2011 PLP (Trib (PTD)

JAWAID MASOOD TAHIR BHATTI, JUDICIAL MEMBER.

The appellant through this appeal has objected against the Order-in-Appeal No.1165 of 2008 dated 30-6-2008 passed by the learned Collector, Collectorate of Customs, Sales Tax and Federal Excise (Appeals), Faisalabad on the following grounds:-- (i) No attestation was required under law. Refund of sales tax against the charge of "non-filer" has been rejected despite the fact that sales tax returns was duly filed by the alleged suppliers and the same was also produced before the learned Collector (Appeals). The charge of non-filing despite provisions of sales tax return in case of alleged suppliers has been rejected for want of attestation which is neither required under the Supreme Legislation i.e. the Sales Tax Act, 1990 nor under Subordinate Law i.e. Sales Tax Refund Rules nor under the Standing Order No.3 of 2006. As such, rejection of refund on the charge of non-filing despite the fact that alleged sales tax returns have duly been filed for want of their attestation is highly unjustified and illegal. (ii) Non-filer. The first issue as adjudged in the impugned appellate order pertains to rejection of refund on the charge of non-filing against above-listed suppliers which is false and unfounded as all alleged suppliers have filed sales tax returns and the same were produced before adjudicating as well as appellate authority but refund against above-listed suppliers is rejected on the ground that their sales tax returns are not attested and verified by the concerned Collectorate. No such attestation is required under law hence, rejection of refund despite provisions of sales tax returns is highly unjustified and of no legal effect. (iii) Scrutiny for verification of input tax. The appellants claimed refund of input tax against invoices issued by Messrs Star Traders, Faisalabad bearing Sales Tax Registration No.08-3004-00728, duly incorporated in his sales register, summary statement and sales tax return for period in question but the learned adjudicating as well as appellate authority has not considered the same and held: "However, the appellants have legitimate right to filer a supplementary claim if supplier unit is cleared by the concerned Collectorate". The impugned judgment of both fora is not maintainable on the following points of consideration:-- (a) The legal obligations under sections 7, 22, 23, 26 and 73 resting upon the appellants has duly been fulfilled by the appellant's who cannot be confronted with rejection of sales tax refund merely due to any default whatsoever on the part of their supplier. Even otherwise, no action for any default whatsoever on the part of their supplier has so far been taken against the persons in default however, rejection of appellants' refund claim for period in question, which is an easy job, has been ordered keeping aside all the legal aspects of the instant case. (b) No contravention of sales tax laws or notification issued thereunder or any other specific instruction issued by Central Board of Revenue on subject matter is alleged in show-cause notice and impugned appellate order is passed merely on assumptions and presumptions which is not warranted under law as laid down by Hon'ble Sindh High Court, Karachi in a judgment reported at 2004 PTD 868, "The sales tax imposed on the basis of some assumption and presumption not warranted in law shall always be struck down" thus, rejection of refund on this ground is unlawful and illegal in eye of law. (c) The objection of "scrutiny for verification of input tax" is generated by the STARR having no legal backing by the Sales Tax Statute. No legislative enactment or even any written directive from the Federal Board of Revenue for rejection/deferment of sales tax refund on such objection is made on the subject matter without which all proceedings taken by the department in this regard are void, ultra vires, illegal and unlawful. Reliance is placed on the judgment of this Hon'ble Court in case of Messrs Niagara Mills (Pvt.) Ltd. Faisalabad v. The Collector of Sales Tax and another as reported at [Vol. 11 No.08 TAX FORUM 45] wherein it has been laid down: "The information so downloaded from the STARR cannot be held as reliable information and after obtaining such information the department was duty bound to establish through independent evidence." (d) Since term "scrutiny for verification of input tax" is nowhere quantified and qualified or even defined in the Sales Tax Act, 1990 therefore, rejection of refund on this ground is beyond scope of sales tax laws. The Hon'ble Lahore High Curt, Lahore has laid down in case of Messrs Avari Hotel Ltd. v. The Collector of Sales Tax and 3 others reported at 2000 PTD 3765; "A levy can only be made by express and exact words". The Supreme court of Pakistan had also laid down in a judgment of Messrs Mehran Associates Ltd. reported at (1993 SCMR 274) that; "The cardinal principles of interpretation of a fiscal statute seem to be that all charges upon the subject are to be imposed by clear and unambiguous words. There is no room for any intendment nor there is any equity or presumption as to a tax. A fiscal provision of statute is to be constructed liberally in favour of the taxpayer and in case of any substantial doubt, the same is to be resolved in favour of the citizen". (e) Reliance is also placed on the judgment of Hon'ble Sindh High Court, Karachi in case of the Collector, Sales Tax and Central Excise (West), Karachi v. Messrs Al-Hadi Industries (Pvt.) Ltd. as ported at 2002 PTD 2457 wherein it was held: "A Court cannot imply anything, which is not expressed; it cannot import provisions in the statute, so as to support assumed deficiency. The taxing statute must be interpreted in the light of what is clearly expressed".

2. I have heard the learned representatives from both the sides and have also perused the impugned order. Learned A.R. has raised the preliminary legal objection involving matter of jurisdiction with the contention that the legal issues going to the roots of the case can be raised at any stage of the proceedings, even if not raised before the lower forums. In this respect, the decision of the Hon'ble Supreme court of Pakistan reported as 2006 SCMR 783 and the decision of the Honourable High Court reported as 1976 PTD 56 as well as the judgment of Karachi High Court reported as 2000 PTD 359 have been referred. Regarding the legal objection, learned A.R. has contended that the order-in-original in this case has been passed by the Assistant Collector (Refund) which lacks jurisdiction being hit by Clause (iii) of subsection (1) of section 45 of the Sales Tax Act, 1990. Learned A.R. has further contended that show-cause notice in this case bearing C. No.14415 dated 26-3-2007 for January, 2007 was issued by the Deputy Collector (Refund) whereas the consequent adjudication order dated 26-6-2007 has been passed by the Assistant Collector rejecting the sales tax refund which is illegal, without jurisdiction and coram non judice as the Assistant Collector is not lawfully empowered to adjudicate the cases falling under subsection (2) of section 11 beyond pecuniary limit of one million rupees as prescribed under clause (iii) of subsection (1) of section 45 of the Sales Tax Act providing powers of adjudication. Learned A.R. has contended that as the adjudicating authority has transgressed its jurisdiction and powers of adjudication by passing the impugned adjudication order for rejection of refund beyond the threshold of one million rupees contrary to the provisions of section 45 of the Sales Tax Act, 1990 as it was only the Deputy Collector (Refund) who should have passed the adjudication order, therefore, the impugned order-in-original being illegal is liable to be set aside. He has contended that it is a well-settled principle of law that a power vested in an authority can only be exercised by that authority and none else. Exercise of that authority by any order, authority would be without jurisdiction. In this regard, the decisions of the Hon'ble Supreme Court of Pakistan reported as 2001 SCMR 1822, 2003 SCMR 629 and 2008 SCMR 240 as well as the order of this Tribunal dated 3-6-2010 in S.T.A. No.272/LB/2009 and Order dated 26-8-2010 in S.T.A. No.98/LB/2009 have also been referred.

3. After perusal of the order-in-original, show-cause notice and other record of the case, I have found that the order-in-original has been passed by the Assistant Collector while the show-cause notice was sent by the Deputy Collector. I, therefore, without going into the merits of the case find no justification for the passing of order-in-original as in this case once the Deputy Collector has assumed the jurisdiction through sending a show-cause notice, the lower authority i.e. Assistant Collector was not justified to pass the order which was regarding the sales tax refund amounting to Rs.22,07,157 as the amount involved is more than one million rupees and the assumption of jurisdiction by the Assistant Collector is coram non judice as has already been held by the Tribunal in the above referred cases. All the subsequent proceedings conducted thereof cannot be considered as having been done in pursuance of the law. The impugned order of the learned Collector (Appeals) is consequently vacated and the order-in-original is set aside and directions are made to allow the refund claimed by the registered person. The appeal is allowed in the above manner. H.B.T./141/Tax(Trib.) Appeal allowed.