2005 PLP (Trib (PTD)

This appeal challenges the vires of the impugned order, dated 21-2-2004, passed by the Collector of Customs, Sales Tax and Central Excise Appeals, Karachi.

2. The issue in this case is whether or not imposition of penalty of Rs.5,000 per month for allegedly non-filing of sales tax return-cum-payment challan was warranted by law.

3. Rival parties have been heard and case record has been examined. The impugned order is not sustainable as the respondent imposed penalty on appellant having failed to notice that no such charge or controversy was part of the show-cause notice. The learned respondent neither ascertained the facts nor made any inquiry or issued a show-cause notice in order to adjudicate an issue which was not before him as part of the show-cause notice. It s a well established principle of law that no body should be a judge of his own cause (nemo debet esse index in causa propria sua), thus in absence of notice regarding a disputed issue, the adjudication authority was not competent to pass an order. The said principle is applicable to Courts, Tribunals, Authorities having jurisdiction to determine judicially, the rights of citizens.

4. The law is now settled to the extent that without following the legal formalities, valuable rights of the parties cannot be taken away. The object behind all such formalities is to safeguard the paramount interest of justice legal percepts are devised with a view to impart certainty, consistency and uniformity to the administration of justice and to secure the same against arbitrariness, errors and of failures of individual judgment etc.

5. As is evident that the respondent decided an issue which was not sub judice before him as part of the statement of allegations conveyed to the appellant, and by giving a decision on the same he acted beyond his jurisdiction to pass a finding on such an issue. The general principles of adjudication as pronounced by the higher Courts and as provided in the Act inter alia include that:-- (i) When executive officers are invested with statutory powers of a special or drastic nature, before exercising those powers, they must strictly comply with the provisions of the Act, Rules and natural justice. (ii) A proper show-cause notice stating therein brief facts of the case, the offence committed and the evidence on the presumption of which the offence is based should be issued to the person concerned before taking any action against such person. When a show-cause notice is given, the object is that the person on whom it is served gets an opportunity to explain his position for which action is proposed to be taken. (iii) When an inquiry into an alleged offence, punishable by a sentence or penalty is made, the accused should know that there is a charge against him and should exactly know that the charge is; and he should be given fair opportunity of explaining his position before any adjudication against him is made. This holds goods of all such inquiries, whether they are conducted departmentally or under a special statute, or in a Court of law and whether conducted with the formalities of a settled procedure or not. (iv) The show-cause notice must be issued by the authority competent to adjudicate the case and not by a lower authority. (v) Notice under subsection (1) of section 36 of the Act must contain the allegation of collusiveness and notice under subsection (2) of section 36 of the Act should speak of inadvertence, error or misconstruction and without such allegations the notices would be defective and against law. The impugned order in this case thus suffers from procedural impropriety, as a cause for which no show-cause notice was given by the respondent was adjudicated by him in flagrant violation of the existing provisions of law. Having said that, it is observed that respondent had no jurisdiction to decide an issue which was not sub judice before him.

6. It may also be added that for imposition of a penalty, it must also have been shown that offender was committing some criminal activity and for that there existed mens rea or at least a criminal intent. In absence thereof he can not be penalized.

7. The impugned order shows that a finding on the guilty mind of the appellant was never given by the respondent. Accordingly, the imposition of penalty was not called for, as the same was not warranted by law.

8. Accordingly, this appeal is allowed and the impugned order to the extent of imposition of penalty is set aside. H.B.T./377/Tax (Trib.) Appeal allowed.