2004 PLP (Trib (PTD)

(1) Where by reason of some collusion or a deliberate act any tax or charge has not been levied or made or has been short‑levied or has been erroneously refunded, the person liable to pay any amount of tax or charge or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date requiring him to show‑cause for payment of the amount specified in the notice. (2) Where, by reason of any inadvertence, error or misconstruction, any tax or charge has not been levied or, made or has been short- levied or has been erroneously refunded, the person liable to pay the amount of tax or charge or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show cause for payment of the amount specified in the notice: Provided that, where a tax or charge has not been levied under this subsection, the amount of tax shall be recovered as tax fraction of the value of supply. (3) The officer of sales tax empowered in this behalf shall, after considering the objections of the person served with a notice to show cause under subsection (1) or subsection (2), determine the amount of tax or charge payable by him and such person shall pay the amount so determined: Provided that order under this section shall be made within forty‑five days of issuance of show‑cause notice or within such extended period as an officer of sales tax may, for reasons to be recorded in writing fix, provided that such extended period shall in no case exceed ninety days. (4) For the purpose of this section, the expression "relevant date" means-- (a) the time of payment of tax or charge as provided under section 6: and (b) in a case where tax or charge has been erroneously refunded, the date of its refund.." (B) Without prejudice to the contention submitted in the foregoing paragraphs, the case is ab initio void against the company on account of the following:‑‑ (i) the respondent‑Company was neither a registered person nor was required to be registered in the meaning of Sales Tax Act, 1990; (ii) "taxable supply" was defined as a supply of taxable goods whereas the respondent‑Company was not engaged in the supply of any goods at all. It was exclusively engaged in the rendering of restaurant services; (iii) in view of the foregoing legal provisions, the business of the company fell outside the scope of sales tax as defined in section (iv) The Deputy Collector Adjudication graciously held that the excise duty charged and paid by the company which was amounting to Rs.3,71,550 was neither livable nor payable. Instead the sales tax was payable by the company @ 15 % of the value of supplies. However, the adjudged amount of Rs.6,13,055 has been determined after adding the exercise duty to the remuneration received by the appellant‑Company. The case also suffers from double taxation which is not permissible under the law. 'Furthermore', if any tax is at all payable, the amount of tax @ 10% would come to Rs.5,57,323 which was neither charged nor received from the customers; (v) without prejudice to the submissions made in the forgoing paragraphs; the additional tax prior to 1996 was not mandatory in nature and in several cases was held to be directory in nature. The facts of the case abundantly show that no wilful default on the part of the company was involved and the company is not liable to the imposition of any additional tax or penalties.

7. On the basis of said arguments, the appellant pleads that:‑‑ (a) their appeal be allowed and the impugned order be set aside; and (b) that the additional tax and penalties imposed upon the appellants be remitted.

8. The respondent on the other hand, maintained the same arguments as advanced by the respondent‑Collector.

9. We have heard the rival parties and the case record has been examined. It is now well‑settled principle of law that processes and procedures granting rights to the citizens are to be applied as they are and nothing is to be construed which is not intended. The above quoted provisions of section 36 states that while determining a tax liability against a person liable to pay the amount of tax or charge or the amount of refund erroneously made, such person shall be served with a notice within a period of three years.

10. The law further lays down that the competent sales tax officer after considering the objections of the person served with a notice to show cause shall determine the amount of tax. So in other words a demand raised against a person liable to pay tax has to be considered by the officer of the competent jurisdiction in the light of the objections raised and then the liability is to be determined.

11. The perusal of the case records indicated that before 25‑1‑2001, no notice as required by the provisions of section 36 was ever served on the appellant and no determination of tax was ever made as required by said section before 30‑11‑2001. And by then the demand raised had become time‑barred within the four‑corners of the provisions of subsection (2) of section 36 of the Sales Tax Act, 1990. And obviously, a time‑barred demand is not enforceable in law as it in itself defeats the requirements of section 36 of the Sales Tax Act, 1990.

12. Before parting with the case we would like to observe on the conduct of the respondent‑Collector who in spite of the directions of this Tribunal, by simply stating "that the issue is not time‑barred since the notice of demand for sales tax involved has been issued to the unit many times since the inception of contravention report" failed to comply with the Tribunals orders and without applying the judicial mind passed a perfunctory order and failed to abide by the legal provisions.

13. Honourable Supreme Court of Pakistan has time and again disapproved the passing of such perfunctory orders in the causes involving valuable rights of the parties. It is settled law that the judicial order must be a speaking order manifesting by itself that the Court has applied its judicial mind to the issues and the points of controversy involved in the causes. Furthermore, when the reasons would not be forthcoming, obviously the Appellate Court would be deprived of the views of the subordinate Court. In any way the impugned order, which is not a speaking order and devoid of reasons is not sustainable in law being in contravention of law declared by the Honourable Supreme Court of Pakistan in various cases like Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others (PLD 1959 SC (Pak.) 272). Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others (PLD 1970 SC 158) on Mollah Ejahar Ali v. Government of East Pakistan and others (PLD 1970 SC 173) and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others (1984 SCMR 1014) etc.

14. In the light of above, we have examined the impugned order and find that the same is not sustainable in law as the demand raised was hit by limitation thus the demand being time‑barred is not enforceable. The impugned order is accordingly set aside. S.A.K./45/Tax(Trib.) Appeal accepted.