2010 PLP (Trib (PTD)

This appeal has been filed by the Revenue against the order of the Collector (Appeals) Excise and Sales Tax, Faisalabad, bearing No.279-284/2008 dated 26-4-2008.

2. The facts of the case for the purpose of disposal of the instant appeal are that the respondent/registered person is a manufacturer-cum- exporter engaged in making zero-rated supplies of textile goods. It claimed refund of sales tax amounting to Rs.586,165 for the period October, 2004, which accrued to it because of the zero-rated supplies. The registered person was however, served with a show-cause notice dated 19-12-2006, whereby the credit of input tax claimed by it in respect of purchases of raw material was intended to be denied for reasons like "non-filer, invoice summery not submitted, scrutiny for verification of input tax, exceeds declared output tax, deregistered and suspected etc." The respondent/registered person submitted a detailed reply to the show-cause notice which was not considered to be satisfactory. Resultantly, order-in-original was passed by the learned Assistant Collector on 16-6-2007 raising sales tax demand of Rs.470,360 being inadmissible input tax. Being aggrieved, the respondent filed appeal before the Collector (Appeals) of Customs, Excise and Sales Tax who vide impugned order dated 26-4-2008 accepted the evidence produced by the respondent-company in support of its claim of credit of input tax. Now the Revenue, feeling aggrieved has come up on appeal before us.

3. The learned DR appearing on behalf of the Revenue supported the order of the learned Assistant Collector of Sale Tax dated 16-6-2007 contending that the Assistant Collector had recorded valid reasons for disallowing the credit of input tax. He stated that the Assistant Collector was not in a position to allow the credit of input tax which was not cleared by STARR.

4. The learned AR of the respondent-company, on the other hand, supported the order of the learned Collector (Appeals) and stated that the evidence in support of the credit of input tax was considered to be satisfactory by the Collector (Appeals) only after thorough scrutiny. He further contended that the order-in-original was not sustainable under law because of having been passed in violation of the limitation provided under section 11(4) of the Sales Tax Act, 1990. Elaborating his contention the learned AR of the registered person stated that the show-cause notice was issued by the learned Assistant Collector on 19-12-2006 and as per limitation provided in the Sales Tax Act, 1990 the order-in-original was to be passed within 90 days of the issuance of the show-cause notice or within such extended period as the Collector (Appeals) may, for reasons to be recorded in writing fix. However, even the extended period will not, in any case exceed ninety days. Thus the time available at the disposal of the learned Assistant Collector for the disposal of the show-cause notice dated 19-12-2006 was 180 days whereas he passed the order on 14-7-2007 after 206 days, which was violative of the limitation laid down under section 11(4) of the Sales Tax Act, 1990. For this reason, the learned AR argued that the order-in- original could not be held as sustainable under the law. To further fortify his argument the learned AR also relied upon the reported judgment 2008 PTD 578, 2009 PTD 1978 and 2008 PTD 60 rendered by the Lahore High Court, Lahore.

5. We have given due consideration to the arguments of both the sides and also gone through the judgments of the Lahore High Court, Lahore, relied upon by the learned AR of the registered person. We feel that the learned Collector (Appeals) was justified to accept appeal of the registered person because the technical objections raised by the STARR for disallowing the credit of input tax had been met through irrefutable evidence. We are also inclined to agree with the learned AR of the registered person and hold that the order-in-original, having been passed by the learned Assistant Collector in violation of the limitation laid down in section 11(4) of the Sales Tax Act, 1990 was a nullity in the eyes of law. The case-law relied upon by the learned AR of the registered person adequately supports his contention. For the sake of reference we reproduce the relevant extract from the judgment of the Lahore High Court, Lahore in the case of Messrs Super Asia Muhammad Din & Sons (Pvt.) Limited v. Collector of Sales Tax, Gujranwala reported as PTCL 2008 CL 1 = 2008 .PTD 60:-- "The claim of the Revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is settled law that where inaction on the part of the public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the Revenue in that regard will make a provision of law redundant and nugatory. Redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the moreso, when. the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a taxpayer thereby creating certainty that after its expiry even if there was a good case for creation of liability he will not be dragged in."

6. For reasons discussed hereinabove we hold that the learned DR has not made out a case for our intervention. Accordingly we uphold the order of the learned Collector (Appeals) and dismiss the departmental appeal. C. M. A./80/Tax(Trib.) Appeal dismissed.