2011 PLP (Trib (PTD)

The titled appeal preferred by taxpayer arises out of Order-in-Appeal No. 2994 of 2008 dated 30-6-2008 passed by the learned Collector (Appeals) Faisalabad.

2. Brief facts of the instant case are that during process of refund claim for July, 2007, the STARR System raised certain discrepancies, upon which a show-cause notice bearing C. No. 27657 dated 31-12-2008, was issued that as to why refund claimed by the taxpayer amounting to Rs.2,334,953 may not be rejected under section 11(2) read with Rule 37 of the Sales Tax Rules, 2006 notified vide S.R.O No. 555(I)/2006 dated 5-6-2006. The charges contained in the show-cause notice were contested by the appellant but the Assistant Collector partially accepted the claim and passed order dated 21-4-2008, for rejection of refund worth Rs.1,518,

734. The taxpayer went up in appeal before the learned Collector of (Appeals) who vide impugned order also rejected the same and upheld the order of adjudicating authority.

3. At the very outset, the learned AR has taken a legal stance and contented before us that the impugned show-cause notice dated 31-12-2007, as well as adjudication order dated 21-4-2008, have been issued illegally by the Assistant Collector (Refund), Faisalabad,. because he is not lawfully empowered to adjudicate the cases falling under subsection (2) of section 11 beyond pecuniary limit of one million rupees as specified under clause (iii) of subsection (2) of section 45 of the Sales Tax Act, 1990 as the amount of tax involved in the instant case was Rs.2,334,

953. In this regard, the learned AR of the taxpayer has relied on case-law reported as 2008 SCMR 240 SC Pak, 2001 SCMR 1822 SC Pak, 2010 PTD (Trib.) 1636.

4. On the contrary, the learned DR has opposed the objection raised by the AR of the appellant and supported the orders passed by the authorities below. It is also submitted by the DR that the appellant did not raise this legal objection of jurisdiction before the authorities below. We do not agree with this contention of the learned DR and hold that jurisdictional objection or a basic lacuna on assumption of jurisdiction can be raised at any stage of proceedings inasmuch as it goes to the very root of the matter.

5. We have heard both sides and perused the available record as well as case-law cited at bar. For proper conclusion of the controversy, we deem it necessary to reproduce the relevant provisions of section 45 of the Act which reads as under: "

45. Power of Adjudication.

(1). In cases involving assessment of tax, charging of default surcharge, imposition of penalty and recovery of amount erroneously refunded or any other contravention under this Act or the rules made thereunder, the jurisdiction and powers of adjudication of the Sales Tax Officers shall be as follows: (i) Additional Collector Cases falling under subsection (2) of section 11 and section 36 without any restriction as to the amount of tax involved or amount erroneously refunded. (ii) Deputy Collector (a) Cases falling under subsection (1) of section 11 (b) Cases falling under subsection (2) of section 11 and section 36 provided that the amount of tax involved or the amount erroneously refunded exceeds one million rupees, but does not exceed two and a half million rupees. (iii) Assistant Collector Cases falling under subsection (2) of section 11 and section 36 provided that the amount of tax involved or the amount erroneously refunded exceeds ten thousand rupees, but does not exceed one million rupees.

6. A bare perusal of above provisions of law reveals that each authority working under the hierarchy of the Sales Tax Department has been given power to perform his duty and to exercise jurisdiction within the parameters as specifically provided under the law. Any transgression, to the above limit would render the entire exercise of authority illegal and void ab initio. It is crystal clear that the Assistant Collector has transgressed his jurisdiction and powers of adjudication by issuing show-cause notice and passing adjudication order beyond pecuniary limit of one million rupees as admittedly in the case at hand, amount of refund involved is Rs.2,334,

953. Under section 45(1)(ii), it was only the Deputy Collector who had the power to issue notice to show cause and to pass adjudication order. It is a well-settled principle of law that the power vested in any authority can only be exercised by the same authority, in default whereof, the entire action would be without jurisdiction, void ab initio and of no legal effect.

7. In this regard we derive strength from the ratio settled by the. Hon'ble Supreme Court of Pakistan in the judgment reported as (2001 SCMR 1822). The relevant portion of the said judgment is reproduced below:-- "Whenever orders are passed by an officer without caring, whether jurisdiction. vests in him or not, it prima facie reflects on his conduct as well as competency. It is also to be noted that whenever authority is exercised in such a manner then no other inference can be drawn except that the functionary has transgressed his jurisdiction for the consideration other than judicial one and the courts ceased with such order may recommend any action against the said officer because neither .the executive authorities nor judicial forums will pass a wrong order because the jurisdiction in both the capacities is conferred upon such authorities to discharge their functions in accordance with law which has bestowed authority upon them to function in the capacity and if there is abuse of power by such officer then no hesitation should be felt in passing stringent structure against officer keeping in view norms of justice."

8. An identical question also came up for consideration before the Supreme Court of Pakistan in case of Izhar Alam Farooqi v. Sheikh Abdul Sattar reported as (2008 SCMR 240) wherein the Hon'ble Court held as under:-- "If a mandatory condition for the exercise of a jurisdiction before Court, Tribunal or Authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revision equally suffers from illegality and is without jurisdiction."

9. Keeping in view the above discussion and in the light of law and judgments quoted supra, we are inclined to accept the appeal filed by the appellant/taxpayer and hold that the impugned show-cause notice and order-in-original was passed by an authority having no jurisdiction in the matter. It was an order coram non judice and is accordingly declared as illegal, ab initio void and without lawful jurisdiction is hereby set aside. Consequently, the impugned order passed by the learned Collector (Appeals) equally suffers from illegalities being without jurisdiction is also vacated.

10. Since, we have decided the appeal purely on legal ground, therefore, other grounds taken by the appellant need not be dilated upon. C.M.A./181/Tax(Trib.) Appeal accepted.