2021 PLP 2024 (PTD)

Through instant Reference Application under Section 47 of the Sales Tax Act, 1990 ("the Act of 1990"), following questions of law, asserted to have arisen out of impugned order dated 05.11.2018, passed by learned Appellate Tribunal Inland Revenue, Lahore Bench, Lahore ("Appellate Tribunal"), have been pressed and argued for our opinion:-

1. Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal has misdirected itself in upholding the charge of further tax under section 3(1A) of the Sales Tax Act, 1990 by ignoring the category/status of sales tax registration of the petitioner as manufacturer cum retailer and SRO No.648(I)/2013 dated 09th July, 2013?

2. Whether a conclusion drawn on the basis of misreading and non-reading of the evidence and the law is sustainable?

3. Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in ignoring sales tax registration, existence of retail outlet and SRO 648(I)/2013 dated 09th July, 2013?

2. Brief facts of the case are that a Show-Cause Notice ("SCN") was issued to applicant-taxpayer alleging therein several discrepancies and irregularities, which culminated in passing of order-in-original dated 24.07.2017. Feeling aggrieved, applicant-taxpayer filed appeal before CIR (Appeals), which was partly accepted vide order dated 16.11.2017. Being dissatisfied, applicant-taxpayer preferred second appeal before learned Appellate Tribunal, which was dismissed vide order dated 05.11.2018. Hence, this Reference Application.

3. Learned counsel for applicant-taxpayer submits that the charge of further tax under Section 3(1A) of the Act of 1990 has not been examined in its true perspective inasmuch as the category / status of sales tax registration of the applicant-taxpayer as manufacturer-cum-retailer has not been kept in view by learned Appellate Tribunal while passing impugned order. He adds that learned Appellate Tribunal has failed to appreciate the SRO 648(I)/2013 dated 09.07.2013 as well as core issue regarding category/status of sales tax registration of the applicant-taxpayer as manufacturer-cum-retailer, having its retail outlet, thus, impugned order is violative of Section 24-A of the General Clauses Act, 1897 as well as law laid clown by the superior Courts. In the end, he submits that impugned order is not sustainable in the eye of law.

4. Confronted with the above, learned Legal Advisor for respondent-department, despite arguments at some length, failed to rebut that impugned order lacks valid lawful reasons and does not cover all aspects of the matter.

5. Arguments heard. Available record perused.

6. Perusal of record shows that the core issue regarding category / status of sales tax registration of the applicant-taxpayer as manufacturer-cum-retailer, having its retail outlet substantiated through sales tax registration certificate, has not been determined by learned Appellate Tribunal while passing impugned order.

7. In our considered view, learned Appellate Tribunal has not dilated upon the vital aspect, referred supra, which is not a proper exercise of jurisdiction within the contemplation of law laid down by the Hon'ble Supreme Court of Pakistan in case titled Commissioner Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Limited, Karachi (2002 SCMR 527 = 2002 PTD 419). The relevant portion of said judgment is reproduced hereunder:- "10. .. As it has been pointed out hereinabove that Income Tax Appellate Tribunal had not independently assigned any reason in holding that respondent organization was a public company because it has based its finding on some earlier decision referred to hereinabove and we were not aware that what reasons prevailed upon learned Tribunal while deciding those cases. Thus in such-like situation it was obligatory upon the Tribunal either to have disclosed the facts as well as reasons of earlier case on which reliance was placed or the respondent's case should have been examined independently. As such, we are of the opinion that the Income Tax Appellate Tribunal did not exercise its jurisdiction in accordance with law. Therefore, question of non-exercising of jurisdiction properly by the Tribunal, being a question of law, was liable to be answered by the High Court in its appellate jurisdiction under section 136(2) of the Ordinance but it failed to do so."

8. Even otherwise, impugned order has been passed in violation of the Section 24-A of the General Clauses Act, 1897, inasmuch as it lacks valid lawful reasons. It is now well-settled that an order passed by judicial or quasai-judicial authority, has to be supported by lawful reasons. In our opinion, it was obligatory upon learned Appellate Tribunal to have examined the case independently and given the reasons in support of the impugned order.

9. In view of the above, impugned order dated 05.11.2018 is set aside, and the matter is remanded back to learned Appellate Tribunal for re-adjudicating the same through a speaking order, after providing opportunity of being heard to both the parties, preferably within a period of sixty days from the date of receipt of certified copy of this order.

10. The instant Reference Application is disposed of accordingly.

11. Office shall send a copy of this order under seal of the Court to learned Appellate Tribunal as per Section 47(5) of the Act of 1990. SA/S-3/L Case remanded.