted that section 6 of the General Clauses Act, 1897 protects the proceedings already Initiated under the provisions of the repealed enactment prior to the repealing, whereas in the case of the appellant at the time of the repealing of CEA, 1944 and commencement of FEA, 2005, no legal proceedings were initiated against the appellant. Therefore, section 6 of the Act of 1897 does not apply in the case of the appellant as the same does not provide to initiate the proceedings under the repealed enactment after it has been duly repealed. In this regard, attention of the AR was brought to the provision of Article 264 of the Constitution of the Islamic Republic of Pakistan 1973, wherein it is provided that any legal proceedings may be instituted, continued or enforced under the repealed enactment as if the law had not been repealed. Keeping in view the provision of Article 264 of the Constitution and section 6 of the Act of 1897, we reach to the conclusion that the liability of CED incurred upon the appellant under the repealed CEA, 1944 is not affected by the enactment of repealing Act of 2005 even in the absence of any saving clause in the FEA, 2005. Whereas the initiation of proceedings for recovery of the CED incurred on the appellant under CEA, 1944 is concerned, we come to the conclusion that the same can be initiated even after the repealing of CEA, 1944 by FEA, 2005, but the same, by virtue of Article 264 of the Constitution, has to be initiated under the provisions of repealed law (CEA, 1944) in a manner as if the law had not been repealed provided that other legal formalities are properly complied with.

14. Other contentions advanced by the learned AR have considerable force. From perusal of the impugned order, we have noted that allegation against the appellant is that he has short paid CED and he was called upon to show cause under sections 11(2) and 36 of the Sales Tax Act, 1990. It was contended by the AR that no allegation of deliberate act or collision was confronted through show cause notice, hence the order passed in consequence of a defective show cause notice is always held illegal by the Superior Courts. We have consulted the available record and do agree with the learned AR that the impugned order is not sustainable for the following reasons: i) Recovery of short paid FED relating to tax periods 2001 to 2005 has been assessed by issuing show cause notice under sections 11(2) and 36 of the Sales Tax Act. Since no provision of the enactments on the subject matter (i.e., excise duty) has nowhere been invoked in the show cause notice the very initiation of the proceedings are void ab initio: ii) In show cause notice no allegation of deliberate act or collision on the part of taxpayer is levelled, hence, the imposition of penalty and default surcharge is not sustainable: iii) According to the provisions of CEA, 1944 recovery of short levy can be adjudicated by issuing show cause notice within three years whereas by invoking the provisions of STA, 1990 the Assessing Officer has enlarged the limitation to five years. For this reason, the order of the authorities below relating to tax periods 2001 to 2004 are time barred: iv) It is also evident from the available record that the Assessing Officer has failed to make any effort to reconcile the issue with the help of amended Abstract-X filed by the appellant keeping in view the specific directions of CIR(A). Neither the department challenged these directions nor follow the same in letter and spirit, hence attained finality, hence, the impugned orders are not sustainable. For the reasons recorded above, the appeal filed by the taxpayer is allowed in the manner indicated above. For the reasons recorded above, the orders of the authorities below are annulled and the appeal filed by the appellant is allowed accordingly. This order consists of (11) pages and each page bears my signature. MQ/33/Tax(Trib) Appeal allowed.