2010 PLP (Trib (PTD)

CH. MUNIR SADIQ (JUDICIAL MEMBER).

This sales tax appeal has been filed at the instance of the assessee/registered person calling in question the impugned order dated 15-8-2007 passed by the Assistant Collector of Sales Tax (RSD), 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 Assistant 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 the appellant claimed refund of sales tax amounting to Rs.4,721,653 incurred on goods acquired upto June, 2005. A show-cause notice dated 13-3-2007 was issued as to why refund of sales tax against stock not consumed upto 31st December, 2005 may not be recovered under section 11(2) of, the Act. Subsequently an addendum bearing C.No.1382 dated 8-8-2007 to the show-cause notice as to why an amount of Rs.1,656,357 may not be rejected on invoices of units included in negative list of CRRAS against which refund was received by the appellants during earlier period. After examination of the supportive documents in respect of refund claims the Assistant Collector (Refund) partly accepted the claim. The assessee being aggrieved went in appeal I before the Collector who upheld the treatment given by the Assistant Collector (Refund). This has grieved the appellant/registered person, hence the instant appeal.

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 13-3-2007 and the order-in-original was passed on 15-8-2007. It was argued that initial limitation of 90 days expired on 14-11-2007 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 CBR/Sales 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, 2008 PTD 60, 2009 PTD 762, and 2009 PTD 1978. 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. We have observed that in the present case show-cause notice was issued on 13-3-2007 and the order was passed on 15-8-2007 while time limit of 90 days as per section 36(3) of the Sales Tax Act, 1990 stood expired on 14-1-2007. 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. Lhr.) 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 section 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 more so 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 90 days moreover the adjudicating authority had neither sought any extension from the competent authority nor has in the instant case recorded any reasons for passing of order after 90 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./178/Tax(Trib.) Appeal accepted.