P L D 1965 Dacca 28 (PLP)

SATTAR, J.‑The petitioner, Hossein Brothers (Pak.) Ltd., a private limited company (hereinafter called the Company) obtained this Rule on (1) Sales Tax, Officer, Companies Circle 1, (2) Pakistan represented by Commissioner of Sales Tax, East Pakistan, and (3) Appellate Assistant Commissioner of Sales Tax to show cause why the assessment order made on the 31st May 1960 under section 28 of the Sales Tax ?pct and that of the Appellate Assistant Commissioner dated the 11th March, 1961 and the order passed in revision by the Commissioner of Sales Tax on the 12th December, 1963, should not be declared to have been made without lawful authority and as such of no legal effect. The simple facts of this case are that the Company in its Return for the year 1955‑56 filed under the Sales Tax Act, 1951 (hereinafter called the Act) showed taxable sales of Rs. 48,182 and paid tax at 10% amounting to Rs. 4,

800. The Sales Tax Officer, Companies Circle I, Dacca, however, purporting to act under section 28 of the Act, issued notice to the Company, and by his order dated the 31st May 1960 fixed the taxable sale for the year 1955‑56 at Rs. 2,32,

190. The Company preferred an appeal under section 14 of the Act, which was rejected by the Appellate Assistant Commissioner by his order dated the 11th May 1961 on the ground that the deposit required by the said section was not made. As against that order, the Company filed revision application to the Commissioner of Sales Tax under section 16 of the Act. This was also rejected. It was thereafter that the present Rule was obtained. Mr. Asrarul Hossain appearing on behalf of the petitioner has argued that the assessment order was passed without jurisdiction. His contention is that an assessment under section 28 of the Act can be made "within four years of the end" of the year in question. "Year", it is pointed out, has been defined in section 2 (e) as "Financial Year". There was no definition of "Financial Year" in the original Act and therefore, by virtue of section 3 (19) of the General Clauses Act, it means the year beginning from the 1st of April and consists of 12 months. It follows, therefore, that the assessment could be made only up to the 31st March 1960. In this connection, he has further submitted that the amendment of section 2 (2) made by the Finance Ordinance, 1959, which came into force on the 31st March 1959, not being retrospective in operation, the case of the petitioner‑company does not come within its purview. The learned counsel has relied on the decision of the Supreme Court in the case of Nagina Silk Mill, Lyallpur v. The Income‑Tax Officer Award, Lyallpur and another ((1963) P T D 633). It is not disputed by Mr. Mesbahuddin that, but for the amendment of section 2 (20) by adding the first proviso to it by Finance Ordinance of 1959, the assessment in question must be deemed to have been made beyond the period prescribed by section

28. His contention, however, is that no question of retrospective operation of the amendment arises in this case as it came into force before the expiry of the period prescribed by section 28 of the Act. Mr. Asrarul Hossain's contention that the decision of the Supreme Court in the case of Nagina Silk Mill supports him, cannot be accepted. In this case the Supreme Court considered the effect of section 6 of the Finance Ordinance No. XXXV of 1960 which was promulgated on the 30th of June, 1960 but it was provided that it shall be deemed to have come into effect on 1‑4‑59 on an assessment order dated the 29th June 1960 made under section 23 of the Income‑tax Act for the year 1955‑

56. Section 34 of the Income‑tax Act provides inter alia that "No. order of assessment under section 23* * * * * * shall be made after the expiry* * * * * * * * * * * of four years from the end of the year in which the income profits or gains were first assessable. This is the section in the income- tax Act which deals with escape assessment as in the case of sales tax it is dealt in section 28 of the Act. The word "Year" was not defined in the Income‑tax Act till the promulgation of Finance Ordinance, 1960. In this Ordinance, "Year" was defined as follows:‑ "Year means‑ (a) as respect any period before the first day of April 1948, the period of twelve months beginning on the first day of April and ending on the thirty‑first day of March next following; (b) as respect the period beginning on the first day of April 1958 and ending on the thirtieth day of June 1959, the said period; and (c) as respects any period beginning on or after the first day of July 1959, the period of twelve months beginning on the first day of July and ending on the thirtieth day of June next following." The question that arise is: Whether, on account of the above definition of the "Year", four years mentioned in section 34 would mean fours of 12 months each or three years of 12 months each and the year 1958‑59 of 15 months? On behalf of the respondent, namely, the Income‑tax Officer, the contention put forward was that, as the definition in question had come into force from the 1st of April 1959, four years consisted of 15 months. In repelling this contention, it was observed:‑ "In the normal course, before these amendments were made the four‑years period during which assessment was possible in respect of the assessment year ending with the 31st March 1956, would have terminated on the 31st March 1960. If, however, the new definition of "Year" is pressed into service, the first two years after 31st March 1956, would each be of 12 months' duration, the third year starting with 1‑4‑58 would be one of 15 months and would terminate on the 30th June 1959, and thereafter the fourth year would extend from 1‑7‑59 to 30‑6‑

60. The impugned order was passed one day earlier than the last mentioned date.". On behalf of the appellant it is strenuously contended that the expression "four years" in section 34 (2) of the Act must still be construed to mean "four years" of the twelve months each" despite the above‑mentioned changes in the law. The appeal is to the context in this behalf. It is pointed out that in `the provision to subsection (2) of section 34 of the Act the word "years" can only mean "a year of twelve months", as it may start from the date of notice under subsection (1) of section

34. In the substantive part of the subsection, it is urged the same meaning should attach to the word "year" as in the proviso. There are some other sections of the Act in which limitation is provided for, namely sections 33‑A, 34‑A, 35, 46 (7) and 50 of the Act. It is argued that in none of these sections, excluding section 34, the new definition of year will apply as the context of the those enactments clearly establishes. The starting point of limitation in all these cases, except for section 50 is a particular date which may or may not coincide with the beginning of an assessment year or a financial year, presuming that the two letters are co‑terminus. In section 50 also it is plain that the Legislature could not have intended to extend the period during which a refund could be claimed, vie., the period of four years commencing on the last day of the financial year after the expiry of the previous year in which the income arose, accrued or was received etc. By parity of reasoning it is argued that the same connotation of the word "year" should be adopted for interpreting the expression "four years" in the main part of subsection (2) of section

34. It is forcefully contended that no intention could be imputed to the Legislature of taking away vested rights, so as to speak by a side wind or to validate what would ordinarily have been invalid orders of assessment, without having expressly provided to that effect. The definition of "year" was probably incorporated into the Act for Government accounting purposes connected with the change in the duration of the financial year. The argument has considerable force. In the present case, as we have already seen, four years mentioned in section 28 began from the 1st of April 1956 and before the period had run out the amendment to section 2 (20) of the Act came into effect on the 31st of March 1959. In this view of the matter the contention of Mr. Asrarul Hossain that since there is nothing in the Finance Ordinance to indicate that the amended provision would have retrospective effect the amendment cannot be pressed into service in the instant case and cannot be accepted. He has in this connection also drawn our attention to the second proviso to that section which was also introduced by this Ordinance and the observations of the Supreme Court thereon. We shall reproduce the two provisos and thereafter indicate our conclusions on the argument advanced by Mr. Asrarul Hossain. The two provisos read as follows:‑ Proviso to clause (2) of section 21: "Provided that as respect the period beginning on the first day of April 1959 and ending on the thirtieth day of June 1960, the said period shall be deemed to be a "financial year" and all the provisions of this Act shall be construed accordingly." Proviso to section 28:‑ "Provided that for the purposes of making any assessment under this section for the year beginning on the first day of April 1954 and ending on the thirty‑first day of March 1955, the period beginning the first day of April 1958 and ending on the thirtieth day of June 1959 shall be deemed to be one year." The learned counsel has argued that, if there was any intention to extend the period of limitation under section 28 of the Act for assessment in connection with the year 1955‑56, the first proviso would have been worded similarly as the second one which clearly extended the period of limitation by three month in regard to the year 1954‑

55. We, however, on a careful reading of the two provisos and giving our anxious consideration to the observation of the Supreme Court in the case already referred to, find that the clear indication by introducing these two provisos is that the period of limitation in regard to both the years 1954‑55 and 1955‑56 would be extended by three months. We, therefore, find no substance in the first contention of Mr. Asrarul Hossain, namely, that the assessment was made without jurisdiction. It has been argued that the Appellate Commissioner illegally dismissed the appeal of the petitioner in limine. The ground given by the Appellate Assistant Commissioner in rejecting the appeal is to be found from the following observation:‑ "The learned representative for the appellant state that the credit sales represent transfer of goods on approval for which the appellant was not paid and as such credit sales were not included in the sales and sales tax was not paid on that. He also states that as credit sales were not admitted as taxable sales, tax on that cannot be taken as admitted tax. Regarding sales effected to foreign embassies it is stated these sales are exempted from sales tax as per circular No. 6 S. T. of 1951 dated 7‑8‑51 and as such tax on sales effected to foreign embassies cannot be taken as admitted tax. From the statement filed before the I. T. O. I find that the appellant did not take the credit sales as representing transfer of goods on approval. From the accounts also he cannot prove it. From 2 (15) of the Sales Tax Act, 1951 it is very clear that the sales included cash and credit sales. So there is no reason for not taking the credit sales as sales of the year and also not taking the tax on credit sales to determine admitted tax. From the circular quoted by the appellant's representative it does not appear that the sales of furniture from assessee's shop to foreign embassies are exempt from sales tax. From these facts it is clear that the appellant did not pay the admitted tax. So this appeal cannot be entertained. The appeal is therefore struck off." The Appellate Assistant Commissioner seems to have taken the view that, though the petitioner‑company contended that it was not liable to pay tax on the credit sales as well as on sales to foreign Consulate yet since in his opinion the amount covered by the sales was taxable under the Sales Tax Act, the deposit contemplated under section 14 must cover that amount also. The relevant portion of section 14 of the Sales Tax Act runs as follows:‑ "Any assessee objecting to an assessment made or a penalty imposed on him, may within thirty days of the date on which he was served with notice of the assessment or penalty, appeal to the Appellate Assistant Commissioner: Provided that no appeal shall be entertained under this subsection unless it is accompanied by proof to the satisfaction of the Appellate Assistant Commissioner of the payment of tax admitted by the appellant to be due: * * * * * *" The learned Appellate Assistant Commissioner thought the whatever according to the Sales Tax Act was payable as tax must be deposited before an assessee could prefer an appeal against B the order of assessment. The view has been taken clearly on a misreading of the section. The section mentions that the assessee can prefer an appeal against an order of assessment if it is proved that he has paid the tax admitted by him. In the present case, the petitioner‑company disputed the right of the Department to assess on credit sale. Therefore, it cannot be said that there was any admission on its part with regard to that amount. Whatever according to the company was payable had already been paid and therefore the Appellate Assistant Commissioner was not within his rights to dismiss the appeal in limine. The third point raised by Mr. Asrarul Hossain is that in this case the notice served was not the form prescribed. He has in this connection drawn our attention to the form which appears at page 197 of Maqsud Ahamad Khan's Book on the Law of Sales Tax in Pakistan. The form in which the notice was given appears from Annexure I to the affidavit in opposition filed by the Sales Tax Officer Companies Circle. This notice was issued on the 15th October 1959 and the petitioner company was asked to appear on the 26th October 1959. Mr. Asrarul Hossain has contended that this notice is not in terms of the form already mentioned. He has not been able to show that this form has been prescribed under any of the provisions of the Act, however, as we propose to send this case back to the Appellate Assistant Commissioner for disposal of the appeal on merit, we do not like to give any decision on this question and leave it for consideration by the Appellate Assistant Commissioner. A preliminary objection was taken by Mr. Mesbahuddin as to the maintainability of this petition. He argued that as the petitioner had a remedy by appeal to the Appellate Tribunal against the order of the Assistant Commissioner which he did not avail of, this petition must fail. We are unable to accept this contention. The Company challenged the order of the Assistant Commissioner in revision which is an alternative remedy. The preliminary objection is, therefore without substance. The result, therefore, is that this Rule is made absolute. The order of the Appellate Assistant Commissioner dismissing the appeal of the petitioner‑company in limine as well as the order of the Commissioner confirming the said order are declared to have been passed without any lawful authority. The Appellate Assistant Commissioner, therefore, will now decide the appeal on merits. Regard being had to the facts of this case, however, we direct the parties to bear their own costs. SAYEM, J.‑I agree. M. N. Order accordingly.