2026 PLP 34 (PTD)

MALIK JAVID IQBAL WAINS, J.

This order shall also dispose of connected Customs References Nos. 24553 and 24554 of 2024, as they involve common questions of law and fact.

2. The applicant, being aggrieved by the order dated 23.01.2024 passed by the Customs Appellate Tribunal, Lahore in Customs Appeals Nos. 121, 122, and 123/LB/2016, has filed this reference under Section 196 of the Customs Act, 1969. The following question of law has been proposed: Whether the Order-in-Original No.88-90/2016 dated 07.04.2016 is barred by time, having been passed after the available statutory time for adjudication, as per the settled principles as enumerated by the Honorable Supreme Court in judgments reported 2017 SCMR 1427 = 2017 PTD 1756, 2019 SCMR 1735 = 2019 PTD 1961 and 2019 SCMR 1989 = 2020 PTD 147?

3. Brief facts are that M/s. Fatima Fertilizer Company Limited, Multan imported 22 consignments during 2011 2013, including electric cables, steel pipes, scaffolding, lubricants, and welding wire, which were cleared under Serial Nos. 20 and 21 of SRO 575(I)/2006 dated 05.06.2006, granting partial exemption from Customs Duty, Sales Tax, and Income Tax for capital goods required for industrial installation or expansion. Upon scrutiny, it was found that the imported goods did not qualify as machinery, equipment, or accessories as required under the SRO and were also listed in the locally manufactured items under CGO No.11/2007 dated 28.08.2007. Consequently, the exemption was deemed inadmissible, resulting in duty/tax evasion amounting to Rs.16,071,936/-. Audit observation was issued on 26.09.2013, followed by a Show-Cause Notice dated 30.03.2015. The Collector (Adjudication) upheld the charges through Order-in-Original dated 07.04.2016. The appeals before the Customs Appellate Tribunal were dismissed on 23.01.2024. The key legal issue is whether the Order-in-Original was passed within the statutory time frame under Section 179(3) of the Customs Act, 1969.

4. On this point, we have heard the learned counsel for the parties and perused the available record.

5. Upon examination of the record, it is revealed that the statutory period prescribed for adjudication under Section 179(3) of the Act is one hundred and twenty (120) days from the date of issuance of the show cause notice. In the present case, the show cause notice was issued on 30.03.2015, therefore, in terms of Section 179(3) of the Act, the Order-in-Original was required to be passed on or before 25.10.2015. However, the Order-in-Original was passed on 07.04.2016, well beyond the statutory period.

6. The relevant statutory provision is reproduced for ready reference. Section 179(3) of the Customs Act, 1969. The cases shall be decided within one hundred and twenty days of the issuance of the show cause notice or within such period extended by the Collector for which reasons shall be recorded in writing, but such extended period shall in no case exceed sixty days: Provided further that any period during which the proceedings are adjourned on account of a stay order or alternative dispute resolution proceedings or the time taken through adjournment by the petitioner not exceeding thirty days shall be excluded for the computation of the aforesaid periods. (Underline supplied for emphasis) Show-cause notice issued on Order in de in original was al was passed on Mandatory time as per S.73 of the Act (120 days) Permissible extension period under S.179 of the Act, (60) days Period of adjournment (30 days) Extension granted by Board in terms of S.179(4) of the Act. (90 days) on 20.01.2016 30.03.2015 07.04.2016 28.07.2015 26.09.2015 25.10.2015 w.e.f. 18.01.2016

7. The above table makes it evident that the Show-Cause Notice (SCN) was issued on 30.03.2015. In terms of Section 179(3) of the Act (as it stood during the relevant tax year), the mandatory period for passing the Order-in-Original was 120 days. Additionally, the law permitted an extension of 60 days under the same section, along with a further 30 days attributable to adjournments under the second proviso to Section 179(3). Accordingly, the Order-in-Original ought to have been passed on or before 25.10.2015.

8. However, the record reflects that the Order-in-Original was passed on 07.04.2016, well beyond the permissible statutory timeframe. Interestingly, it is mentioned by the Collector/Adjudicating Authority in paragraph No. 29 of the Order-in-Original that the case could not be finalized within the statutory period, and that a further extension of 90 days was granted by the Federal Board of Revenue (FBR) on 20.01.2016, with effect from 18.01.2016, purportedly under Section 179(4) of the Act.

9. This extension was granted after a lapse of 87 days from the expiry of the mandatory adjudication period under Section 179(3). Such an extension, made beyond the statutory limit and without lawful authority at that stage, is clearly in violation of the time-bound procedural mandate of Section

179. Consequently, the adjudication proceedings culminating in the Order-in-Original dated 07.04.2016 are rendered without lawful sanction.

10. The principle that statutory timelines for the creation of liability against a taxpayer are mandatory is now well-settled. As reiterated by the Hon ble Supreme Court of Pakistan C.P. No.110 of 2023 decided on 20.08.2025, (M/s Commander Agro (Private) Limited v. Customs Appellate Tribunal Bench-I, Lahore, and others). The relevant part of esteemed judgment is reproduced as under: -

4. This time bound proceeding in terms of sections 179(3) and 179(4) is mandatory. The like provisions were adjudged as mandatory in the case of Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others (2017 SCMR 1427). Judgment then came for its application in another matter that is Wak Limited Vs. Collector Central Excise and Sales Tax reported as 2018 SCMR 1474 which expressed their concern over finding of Super Asia. The matter was then set at rest by larger bench of this Court in the case of Messrs Wak Limited Multan Road, Lahore and others v. Collector Central Excise and Sales Tax, Lahore and others reported as 2025 SCMR 1280 which confirmed and upheld the findings of Super Asia case ibid, confirming the time bound proceedings as mandatory.

11. Furthermore, Section 179(4) of the Act empowers the FBR to regulate the system of adjudication, including the transfer of cases and the extension of time in exceptional circumstances.(at the relevant time in of Tax year 2016) However, for such an exceptional extension to carry legal effect, requisite approval must be obtained within the statutory timeframe prescribed under Section 179(3) of the Act. Once the mandatory period provided therein lapses, any subsequent extension granted by the Federal Board of Revenue is without legal force. Consequently, the Order-in-Original dated 07.04.2016 is time-barred, and the proceedings initiated through the Show-Cause Notice could not lawfully continue beyond the expiry of the prescribed limitation period, As reiterated by the Hon ble Supreme Court of Pakistan in judgment M/s Commander Agro (Private) Limited (supra). Operative part whereof is reproduced as under: -

5. Since, in terms of the above calculation the order was passed much beyond the time limits and even the alleged extension was much beyond the limit prescribed, (as it ought to have been extended, if at all, within the time frame), leaving the decision that is order-in-original as time barred and consequently the proceedings under the aforesaid show-cause notice could not continue anymore.

12. The principle that statutory timelines for the creation of liability against a taxpayer are mandatory is now well-settled. As reiterated consistently been upheld in landmark judgments by the Hon ble Supreme Court of Pakistan including, Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others (2017 SCMR 1427), Wak Limited v. Collector Central Excise and Sales Tax (2018 SCMR 1474), and set at rest by the Larger Bench of the Hon ble Supreme Court of Pakistan in case titled Messrs Wak Limited v. Collector Central Excise and Sales Tax, Lahore and others (2025 SCMR 1280), which re-affirmed that adherence to statutory timelines in tax adjudication is mandatory, not merely directory.

13. The rationale behind these rulings is rooted in the protection of Taxpayer rights against administrative excess, ensuring certainty, fairness, and finality in tax matters. Permitting indefinite extensions would render the express language of the statute redundant, which is impermissible under the settled canons of statutory interpretation. When confronted with the above legal position, the learned Legal Advisor for the respondent-department was unable to offer any satisfactory explanation or produce any record demonstrating valid and timely extension.

14. Upon perusal of paragraphs Nos. 14 and 21 of the impugned order, it is manifest that the learned Appellate Tribunal, while rendering its findings, erroneously relied upon an alleged extension of 180 days purportedly granted by the FBR and thereby concluded that the Order-in-Original dated 07.04.2016 was passed within the statutory limitation period prescribed under Section 179 (3) of the Customs Act, 1969. This finding is in direct contradiction to the explicit observations recorded by the Adjudicating Authority in paragraph No. 29 of the Order-in-Original, wherein it was categorically admitted that the proceedings could not be concluded within the original timeframe, and thus, an extension of only 90 days was sought and granted by the FBR effective from 18.01.2016, vide letter No. 5(3)Cus.Jud/2015 dated 20.01.2016, ostensibly under Section 179(4) of the Act.

15. The attempt of the learned Appellate Tribunal to validate the Order-in-Original as being within limitation under Section 179(3) is legally misconceived and untenable. It is a settled principle that where the statutory period prescribed for adjudication lapses without a valid and lawful extension, the proceedings become time-barred, and any subsequent order passed by the FBR has no legal sanctity. No legal stratagem can validate an act which is, in essence, barred by limitation.

16. Moreover, the Tribunal further fell into error while attempting to distinguish the binding principle enunciated in the Super Asia case by the Hon ble Supreme Court of Pakistan, on the ground that the said ruling pertains to the Sales Tax Act, 1990, and is inapplicable to the time limitation provided under the Customs Act, 1969. Such reasoning is misconceived and contrary to the settled law regarding the binding nature of precedents. As per Article 189 of the Constitution of the Islamic Republic of Pakistan, any declaration of law or enunciation of a legal principle by the Hon ble Supreme Court is binding on all courts within the country. The maxim "Stare decisis et non quieta movere" (To stand by decision and not to disturb settled matters) underscores the mandatory nature of adherence to judicial precedents. Therefore, the Tribunal s disregard of the ratio decidendi of the Hon ble Supreme Court constitutes a grave error in law. Consequently, the findings of the learned Appellate Tribunal not only lack legal sanctity but are also rendered void-ab-initio. The impugned judgment, being based on misinterpretation and misapplication of law, is thus liable to be set aside.

17. In light of the foregoing discussion, we are of the considered view that the Order-in-Original dated 07.04.2016 was passed beyond the statutory period prescribed under Section 179(3) of the Act and is, therefore, barred by limitation. And the extension granted by the board on 20-1-2016 after laps of mandatory time frame has no legal value. Consequently, the proceedings initiated under the aforesaid SCN could not have lawfully continued beyond the expiration of the prescribed period. The Appellate Tribunal failed to properly consider these crucial legal aspects, rendering its findings, unsustainable in law.

18. Accordingly, our answer to the proposed question is in affirmative in favour of applicant-taxpayer and against the respondent-department. This Reference Application stands allowed in the above terms.

19. Office shall send a copy of this order under seal of the Court to the Customs Appellate Tribunal, Lahore as per Section 196 (10) of the Customs Act, 1969. MQ/F-22/L Reference allowed.