1989 PLP 145 (PTD)

NAIMUDDIN, CJ.-- By this application under section 17 (1) of the Sales-Tax Act, 1951 (hereinafter called the Act) the following questions of law have been referred to this Court: "(1) "Whether it the facts and circumstances of the case, the Appellate Tribunal was justified in holding that no notice under Section 28 of the Sales tax was issued and hence the Sales-tax Officer acted without jurisdiction in framing the assessment?" (2) "Whether in the facts and circumstances of the case, the notice issued on SST-24 was bad in law as it did not allow 35 day's, time to the assessee to file returns?'

2. The facts as stated in the statement of the case-are as follows:

3. The respondent assessee is a private limited company engaged in the export of sea-food. It had neither obtained any manufacturing license nor submitted any return for sales-fax for any of the quarters of the year 1968-69 under reference. The Sales Tax Officer, however, issued notice dated 3-10-1973, on prescribed form SST-24 and in pursuance thereof the assessee filed a return under protest on 30th July, 1973 (?),

4. Before the Sales Tax Officer the assessee pleaded that the sales amounting to Rs.6,47,912 made locally to Messrs Pakistan Fisheries Limited, should be treated as export sales as the said company had later on exported them. The Assessing Officer did not agree with the contention and charged sales tax on total sales including sales made to Messrs Pakistan Fisheries Limited but after excluding the export of Rs.9,62,012.

5. The assessee under the then existing law filed direct appeal from the order before the Appellate Tribunal where inter alia it was submitted that no notice under Section 28 of the Act which was sine qua non was issued. It was therefore, submitted that the Sales Tax Officer had no jurisdiction to make assessment and hence the entire proceedings were void ab initio. Alternatively it was contended on behalf of the assessee that even if the notice issued on 3-0 1973, was treated as notice under won 28 of the Act still the assessment was bad in law and the Sales Tax Officer did not allow the statutory period of 35 days,

6. The Tribunal, however, relying on its earlier decision dated 7-1-1975, in S.TA. No.156/KB/1972-73, opted the assessee`s contention and cancelled the order of assessment as being void ab initio. It may be mentioned that the Tribunal in STA/KB/1972-73, had, in turn relied on its earlier two decisions, one of them being STA. No. 141 of 1971-72 on the issue and concluded as follows: "We find on the basis of these facts that in the first instance the statutory notice required under Section 28 was not issued in this case. But even if we hold that the last requisition of 27-5-1971, did constitute a notice under section 28, the time for filing the return made in this requisition could not be cut short from the statutory limitation of 35 days. Therefore, following our own decision for the earlier year we must accept the appellant's plea that the proceedings initiated upon the concession that the requisition of 27-5-1971 was a notice under Section 28 would still be rendered invalid The assessment would therefore, be cancelled as ab initio void- In this view of the matter the second objection regarding the non-taxability of the goods sold needs no adjudication at this stage?"

7. We have heard Mr.S. Nasrullah Awan, learned counsel for the applicant and Mr. Iqbal Naim Pasha learned counsel for the respondent.

8. It is common ground that the notice issued by the department was in the prescribed form SST-24, specimen whereof is reproduced herein below:- FORM SST-24 FORM OF SUMMONS UNDER THE SALES TAX ACT, 1951. Summons to appear in person or by an authorized agent or by a pleader duly instructed and able to answer all material questions relating to the assessment or accompanied by some person able to answer all such questions and/or to produce documents.

Whereas your attendance is necessary to give evidence, whereas the following documents (here describe the documents in sufficient detail to permit of their identification with reasonable certainty) are required with reference to an enquiry and under the Sales Tax Act, 1951 (here enter briefly the subject of the inquiry) now pending before me you are hereby summoned to appear in person--before me to produce, or cause to be produced the said documents on--the day of 19--at o'clock at place (and not to depart thence until permitted by me). Given under my hand and seal this

day

of 19

. (Seal) Signature Official Designation."

9. It is submitted by Mr. Nasrullah Awan that notice issued in Form SS.T 24 was the required notice under Section 28 of the Act and no other notice was issued.

10. Taking up the second question it is an admitted position that the notice issued in Form SS.T-24 did not provide a period of 35 days and required the assessee to file the return within three days. Now the question is whether such a notice fulfils the requirement of Section 28 of the Act, therefore, it is necessary to refer to Section 28 of the Act. Section 28 as existed at the relevant time reads as follows:- "

28. Tax not assessed.--(1) If for any reason in any year tax has escaped assessment or has been under assessed, or has been assessed at a rate lower than that provided under this Act, or excessive relief or refund has been allowed, the Sales-tax Officer may at any time within five years of the end of that year assess or re,-assess the tax payable or the relief of refund allowed after issuing 'a notice to the assessee and making such enquiry as he considers necessary. (2) Notwithstanding any thing to the contrary contained in subsection (1), the assessment for the tax payable for anyone quarter or more quarters than one of the period beginning on the first day of April, 1954 and ending on the thirtieth day of June, 1965 may be made at any time before the thirtieth day of June, 1971 after issuing a notice to the assessee and making such enquiry as the Sales Tax Officer considers necessary and no assessment made, or any other proceeding taken.

11. Now, the question is whether there is a requirement of service of notice and that should allow a period of 35 days. A bare perusal of section 28 of the Act and Form SS.T-24 shows that both do not fix any such period of 35 days. Therefore, the only requirement is of issuance of a notice to the assessee, which notice has to be reasonable. Now, in this case the notice issued was for three days, therefore, even if there was no requirement of issuing notice for 35 days could we say that it was a reasonable notice to the assessee. In our opinion such a notice was bad in law. Mr. Iqbal Naim Pasha referred .to three cases, namely, Commissioner of Sales Tax, Karachi (Central) Karachi v. Pakistan Fisheries Ltd., Karachi (1985) 51 Tax 88, (2) Commissioner of Income Tax v. Pakistan Fisheries LTD. 1988 P T D 5; and (3) Ata Hussain Khan Ltd. v. Commissioner of Income tax, East Pakistan, Dacca 17 Taxation

220. In the first case it was held that the Form SS.T-15 provides a period of 35 days. It was contended on behalf of the department that Forms SS .T-15 to 25 were not forms appended to rules to Sales Tax Rules as defined in rule 36 of the Sales Tax Rules. On the other hand Mr. Iqbal Naim Pasha who was appearing for the respondent in that case relied on section 5(3) of the Sales Tax Act which provides that all the officers and persons employed in the execution of the Act shall observe and follow the orders, instructions and directions of the Central Board of Revenue. It was further contended by Mr. Iqbal Nairn Pasha that Forms SS.T-15 to 25 issued under Section 5 (3) read with Rules framed under section 39 of the Act were binding on the Sales Tax Officers and it was pointed out that the Sales Tax Officers have been issuing notices under S.S.T-15. Dealing with this contention it was observed by Mr. Justice Haider Ali Pirzada who wrote the opinion of the Division Bench as follows:- "It will be appreciated that right from the inception of the Act, and even uptil now the Sales Tax Officers have been issuing notice under S.S:

15. It is well settled as Laid down in Bashir Ahmed Khan v. Mahmud Ali Khan Choudhary and 3 others P L D 1960 SC 195 and the United Netherland Navigation Co. Ltd. v. C.I.T. P L D 1965 SC 412, (1965) 12 Taxation 57 that departmental construction can be used in aid of interpretation."

12. Then reference was made to the cases of Nazir Ahmed v. Pakistan (PLD 1970 S.C. 453) and Masuf Ahmed v. Pakistan (P L D 1976 S.C. 195), and certain observations were made there, meeting with the arguments that Forms S.S.T. No.l to S.S.T-14 were issued under the rules framed under Section 39 and Forms No.S.S.T-15 to S.S.T-25 were issued without any Rules. It was then observed as follows:- "This argument he was raising on the principle that where legislature had indicated, that a thing should be done m a particular manner it should be done in that and that manner alone. The principle advanced is quite sound but it has no application to these forms because these forms were issued by the C.B.P. under Section 5 (3) of the Act and not under the Sales Tax Rules, 1951. For issuing orders, instructions and directions under Section 5 (3) the requirement of acting through Rules does not exist anywhere."

13. Any other argument in our opinion, which was noticed in this case and raised by the Advocate for the Government was that Form No. S.S.T 15 was directory and not mandatory and it was observed as follows:- "We are in respectful agreement with this judgment. We are of the view that the Form S.S.T. 15 in regard to calling on the assessee to submit return is not directory but is mandatory and the Sales Tax Officer had no power to curtail the period prescribed therein". This judgment was followed in the second case referred by Mr. Pasha. No valid reason has been advanced to take a different view in this regard. 14.In the third case the Sales Tax Officer issued notice on 1-5-1961 for the charge year 1957-58 and completed the assessment under section 10(4) of the Sales Tax Act on 1-5-1961. In appeal the assessment order was set aside as no notice under Section 28 of the Act was issued. The Appellate Tribunal, however, maintained the assessment order holding that the assessment was rightly made under section 10(4). On reference it was observed: "The question as framed, however, is whether the issue of a notice was necessary for initiation of proceedings for assessment for the year 1957- 58, after the expiry of that year. We have seen that the assessment has been admittedly made under Section 10 (4) and that assessment can be made in this case only under Section 28 of the Sales Tax Act and we are of opinion that a notice should have been issued, proceedings conducted, and an enquiry held, as contemplated in section 28 as distinguished from section 10 of the Act."

15. This judgment draws distinction between assessment framed under sections 10 and 28 of the Act. From the -facts of this case it is not clear which form of notice was used by the Sales Tax Officer. However, it has been held that an assessment under Section 28 can be made after notice to the assessee. This judgment is not. of much relevance to the present case. 16.We have already observed that when notice is required to be given it should be reasonable notice i.e. the period within which the thing is required to be done must be reasonable and the person who is required to comply with the terms of the notice must have reasonable time to comply with it. In this case we have observed that the notice was not reasonable.

17. Notice in Form S.S.T-24 materially differs from S.S.T-15. The former does not fix any date for compliance but the latter does fix a minimum period of 35 days in cases where the Sales Tax Officer has reason to believe that the value of taxable sales has wholly or partially escaped assessment or has been assessed at too low a rate and the assessee is called upon to file return of total taxable sales. In the facts and circumstances of the case notice in Form S.S.T-15 would have been proper and appropriate. The Sales Tax Officer, however, chose to issue notice in Form. S.S.T-24 but failed to provide even a reasonable time for submitting the return. From the above discussion it is clear that the notice in Form S.S.T-15 fixes a minimum period while in a notice in Form S.S.T-24 reasonable time should be given. In the present case none of the require Were observed. No notice in Form SST-15 was issued and the notice issued in Form S.S.T-24 did not provide for reasonable time and was bad in law. The assessment made by the Sales Tax Officer could not be maintained. Our answers to the questions are as follows:- (1) In the affirmative. (2) Notice in Form SST-24 is bad in law. M.B.A./C-67/K Order accordingly.