2003 PLP 1411 (PTD)

(3) Any person desirous of appealing under subsection (1) against any decision or order relating to any tax demanding 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.

29. Section 45, however, after amendment by the Finance Ordinance, 2000 (XXI of 2000) reads as follows:-- "(45) Appeals.-(1) Any person including the Sales Tax Department aggrieved by any decision or order made under this Act by an Officer of Sales Tax below in rank than a Collector may, within thirty days of the date of communication of such decision or order, 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 five hundred 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: Provided that the Collector of Sales Tax (Appeals) may also confirm, vary, alter, set aside or annul the penalty imposed under this Act for reasons to be recorded in writing. (2a) In deciding an appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be necessary but h^ shall not remand the case to an officer who made the order for deciding it afresh. (3) Any person desirous of filing an appeal under subsection (1) against any decision or order relating to any tax demanded or any penalty imposed under the Act shall, before filing the appeal, deposit the tax demanded and the penalty imposed: Provided that, where in any case, the Appellate Authority is of the opinion that the deposit of tax demanded or the penalty imposed is likely to cause undue hardship to the appellant it may dispense with such deposit subject to such conditions as it may deem fit to impose: Provided further that in any particular case, the Collector of Sales Tax (Appeals) may direct that the pending decision of the appeal, the tax demanded or penalty imposed shall be paid by the appellant is suitable installment spreading over a period not exceeding six months from the date of such directions."

30. Section 45 of the Act was further amended by Finance Ordinance 2000 (XXI of 2000) in the following manner:-- "(45) Power of Adjudication.

In cases involving assessment of tax, charging of additional tax, imposition of penalty and recovery of amount, erroneously refunded under this Act or the rules made thereunder, the jurisdiction and powers of adjudication of the Sales Tax Officers shall be as follows:-- (i) Collector Cases falling under sub-section (2) of section 11 and section 36 of the Act without any restriction as to the amount of tax involved or amount erroneously refunded. (ii) Additional Collector Cases falling under subsection (2) of section 11 and section 36 of the Act provided that the amount of tax involved or the amount erroneously refunded does not exceed ten million rupees. (iii) Deputy Collector (a) Cases falling under subsection (1) of section 11. (b) Cases falling under subsection (2) of section 11 and section 36 of the Act provided that the amount of tax involved or the amount erroneously refunded does not exceed two and a half million rupees. (iv) An officer of sales tax with any other Designation. Such cases as may be notified by the Board. Provided that the Board may, by notification in the official Gazette, vary the jurisdiction and powers of any Officer of Sales Tax or a class of officers of Sales Tax. Provided further that the Board shall have powers to regulate the system of adjudication including transfer of cases and extension of time limit in exceptional circumstances. Explanation.-For the purpose of this section, tax means the principal amount of sales tax other than tax or additional tax and in a case where only further tax, whether or not with additional tax, is involved, the amount of further tax and in all other cases additional tax."

31. Section 45A of the Act, reproduced below however, has not undergone any material change except that the word "three years" was substituted as "five years" in subsection (3) and additionally the subsection (2) of 45A introduced the word section 45B or section 46. "45A. Powers of the Board and Collector to call for records.-(1) The Board may, of its own motion, call for and examine the record of any departmental proceedings under this Act of the rules made thereunder for the purpose of satisfying itself as to the legality or propriety of any decision or order passed therein by an Officer of Sales Tax, it may pass such orders as it may think fit: Provided that no order imposing or enhancing any penalty or fine requiring payment of a greater amount of sales tax than the originally levied shall be passed unless the person affected by such order has been given an opportunity of showing cause and of being heard. (2) No proceeding under subsection, (1) shall be initiated in a case where an appeal under section 45B of section 46 is pending. (3) No order shall be made under this section after the expiry of five years from the date of original decision or order of the sub ordinate officer referred in subsection (1). (4) The Collector may exercise the powers conferred on the Board by subsection (1) in respect of any case decided' by an officer subordinate to him."

32. Section 45B was inserted by the Finance Ordinance, 2002 (XXVII of 2002) which was promulgated on 15-6-2002, which reads as under:-- 45B. Appeals.-(1) Any person, including the Sales Tax Department, aggrieved by any decision or order passed under sections 11, 36 or 45, 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) tray, after giving both parties to the appeal an opportunity of being heard, passed such order as he thinks fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against. (3) In deciding in appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be 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 the tax demanded and the penalty imposed under such decision or order: Provided that, where in any case, the Collector of Sales Tax (Appeals) is 'satisfied that the deposit of tax, demanded or the penalty 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 demanded or penalty imposed shall be paid by the appellant in suitable installments spreading over a period not exceeding six months from the date of such directions."

33. Section 46 relates to filing of appeal before the Appellate Tribunal whereas section 47 relates to filing of appeal to this Court.

34. In addition to this, the word "Board" used in section 45A has been defined under section 2(4) of the Act which means the "Central Board of Revenue" constituted under the Central Board of Revenue Act, 1924 (IV of 1924). The Defendant No.1 in exercise of powers conferred by section 3 of the Central Board of Revenue Act, 1924, had framed the Rules called "Central Board of Revenue Rules, 1967." These Rules have been framed to regulate the transaction of business by the Central Board of Revenue and in exercise of such Rule the Board had issued a Notification on 24-9-1998, as Sales Tax General Order No.7 of 1998 which read: as follows whereby the Defendant No.2 was authorized to exercise powers under section 45A of the Act. "'SALES TAX GENERAL ORDER No.7 OF 1998, DATED 24TH SEPTEMBER, 1998 SUBJECT: EXERCISE OF C.B.R.'S POWERS UNDER SECTION 45A OF THE SALES TAX ACT, 1990. In exercise of tire powers conferred by rule 5(1) of the Central Board of Revenue Rules, 1967, the Chairman is pleased to allocate the business of the Board under section 45A of the Sales Tax Act, 1990 to the Member (Judicial), C.B.R., Custom House Building, Karachi.

2. Ail Collectors, Collector (Appeals) and Additional Collectors Incharge of Sales Tax shall invariably endorse a copy of their order-in-original and order-in-appeal to the said Member (Judicial) for his information."

35. The Board further by a Notification of 15-6-2002 issued under section 30 of the Act, had appointed the officers notified therein to hear the appeals against the orders' of the officers below the rank of Additional Collectors. This Notification spells out the Collector Sales Tax (Adjudication) as the officer authorized to hear appeals and while exercising such authority was for all intents and purposes was the Collector Sales Tax (Appeals).

36. The aforesaid reproduction in regard to different provisions of the Act was necessary act understand the real controversy between the parties.

37. Without touching the merits of the case, I will confine myself to the only issue as to whether the Notices impugned in these proceedings were lawfully issued by the Defendant No.2. Admittedly, section 45A authorizes the Board, which in turn has authorized the defendant No.2 to call for and examine the record in respect of any proceedings under the Act or the Rules made thereunder for the purposes of satisfying itself as to the legality or propriety of any decision or order passed by any Officer of the Sales Tax with two exceptions (1) these powers are available to be exercised initially within three years and now by virtue of the amendment brought in subsection (3) of section 45A within five years from the date of original decision or order of the subordinate officer; and (2) such powers could not be exercised during the pendency of any appeal as provided under sections 45B or 46, as the case may be.

38. The expression "an Officer of the Sales Tax" used under section 45A has been defined under section 2(18) of the Act which spells out that Officer of Sales Tax would mean an officer notified under section 30 of the Act by the Board in the official Gazette and is appointed in relation to any area, any case or class of cases specified in the Notification and such person would include the officers mentioned in sub-clauses (a) to (g) of section

30. From the plain reading of section 30 a Collector of Sales Tax (Appeals) falls within the definition of Officer of Sales Tax. The orders sought to be examined by the Defendant No. 2, in exercise of powers under section 45A, were passed by the Collector Sales Tax (Appeals) on 11-12-11998 in Suit. No. 297 of 1999 and the other orders in Suit No.412 of 1999 were passed by the Additional Collector-I on 2-2-1997, on rewind from Collector Sales Tax (Appeals). The show-cause notices were issued within three years of the passing both the orders.

39. Under section 30 of the Act as stood prior to the Amendment through Sales Tax (Amendment) Ordinance (Ordinance VII of 2001) the Board was empowered to notify arty person to be a Collector of Sales Tax (Appeals) in relation to any area. It was only through an Amendment referred to hereinabove the expression "Collector Sales Tax (Appeals)" was substituted by the expression "Collector Sales Tax (Adjudication)."

40. At, the same time an order passed under tire. Act by any officer below the rank, of a Collector could be questioned in Appeal before the Collector of Sales Tax (Appeals)'. An Officer of the Sales Tax has been defined to mean any officer appointed under section 30 and section 45A enabled the Board to exercise and examine the legality or propriety of any order of such Officer of the Sales Tax. Evidently, therefore, an appeal against the original order was rightly preferred by the plaintiff before the Collector Sales Tax (Appeals) in 1998 and the other appeal in 1997 and the appellate order or the original order on remand are subject to show-cause notices in exercise of revisional jurisdiction by the Board under section 45A.

41. The expression "Collector of Sales Tax (Appeals)" has substituted the expression "Collector of Sales Tax (Adjudication)" in section 30 through Ordinance VII of 2001. The notices issued to the plaintiff in 1999 were perfectly in accordance with the law as operating on the date when these notices were issued and it could trot be urged that these notices were issued without jurisdiction. The amendment purporting to abolish the office of "Collector Sales Tax (Appeals)" was also of no consequence because the amending Ordinance does not stipulate abatement of proceedings already initiated and once again through amendment made by Finance Ordinance, 2002, the appellate powers of the Collector Sales Tax (Appeals) were restored and in addition to such amendment the Board has also notified the Collector Sales Tax (Adjudication) as Collector Sales Tax (Appeals) authorizing them to decide in appeal any order of their subordinate other than the Additional Collector (Adjudication). Therefore, it cannot be even urged at this point of time that the Board has no Jurisdiction to examine the validity or propriety of an order passed by the Collector Sales (Appeals).

42. Under section 30 of the Act the Board had the rower to notify appointments of persons to various positions including the Collector of Sales Tax (Adjudication). Under section 45 the Collector Sales Tax (Appeals) was required to exercise appellate powers against orders passed by the officers below the rank of the Collector. On introduction of the amendment by the Amending Ordinance of 2001, a Sales Tax Tribunal was constituted under section 45B, which could exercise appellate powers. Such powers were therefore, withdrawn from Collector Sales Tax (Appeals) and the Collectors were only left to exercise original powers of adjudication: However in 2002 by Amendment in 45B the appellate powers were conferred upon the collectors and the office of Collector of Sales Tax (Appeals) was reconstituted while the remaining powers remained with the Tribunal. The Collectors Sales Tax (Adjudication) were given those appellate powers under Notification 15-6-2002 issued by the Board which mentions the appointment of such officers under section

30. In this background there is no ambiguity in regard to exercise of powers by the Collector Sales Tax (Appeals) and the show-cause notice issued by Defendant No.2 in exercise of powers under section 45A is lawful as it covers both the orders sought to be examined.

43. I have also gone through the judgment-of Lahore High Court in the case of Flying Board and Paper Products v. Deputy Collector-II reported in 2002 PTD

7. With profound respect I do not agree with the findings of the learned Judge-in particular that the powers under section 45A are executive in nature. It appears that the learned Judge has not taken note of section 30 of the Act which defines the expression "Officer of the Sales Tax" and the powers exercisable under section 45A could extend only to these officers and would not extend to the orders of any other forum like the Appellate Tribunal or this Court. Further, in view of what I have discussed hereinabove, section 45A is applicable to all the orders passed by the Officers of the Sales Tax either in original or in appeal, and non-filing of appeal by either party would not debar the Board from exercising powers under section 45A of the Act to examine the legality or propriety of an order except that during the pendency or the appeal the powers under section 45A could not be exercised. However, the powers under section 45A could not be exercised to examine the legality or propriety of an order passed either by the Appellate Tribunal under section 46 or by this Court.

44. In regard to other proposition of law and the cases cited by the learned counsel of the plaintiff, it has no nexus to the controversy. I, therefore, hold the show-cause notices- were lawfully issued by the Defendant No.2 and, therefore, suits are barred under section 51, which reads as under:-- "

51. Bar of suits, prosecution and other legal proceedings.-(1) No suit shall be brought in any Civil Court to set aside or modify any order passed, any assessment made, any tax levied any penalty imposed or collection of any tax made under this Act. (2) No suit, prosecution or other legal proceeding shall lie against the Federal Government or against any public servant in respect of any order passed in good faith under this Act."

45. Since I have already decided Issue No.2 against the plaintiff, the issue of maintainability of suit shall also go against the plaintiff as the suit is barred under section 51 of the Act. The case-law cited by Dr. Farogh Naseem on different proposition of law, I believe have no application once the Issue No.2 has been answered against plaintiff. I have avoided touching merits of the case and the Board shall examine the legality as well as propriety of the orders by affording the opportunity of hearing to the plaintiff in terms of section 45A of the Act whereafter the Board may pass appropriate reasoned orders in accordance with law. These were reasons on the basis of which I had dismissed the two suits by my short order; dated 24-1-2003. M.B.A./A-430/K Suits dismissed.