2012 PLP (Trib (PTD)

Through this appeal, registered person has assailed the Order-in-Appeal No. 185 of 2010 dated 3-9-2010 passed by the learned Commissioner Inland Revenue (Appeals), Faisalabad whereby he partially accepted the contention of the appellant and partially rejected the appeal filed against Order-in-Original No.14 of 2010 dated 1-6-2010.

2. Briefly stated the relevant facts of the case are that the appellant is an enlisted public limited company incorporated in Pakistan under the Companies Ordinance, 1984 and export oriented refund of sales tax worth Rs.7,532,675 for tax periods from July, 2003 to February, 2007 was claimed/received whereupon a show-cause notice dated 6-5-2010 was issued by the Deputy Commissioner Inland Revenue, Faisalabad as to why amount of tax refunded may not be recovered under section 36(1) of the Act due to black-listing of his suppliers along with hundred percent penalty under section 33(13) ibid. Thereafter, without proper adjudication for viewing into the pros and cons of controversies at counter ends, learned Deputy Commissioner (Audit Division-1, Unit-3), Faisalabad upheld the charges levelled against the registered person and passed sales tax order-in-original dated 1-6-2010. The registered person then feeling aggrieved by the said order filed the first appeal before the learned Commissioner of Appeals who vacated demand of sales tax adjudged in the impugned .adjudication order except an amount of Rs.47,399 which was held as recoverable against the appellant. The registered person again feeling aggrieved and dissatisfied with the proceedings mentioned above has now come up in the second appeal before this Tribunal.

3. Before, we decide the main appeal, we take up the miscellaneous application, through which, the registered person seeks permission to add the following new grounds along with other grounds of main appeal already filed for adjudication:-- "The impugned show-cause notice and adjudication order passed by the learned Deputy Commissioner Inland Revenue is illegal, and without jurisdiction as no notification was published in the Official Gazette for appointment of Inland Revenue Officers as required under section 30 of the Act."

4. The learned counsel of the registered person vehemently argued that due to some inadvertence, legal objection relevant to subject matter could not be referred in memo of appeal filed against the impugned order therefore; additional grounds being made may be allowed and considered as an integral part of-the titled appeal case.

5. We have heard both the rival parties and examined the record of the case in detail as well as relevant provisions of law and have also considered the case-law cited at the bar. We feel no hesitation to hold that the additional grounds filed by the registered person being legal can be taken and raised even if the same were not agitated before the authorities below and even not raised in the grounds of appeal filed before the first appellate authority and under the principle of natural justice and fair-play, the legal grounds cannot be denied and avoided by the Appellate Tribunal. We further reiterate that their being plethora of case-laws, the additional grounds which goes to the route of the case could be raised at any stage of the proceedings. It is now well-settled law that grounds being purely legal in nature can be raised at any stage and in order to dispense with justice, Courts have to allow the same to decide the controversy once for all touching the merits of the case from its all angels, so, we granted the permission to argue and elaborate additional grounds. In this regard; reliance is placed on the judgment of Lahore High Court in case of "Haji Mehr Din v. Commissioner of Income Tax (Zone-A), Lahore" reported as (2002 PTD 541). Where in the honourable Court held as under: "The word "additional ground" itself implies that a ground not already taken was being stressed. There could be a number of reasons for not taking a ground in the memo of appeal despite its availability. It can start from inadvertence to end at negligence. Whatever .be the reason when a lis is pending before a Court or a judicial forum, entertainment of an additional ground should be a rule and not an exception. Unless, the purpose for making of additional ground is either to delay the proceedings or is to cause embarrassing to the parties or the Presiding Officer, an additional ground must not be refused provided; it is made or raised before conclusion of hearing. Even, in cases, where a hearing is complete but the order is not announced, an additional ground should not ordinarily be refused except for the reasons noted above."

6. The learned counsel for registered person has forcefully contented that the learned Deputy Commissioner Inland Revenue at the relevant time was not legally competent to issue show-cause notice and to pass adjudication order as no notification was published for appointment of Inland Revenue Officers in the Official Gazette under section 30 of the Act therefore, proceedings initiated against the appellant is without awful authority and ab initio void. He further argued that imposition of hundred percent penalty under section 33(13) of the Act is also illegal because amount of penalty was not confronted to appellant in show-cause notice and mere citation of section 33(13) of the Act does not warrant hundred percent penalty. On the other hand, the learned DR admitted that there is no such notification issued and published in the official gazette on the pattern of S.R.O. 547(I)/2008 but she urged that a Circular order bearing C;No. 1(19)IR-Jud/2007-Pt dated 11-11-2009 in lieu of a statutory regulatory order was issued and was not notified for appointment of inland revenue authorities.

7. Brief of the case are that the President of Pakistan through Finance (Amendment) Ordinance, 2009 promulgated on 27-10-2009 made effective from 28-10-2009, created a new service group "Inland Revenue Service" and by creation of this group, a number of provisions of the Sales Tax Act, 1990 inter alia including amendments in section 11 and section 36 were made. In this case, show-cause notice dated 6-5-2010 and order-in-original dated 1-6-2010 was issued by the "Deputy Commissioner Inland Revenue (Audit Division-1, Unit-3), Faisalabad" who was not appointed as an "Inland Revenue Officer" and was' never given jurisdiction to the titled case by a notification published in the official gazette under section 30 of the Sales Tax Act, 1990.

8. Through, the' said Ordinance, certain amendments were made in sections 11(5) and 36(3) of the Sales Tax Act, 1990 wherein the words "Collector" was substituted by the word "Commissioner" and the words "Sales Tax Department" or "Sales Tax" were substituted by the words "Inland Revenue." The expression "Officer of the Sales Tax" used in section 11(5) and section 36(3) in the original provisions and "Officer of Inland Revenue" used in the amended sections 11(5) and 36(3) have been defined in section 2(18) of the Act that "Officer of Inland Revenue means an officer appointed under section 30".

9. Prior to the said amendments, the appointment and jurisdiction of "Sales Tax Officers" was made through a notification No. S.R.O. 547(I)/2008 dated 11-6-2008 appointing sales tax authorities and assigning them jurisdiction for a case or area which was duly published in the official gazette but after amendment in section 30 and others amendments as mentioned supra, no notification was issued and published in the official gazette for appointment of "Inland Revenue Authorities" to assign them jurisdiction of a case or area. Since, neither any notification was issued for appointment of Inland Revenue officers nor the same was published in the official gazette therefore, impugned show-cause notice and adjudication order passed by the learned Deputy Commissioner Inland Revenue, Faisalabad" is illegal and unlawful without assigning him the jurisdiction of the instant case under section 30 of the Sales Tax Act, 1990.

10. In order to appreciate the contention of the appellant, it may be convenient if we quote here the relevant provisions of section 30 of the Act which reads as under:-- "Appointment of Authorities.

(1). For the purposes of this Act, the board may, by notification in the official Gazette, appoint in relation to any area, any case or class of cases specified in the notification, any person to be (a) a Chief Commissioner Inland Revenue. (b) a Commissioner Inland Revenue. (c) an Addtional Commissioner Inland Revenue. (d) a Deputy Commissioner Inland, Revenue. (e) an Assistant Commissioner Inland Revenue. (f) an Inland Revenue Officer." ? The above provision of law clearly reveal that the Inland Revenue Officers should have been appointed by the Federal Board of Revenue through a notification published in the official Gazette but, in the instant case, neither any notification appointing inland revenue officers was issued nor the same was published in the official gazette therefore, exercise of adjudication by the Deputy Commissioner Inland Revenue being non-existent at the relevant time is illegal and without jurisdiction. It is a settled proposition of law that if something is stated to be done in a particulars manner it has to be done in that manner only, otherwise, any deviation in this regard would vitiate the whole proceedings. There is a plethora of judgments in this regard and reference may be made to the decision of Supreme Court of Pakistan in case of "Khalid Saeed v. Shamim Rizwan and others" reported as (2003 SCMR 1505), the honourable Court while considering the impact of violation of non-observance of the method prescribed by law for doing an act in a particular manner or mode observed that if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted.

11. The learned counsel of the registered person also cited the case-law wherein the similar issue was resolved by the Supreme Court of Pakistan in case of "Messrs Fecto Belarus Tractor Ltd v. Government of Pakistan" reported as PLD 2005 SC 605 = 2005 PTD 2286. The honourable Court decided the issue with the following observations:-- "The second reason for not granting relief to the petitioner islack of publication of authorization letter dated 26th June, 1996 in official gazette as held in "Province of East Pakistan v. Hasan Askary" (PLD 1971 SC 82) and "Moosa and Co. v. Collector of Customs, Karachi" (PLD 1977 Kar. 710). Thus, it can be conveniently held that authorization letter dated 26th June, 1996 was not issued by the relevant executive authorities of the Federal Government in accordance with the provisions of Article 90 of the Constitution of Islamic Republic of Pakistan read with Rule 12 of the Rules of Business, 1973 coupled with the reasons that authorization letter was not qazetted in order to make it public in light of the judgments noted herein above, therefore, it could have not furnish basis for granting relief to the petitioner vide judgment dated 19th February, 2001."

12. The honourable High Court, Sindh in case of "Commissioner of Sales Tax (Central), Karachi v. Messrs Pakistan Services Limited, Karachi" reported as PLD 1983 Kar. 297 laid down that:-- "The principle in this Supreme Court case is not applicable in the instant cases, as under section 39 of the Sales Tax Act, 1951, rules made by the Central Board of Revenue are required to be published in the official Gazette and only then they have effect. Admittedly, this letter of Central Board of Revenue has not been published in the official Gazette and as such it cannot be accepted as provision amending or supplementing the notifications or rules already in force."

13. The learned AR also produced the judgment of a Division Bench of this Tribunal rendered in S.T.As. Nos. 212-213/LB/2010 wherein the same issue was resolved in favour of taxpayer. It is an established law that one Division Bench of Appellate Tribunal is bound by the judgment of another Division Bench passed by the same Court until; it is reversed by the honourable High Court. The operative part of the said judgment is reproduce hereunder for facility:-- "We have heard the learned counsel for both the parties and have also gone through the case-law cited at the bar, we have no hesitation to hold that no Notification/S.R.O in order to amend earlier S.R.O 547(I)/2008 was issued and published in the Official Gazette, hence, the authority passing the order-in? original has not been appointed under section 30(1) of the Act for the purpose of Sales Tax Act and the case of the appellant was not assigned to him by express delegated legislation as per precedent and pattern of S.R.O 547(I)/2008. Hence, the assumption of jurisdiction and passing of impugned order is illegal and void."

14. Not needless to say that the penalties specified in taxing statutes are imposed in lieu of any term for imprisonment and these proceedings are criminal in nature, thus, it is mandatory for the revenue-department to specify the amount of penalty in show-cause notice, mere invoking of provisions of section 33(13) of the Act in show-cause notice does not warrant hundred percent penalty. In such like proceedings, revenue-department is under a statutory and legal obligation to mention the amount of penalty in the show-cause notice which is being levelled against the taxpayer and also prove that a mala fide or wilful default has been to attributed at the part of the taxpayer and he has acted deliberately in defiance of law and was guilty of conduct contumacious or dishonest or acted in conscious disregard of his obligation. In absence of these ingredients in show-cause notice, hundred percent penalty imposed against the appellant is held to be illegal and unlawful. Reference is made to the judgment reported as (AIR 1962 Madras 366) wherein it was laid down as under:-- "It was contended by counsel for the respondent that no real prejudice was caused in this case because the petitioner had in his explanation admitted the contravention complained of in the show-cause notice. This cannot be construed as an admission of liability to the penalty imposed under section 167(3). As I have already indicated that the mere insertion of the section or the rule contravened in the show-cause notice, would not be sufficient compliance with the spirit of the law. In addition, the show-cause notice must also mention the penalty for the contravention of the provisions of the Act for which penal action is proposed to be taken. In this view, that part of the order imposing a penalty of Rs. 500 on the petitioner must be held to be illegal as it is not proceeded by a proper show-cause notice."

15. In the end, the learned departmental representative argued that the Regional Tax Office, Faisalabad has taken up the instant issue before the honourable High Court, Lahore by filing a Reference Application under section 47 of the Act against earlier decisions passed by this Tribunal, therefore, titled appeal case should be kept pending till final decision by the High Court. When this Court asked her to place any stay or suspension order against these decisions, she could not reply. There is no provision in the Sales Tax Act, 1990 granting automatic stay during pendency of litigation without seeking any order for suspension/stay from High Court against the orders of Appellate Tribunal which still bears its legal binding. We therefore hold that in absence of any stay order by the High Court and unless, earlier judgments of Appellate Tribunal on a point are finally set aside by the High Court, they hold the field and to be acted upon by the sales tax department in letter and spirit.

16. Keeping in view the legal position referred to above and particularly in the light of law and judgments cited supra, we hold that the impugned show-cause notice as well as subsequent adjudication order passed by the learned Deputy Commissioner Inland Revenue, who was non-existent authority at the relevant time, are declared to be illegal, void ab initio and without jurisdiction. The miscellaneous application and main appeal filed by the registered person are allowed. C.M.A./80/Tax(Trib.)?????????????????????????????????????????????????????????????????????????? Appeal accepted.