2010 PLP (Trib (PTD)

CH. MUNIR SADIQ, (JUDICIAL MEMBER).

This sales fax appeal has been filed at the instance of the assessee/registered person calling in question the impugned order dated 18-10-2001 passed by the Deputy Collector of Sales Tax (Adjudication), Faisalabad. A number of grounds were urged through the memo of appeal, however, at the time of hearing of the case, the learned counsel has raised a preliminary objection that the order passed by the Deputy Collector is time-barred in view of the provisions of section 36(3) of the Sales Tax Act, 1990.

2. Facts in brief are that during the audit of the registered person various discrepancies were noted the details whereof have been duly recorded in the impugned order. The Deputy Collector issued a show-cause notice on 7-8-2001 as to why sales tax amounting to Rs.551817 should not be recovered along with additional tax and penalty under sections 34 and 36 of the Sales Tax Act, 1990 and why penal action should not be taken against the registered person under section 33 of the Sales Tax Act, 1990. The reply submitted to show-cause notice did not find favour and the Deputy Collector passed the impugned order dated 18-10-2001 which is now in appeal before this Tribunal.

3. At the very outset the learned AR of the assessee raised a preliminary objection and contended that as per provisions of section 36(3) of the Sales Tax Act, 1990, the order passed by the Collector of Sales Tax is hit by limitation and is barred by time as the show-cause notice was issued on 7-8-2001 and the order-in-original was passed on 18-10-2001. It was argued that initial limitation of 45 days expired on 21-9-2001 and no further extension was sought at all. He further argued that it has been settled by almost all forums that time limit under section 36(3) is mandatory because a public functionary is empowered to create a liability against a citizen. He referred to the order of the President of Pakistan in re: C.B.R./Sale Tax Department v. Messrs Pace International, Rawalpindi cited as PTCL 2005 CL 841 wherein it was held as below. "The department contends that the time limit under section 36(3) ibid was merely directory and not mandatory. The contention does not seem to be valid. Where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory but where a public functionary is empowered to create liability against a ,citizen only within the prescribed time it is mandatory. The FTO's decision must be sustained." Reference was also made to the reported judgment of the honourable Lahore High Court cited as 2008 PTD 578, 2009 PTD 762, 2009 SCMR 1279 2009 PTD 1392 and 2009 PTD

762. As nobody has entered appearance on behalf of the Revenue/respondent nor any application for adjournment has been received therefore it is deemed fit to proceed ex parte.

4. Arguments heard. Record perused.

5. It would be appropriate to quote the proviso to subsection (3) of section 36 of the Sales Tax Act as it was during the period under consideration. Proviso to subsection (3) of section 36.

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. We have observed that in the present case show-cause notice was issued on 7-8-2001 and the order was passed on 18-10-2001 while time limit of 45 days as per section 36(3) of the Sales Tax Act, 1990 stood expired on 21-9-2001. The reported judgment relied upon by learned AR is also on all fours to the case of the registered person. The relevant extract from the reported judgment cited as 2009 PTD 762 (H.C. Lah.) is as follows;-- "As is clear from the language of the above proviso, it has limited the scope of the exercising of the jurisdiction after issuance of notice to basically 90 days or such extended period as the Collector after duly recording proper reasons in writing has fixed. However, it is again subject to the limitation in the manner that the said extension also cannot be for more than 90 days. The period for deciding the order-in-original after issuance of a notice under sections 36(1) and (3) thus is maximum 180 days including earlier 90 and extended 90 days. Obviously if the extension has been given by the Collector before the expiry of earlier 90 days." It is settled law that where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the revenue in that regard will make a provision of law redundant and nugatory. Honourable Lahore High Court has held in re: Messrs Super Asia Muhammad Din and Sons v. Collector of Sales Tax cited as 2008 PTD 60 that redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the moreso when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a taxpayer thereby creating certainty that after its expiry even if there was a good case for creation of liability he will not be dragged in.

6. Admittedly the order-in-original in the present case was passed beyond the prescribed time limit of 45 days moreover the Adjudicating Authority had neither fixed any extended period nor has in the instant case recorded any reasons for passing of order after 45 days.

7. In view of the above discussion and the case-law cited supra the appeal is accepted and the order passed by the Collector of Sales Tax being made after the lapse of statutory period is declared to have been made without lawful authority and is hereby annulled. Appeal allowed. H.B.T./143/Tax(Trib.) Appeal accepted.