2005 PLP (Trib (PTD)

SARFRAZ AHMAD KHAN (MEMBER TECHNICAL).‑‑‑(1). This judgment disposes of nine appeals as mentioned in the above table since these involve common issues on law and facts. All the appellants at Sr. Nos. 1 to 8 of the above table were aggrieved from the orders of the Collector of Customs, Sales Tax and Central Excise (Appeals), Faisalabad who, through a separate order‑in‑appeal in respect of each appellant, as mentioned above, rejected the appeal of each appellant in limine on account of non‑deposit of 15% of the principal amount of Tax, as adjudged separately through adjudication order passed by Deputy Collector of Customs, Sales Tax and Central Excise (Adjudication). These appeals were rejected in limine "being infructuous ab initio" for non‑compliance of subsection (4) of section 45‑B of Sales Tax Act, 1990 without hearing each appellant. Appellant at Sr. No.9 was aggrieved from Order‑in‑Appeal No. 33 of 2003, dated 14‑5‑2003 passed by Collector (Appeals), Faisalabad whereunder their appeal filed against Order‑in‑Original No. 50 of 2003, dated 3‑2‑2003, passed by Deputy Collector (Adjudication), Faisalabad was rejected in limine, being "infructuous ab initio" since the appellant's counsel (Mr. Muhammad Anwar Bhatti) had refused to deposit 1/3rd of the principal amount adjudged vide aforementioned order‑in‑original, in compliance with subsection (4) of section 45‑B of Sales Tax Act, 1990.

2. The cases were heard on different dates. Following interim order was passed on 5‑8‑2004 in Sales Tax Appeal No. 727/LB of 2003 (titled Bilal Fiber Limited):‑‑ "Collector of Customs, Sales Tax and Central Excise (Appeals), Faisalabad vide his impugned Order‑in‑Appeal No.33 of 2003, dated 14‑5‑2003 dismissed the appeal on the ground that the appellant did not deposit the amount as required under subsection (4) of section 45‑B of Sales Tax Act, 1990 prior to taking up the appeal for hearing. According to the learned Collector (Appeals) compliance of those provisions was mandatory and due to non‑compliance, he dismissed the appeal in limine without looking into the merits of the appeal. Recently some fresh appeals have also been filed which involve the same issue. Legal issues involved in this case are:‑‑ (a) Are the provisions of subsection (4) of section 45‑B mandatory? If answer to the question is in affirmative, would it mean that the concerned person would get deprived of from his right of appeal? Is there any such provision in the law, which allows such interpretation? (b) The proviso to subsection (4) of section 45‑B of Sales Tax Act, 1990 requires Collector (Appeals) that in case where he is satisfied that the pre‑deposit of tax is likely to cause hardship to the appellant he may dispense with such deposits subject to such conditions or restrictions he may deem fit to impose. Does this provision of law not require from the Collector (Appeals) to decide this issue by application of independent judicious mind, which would naturally involve granting of opportunity of hearing to both the sides and to examine the circumstances of the appellant and merits of the appeal etc. before either rejecting request for dispensing with pre‑deposit or allowing pre‑deposit subject to certain conditions or restrictions as the Collector (Appeals) deems fit to impose and thereafter to pass a speaking order, which would of course be appealable before the competent appellate forum but his order will be only with reference to the application for dispensing with or otherwise of the pre‑deposit, in terms of subsection (4) of section 45‑B ibid. (c) Even in case of rejection of appellant's request for non‑deposit prior to hearing of appeal, which would of course be subject to passing of a proper judicial order, would Collector (Appeals) reject the appeal as such or this decision would remain restricted only to the application for waiver of pre‑deposit. In other words, would it not mean that the Collector (Appeals) shall proceed with proper hearing and decision of appeal even after having rejected the request for waiver of pre‑deposit? Does rejection of appeal due to non‑deposit of tax in terms of subsection (4) of section 45‑B not mean condemning the appellant unheard? Officer is directed to fix all the appeals so far received on this issue for hearing on 25‑8‑2004. Both the sides to assist the Tribunal on the aforesaid issues. (Sd. ) (Sd.) Member .(Judicial) Member (Technical)"

3. Final hearing took place on 8‑9‑2004. The learned counsel for the appellant at Sr. Nos.2 & 9 argued as under:‑‑ (i) With reference to Appeal No. 727/LB/2003 (Order‑in‑Appeal No. 33 of 2003, dated 14‑5‑2003 refers) observation of the Collector (Appeals) in the impugned order attributed to refusal to deposit 1/3rd of the adjudged amount to Mr. Anwar Bhatti, Advocate was factually incorrect. The said learned counsel who represented the appellant before the Collector (Appeals) merely requested the Collector (Appeals) to allow payment of 1/3rd of the adjudged amount in reasonable instalments, which was refused and the appeal was dismissed in limine. Furthermore, the Collector (Appeals) never passed any orders directing the appellant to deposit 1/3rd of the adjudged amount and rather Deputy Superintendent (Appeals) vide his letter, dated 22‑4‑2003 directed the appellant to deposit 1/3rd of the adjudged amount. As far the appellant in Appeal No.389/LB/2004 (titled Husnain Industries) the Collector (Appeals), Faisalabad never issued any notice to the appellant and without grant of hearing, rejected the appeal in limine and thus the appellant was condemned unheard. (ii) The provisions of subsection (4) of section 45‑B of Sales Tax Act, 1990, so far as it relates to deposit of 15 % of the principal amount of tax before presenting appeal, was directory in nature and not mandatory. On the basis of non‑deposit of 15%, the appeal cannot be dismissed straightaway. In terms of Quran and Sunnat and Constitution of the Islamic Republic of Pakistan, 1973 appeal could not be rejected without first hearing the appellant. Right to appeal was an inalienable right and could not be taken away on the basis of non‑deposit of 15 % of the adjudged amount. In case of non‑deposit of 15%, Collector (Appeals) can at best refuse to grant stay but the appeal shall remain pending till it is disposed of on its merits as per subsection (2) of section 45‑B of Sales Tax Act, 1990. (iii) No consequence had been laid down regarding the fate of the appeal, in case of non‑deposit of‑15% of the principal amount as adjudged by the lower forum and thus it cannot be taken to mean that non‑deposit of 15% would automatically mean rejection of the appeal in limine. (iv) This issue has already been decided by the Hon'ble Lahore High Court vide its judgment, dated 10‑4‑1993 in W.P. No. 1058 of 1993 (titled Messrs Maple Leaf Cement Factory Ltd., (PTCL 1993, CL 656). That judgment was binding on the Collector (Appeals). , (v) Once appeal is preferred in terms of subsection (1) of section 45‑B of Sales Tax Act, 1990, the Collector (Appeals), has to grant opportunity of hearing to both the parties and then to pass an order in a manner as laid down under subsection (2) of section 45‑B of Sales Tax Act, 1990. Jurisdiction of dismissal of appeal in a manner other than as envisaged in subsection (2) of section 45‑B of Sales Tax Act, 1990 was not available with the Collector (Appeals).

4. Rana Farman Ali, learned Advocate adopted all the arguments of Mian Abdul Ghaffar as incorporated at Sr. Nos. (ii) to (v) of para. 3 above. He further stated that Deputy Superintendent (Appeals) vide his notice, dated 10‑7‑2003, 9‑8‑2003 and 29‑4‑2004 asked the appellant to deposit 50% of the adjudged amount while the Collector (Appeals) Faisalabad vide his Order‑in‑Appeal No. 145 of 2004, dated 26‑5‑2004 dismissed the appeal in limine without hearing the appellant for non- deposit of .15 % of the adjudged amount. There was non‑formal order passed by the Collector (Appeals) ordering the appellant to deposit 50% of the adjudged amount.

5. Mr. Muhammad Sarfraz Iqbal and Mr. Zulfiqar Ali, AR's in Appeal No. 617/LB of 2004 and 564‑565/LB/2004 respectively also adopted the arguments as given by Mian Abdul Ghaffar, Advocate at Sr. Nos.(ii) to (v) of para. 3 above.

6. Appeal No. 583/LB/2004 (Al‑Noor Cotton Ginners) was filed by the appellant through Rana Muhammad Aslam Javed, Advocate, whose written arguments as contained in the memo. of appeal are taken to be his final arguments. In the written memo. of appeal, the learned counsel contended that the appellant already deposited 15 % of the adjudged amount but the Collector (Appeals) failed to notice the fact and decided the case without hearing and passed an ex parte order. According to him, the Collector (Appeals) could not dismiss the appeal even on non‑deposit of 15 % of the adjudged amount although the appellant has already deposited the same.

7. Appeal No.379/LB/2004 was filed by Mr. Imran Afzal, A.R. but he did not enter appearance on 8‑9‑2004. Therefore, the grounds of appeal as contained in the written memo. of appeal are taken as the final arguments. Main contention in the grounds of appeal was that the Collector (Appeals) had passed impugned order without giving any notice to the appellant and ex parte order has been passed, which was not sustainable under law. '

8. Appeal No.601/LB/2004 (Merkolink Electronics) was filed by Mr. Badruddin Qamar, Advocate who did not enter appearance on 8‑9‑2004. However, vide his application, dated 7‑9‑2004, he has requested that this case may also be decided in the light of the judgment in other identical cases, which was also fixed for 8‑9‑2004 However, in the written memo. of appeal, the learned counsel contended that the Collector (Appeals), Multan was not justified in rejecting the appeal in limine and rather he was bound to examine the merits of the case and then to decide the appeal accordingly. According to him, the appeal could not be rejected due to non‑deposit of 15% because for deciding the appeal, Collector (Appeals) was required to grant proper opportunity of hearing to the appellant.

9. The learned SDR and the Superintendent accompanying him opposed contentions of the appellants as given through their learned counsel's A.R.'s and in the written memos. of appeal on the following grounds: ‑ (i) Section 45‑B of Sales Tax Act, 1990 accepts the right of appeal of an aggrieved person subject to fulfilment of certain conditions, which were‑‑‑(a) the order should have been passed by an officer below in rank to Additional Collector; (b) appeal had to be filed within thirty days; (c) the appeal has to be accompanied by a fee of Rs.1000; and (iv) deposit of 15 % of the adjudged amount. If any of the aforementioned conditions is not fulfilled, the appeal cannot be filed, in terms of section 45‑B. In terms of subsection (4) of section 45‑B, a person desiring to file an appeal has first to deposit 15 % of the adjudged amount and then to present his appeal. Alternately, the appellant. has to move application before the Collector (Appeals), that he was desirous of preferring an appeal but could not deposit 15 % of the adjudged amount for the reasons mentioned therein and the Collector (Appeals) may dispense with such deposit, subject to such conditions as he may deem fit to impose and on getting information/orders from the Collector (Appeals), the appellant would be able to file an appeal. Subsection (2) of section 45‑B of Sales Tax Act, 1990 empowered the Collector to pass an order "as he thinks fit". In exercise of the said powers, the Collector (Appeals) dismissed these appeals due to non‑deposit of 15 % and this has to be treated as an order, for the purposes of ‑ subsection (2) of section 45‑B ibid. (iii) As far the judgment of Hon'ble Lahore High Court reported as 1993 MLD 1645 the Hon'ble Court held at para. 23 of its judgment "that an appellate authority must examine the facts of each case and determine as to whether or not any deposit of the amounts demanded was called for as a condition for hearing the appeal on merits. In case such an order is passed, the Collector would be competent to dismiss the appeal on account of disobedience and non‑compliance of this order". (iv) Consequences of non‑deposit of 15% were also provided in section 45‑B and that was dismissal of appeal. (v) The orders made by the Deputy Superintendent were actually the orders of Collector (Appeals) since he confirmed the same in his impugned order and moreover the orders for depositing 50% instead of 15 % was due to human error.

10. We have heard the learned counsel's contentions and we have also perused the appeal filed available before us. Since non‑compliance by way‑ of deposit of adjudged amounts of sales tax by the respective appellants in terms of subsection (4) of 45‑B ibid of Sales Tax Act, 1990 is the common issue in all these cases, therefore, the said section 45‑B ibid is re‑produced below for ease of reference:‑‑ "45‑B Appeals.‑‑(1) Any persons, including the Sales Tax Department, aggrieved by any decision or order passed under sections 10, 11, 36, 45 or 66, by an officer of Sales Tax below in rank to Additional Collector may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Collector of Sales Tax (Appeals): Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector of Sales Tax (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period: Provided further that the appeal shall be accompanied by a fee of one thousand rupees to be paid in such manner as the Board may prescribe. (2) The Collector of Sales Tax (Appeals) may, after giving both parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, varying, altering, setting aside .or annulling the decision or order appealed against. (3) In deciding an appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as maybe necessary provided that he shall not remand the case for de novo consideration.

4. Any person desirous of preferring an appeal under subsection (1) against any decision or order' relating to any tax demanded or any penalty imposed under this Act shall, before presenting the appeal, deposit 15 % of the principal amount of tax under such decision or order: Provided that, where in any case, the Collector of Sales Tax (Appeals) is satisfied that the deposit of tax as aforesaid is likely to cause undue hardship to the appellant, he may dispense with such deposit subject to such conditions or restrictions he may deem fit to impose: Provided further that in any particular case, the Collector of Sales Tax (Appeals) may direct that pending decision of the appeal, the tax shall be paid by the appellant in suitable instalments spreading over a period not exceeding six months from the date of such direction: Provided also that such interim order or orders, as the case may be, dispensing with deposit of tax as hereinbefore prescribed shall cease to have effect on the expiration of a total period of six months following the day on which the first interim order is made, unless the case is finally decided, or the interim order is withdrawn by the Collector of Sales Tax (Appeals) earlier."

11. We have also studied the judgment, dated 10‑4‑1993 of Hon'ble. Lahore High Court in Writ Petition No. 1058 of 1993 (titled Maple Leaf Cement Factory Limited v. Collector of Central Excise and Sales Tax (Appeals) reported as PTCL 1993 CL

656. The said judgment of the Hon'ble Lahore High Court was with reference to section 45 of Sales Tax Act, 1990, which then it was, and the same is also reproduced below for the sake of comparison between the then section 45 and the present section 45‑B of Sale Tax Act, 1990, particularly with reference to subsection (3) of section 45, as it existed then, and subsection (4) of section 45‑B and also to find if the issues now before us have already been decided by the Hon'ble Lahore. High Court in the said judgment:‑‑ "(45) Appeal.‑‑(1) Any person including the Sales Tax Department aggrieved by any decision or order made under this Act by an officer of Sales. Tax lower in rank than a Collector may, within thirty days 'of the date of communication of such decision or order, appeal to the Collector (Appeals): Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within that period. (2) The Collector (Appeals) may, after making such further inquiry as may be necessary and after giving the appellant an opportunity of being heard, pass such order as he thinks fit, remanding, confirming, altering or annulling the decision or order appealed against. (3) Any person desirous of appealing under subsection (1) against any decision or order relating to any tax demanded or any penalty levied under the Act shall, before filing the appeal, deposit the tax demanded or the penalty levied or both the tax and penalty."

12. A comparison between the then subsection (3) of section 45 and the present subsection (4) of section 45B of Sales Tax Act, 1990 revealed that the main provisions of subsection (4), then subsection (3), were quite similar to each other except for the absence of provisions of subsection (4) in section 45 ibid. Therefore, the principle settled by the Hon'ble Lahore High' Court in" the said judgment, dated 10‑4‑1993, would apply on all fours to the present cases. The main provision of subsection (4) of section 45‑B ibid is held to be directory and not mandatory in character by following the aforementioned judgment, dated 10‑4‑1993 of the Hon'ble Lahore High Court. We hold that the right of appeal granted to an aggrieved person from any decision/order passed under the provisions of law as mentioned therein and passed by the Sales Tax Officer as specified therein, within thirty days was an inalienable right and could not be made ineffective/redundant, on account of non- deposit of 15 % of the principal amount of tax, in terms of subsection (4) of section 45‑B ibid. Rather the Collector (Appeals) is bound to grant opportunity of personal hearing to the parties to the appeal and then to pass an order "as he thinks fit, confirming varying, altering, setting aside or annulling the decision or order appealed against" in terms of subsection (2) of section 45‑B, ibid. The pre‑requisite for passing "such an order as he thinks fit" is "after giving both parties to the appeal an opportunity of being heard", and that "as he thinks fit", is restricted to "confirming, varying altering, setting aside or annulling". We find that all the appeals, mentioned in the above table except the appeal at Sr. No.6 (titled Al‑Noor Cotton Ginners), were rejected in limine, "being in‑fructuous ab initio". In terms of subsection (2), read with subsection (3) of section 45‑B of Sales Tax Act, 1990, the appeals filed under subsection (1) of the section have to be disposed of only as laid down in subsection (2), read with, if needed, by subsection (3) of section 45‑B ibid. The right to appeal, in terms of subsection (1) of section.45‑B ibid and to have its disposal only in terms of subsection (2), read with, if needed, with subsection (3) of section 45‑B ibid, is not dependent on subsection (4) of section 45‑B ibid. In other words, by taking plea of non‑deposit of 15%, in terms‑ of subsection (4) of section 45‑B, right to appeal in terms of subsection (1) and right to have disposal of the appeal in terms of subsection (2), read with subsection (3), if needed, cannot be allowed to be made ineffective. We find that even allowing dispensation from the deposit of 15 % ; when it is "likely to cause undu hardship to the appellant" in terms of the firs proviso to subsection (4), issuance of direction "that pending decision of the appeal, the tax shall be paid by the appellant in suitable instalments spreading over a period, not exceeding six months, from the date of such direction", is also an exercise of such a power which, has to be used judiciously, and not arbitrarily. One of the‑ basic ingredients for judicious exercise of this power by the Collector (Appeals), is grant of opportunity of hearing to the appellant. Therefore, we hold that the appeal preferred in terms of subsection (1) of section 45‑B has to get decided in terms of subsection (2) and if needed, read with subsection (3). Before taking up the appeal for regular hearing, the Collector (Appeals) may ask the appellant to deposit 15%. In any case, if the appellant expresses that this requirement of deposit of 15 % of principal amount of tax is going "to cause undue hardship to the appellant", the Collector (Appeals) shall grant opportunity of hearing to the appellant and then decide the issue with a judicious mind and then pass formal orders accordingly. This is with reference to the first proviso read with the main provisions of subsection (4) of section 45‑B ibid. It automatically follows that where the Collector (Appeals) does not dispense with the deposit of 15 % of the principal amount of tax as adjudged by the Adjudicating Authority, prior to taking up the appeal for regular hearing, there would be no stay against recovery of the adjudged amount of duty/taxes. Where the Collector (Appeals) has dispensed with the deposit of 15 % of the principal amount of tax, in exercise of his powers under the first proviso to subsection (4) of section .45‑B ibid, then the third proviso to subsection. (4) of section 45‑B ibid, would come into operation i.e. the remaining adjudged principal amount of tax, additional tax and penalty etc., shall remain stayed till the expiry of six months period, or decision of the appeal, whichever is earlier. This order applies to all these appeals mentioned in the preamble of this judgment. Only with reference to Appeal No.727/LB/2003, (filed by Bilal Fibers Ltd.,) it is added that there was no statutory provision available with the Collector (Appeals) asking the appellant to deposit 1/3rd of the principal amount of tax adjudged vide the impugned order‑in‑original.

13. With these findings all the impugned orders‑in‑appeal are set aside and all the cases are remanded to the Collector of Customs, Sales Tax and Central Excise (Appeals), Faisalabad since the appeals are treated to be pending before him for disposal on merit in the light of the judgment, dated 10‑4‑1993 of the Hon'ble Lahore High Court in Writ Petition No. 1058 of 1993 (1993 MLD 1645) and the foregoing findings of this Tribunal.

14. All the appeals stands disposed of as above. C.M.A./324/Tax (Trib.) Order accordingly.