Appointment of Authorities

Judgments on the issue of pecuniary jurisdiction were silent regarding implications of the "Finance Amendment Ordinance, 2009", "Finance Amendment Ordinance, 2010", Finance Act, 2010" and the substitution of S.30(3) of the Sales Tax Act, 1990, whereunder, jurisdiction was vested in the authorities of Inland Revenue Service to exercise the powers irrespective of any restriction of pecuniary jurisdiction

Appellate Tribunal while rendering such judgments was not properly assisted by the taxpayers and the referred judgments were "per incuriam"

Law of precedent was not applicable to per-incuriam decision

Contention of the taxpayer regarding issuance of Show Cause Notice was rejected and the assumption of jurisdiction by the Assistant Commissioner Inland Revenue in terms of S.30(3) of the Sales Tax Act, 1990 for issuance of Show-Cause Notice dated 10-5-2010 and passing of order-in-original dated 16-8-2010 was affirmed

S.R.O. 555(I)/1996 dated 1-7-1996 had lost its validity when the provision of subsection (3) of S.11 of the Sales Tax Act, 1990 was repealed/omitted by virtue of Finance Ordinance, 2000.

After creation of Inland Revenue Services, S.30(3) of the Sales Tax Act, 1990 was substituted through Finance Act, 2010 which only empowered Commissioner Inland Revenue to direct their subordinate Officers to perform functions in respect of such persons or class of persons or such areas as the Commissioners may direct

Assistant Commissioner Inland Revenue had rightly passed the order-in-original dated 16-8-2010, whereas S.R.O. 555(I)/1996 dated 1-7-1996 was inconsistent with the provisions of S.30(3) of the Sales Tax Act, 1990 and dealt only with the officers of defunct Customs, Excise and Sales Tax group cadre.

Two mandatory conditions for appointment of any officer as enlisted in S.30 of the Sales Tax Act, 1990, first being that, a notification or statutory regulatory order for appointment and jurisdiction of Officers of Inland Revenue specifying a case or area was required to be issued by Federal Board of Revenue was necessary condition while second was that, the publication of notification or statutory regulatory order in the Official Gazette of Pakistan was a sufficient condition

If either of the two conditions was missing, the act of any authority appointed in whatsoever manner shall be an act done by any of the ordinary citizen of the State.

Taxpayer contended that order passed by the Additional Commissioner Inland Revenue was illegal and without jurisdiction because he was never appointed as an Inland Revenue Officer through a notification published in the official gazette as required under S.30 of the Sales Tax Act, 1990 and was a non-existent authority at that material time; and order was also hit by time limitation under S.36 of the Sales Tax Act, 1990

Validity

New service Group namely "Inland Revenue Service" was created through Finance Amendment Ordinance w.e.f. 28-10-2009 and as a result, the jurisdiction exercisable under Income Tax Ordinance, 2001, Sales Tax Act, 1990, and Federal Excise Act, 2005 were consolidated

By creation of a new cadre, a number of provisions including provisions of S.11 and S.36 of the Sales Tax Act, 1990 were also amended and the provisions of S.45 of the Sales Tax Act, 1990 for powers of adjudication were also omitted through Finance Amendment Ordinance 2009 applicable w.e.f. 28-10-2009 and an "Assistant Collector or a Deputy Collector or Additional Collector" were no more empowered to adjudicate upon cases falling under Ss.11 & 36 of the Sales Tax Act, 1990

Amendments were made in Ss.11(5) and 36(3) of the Sales Tax Act, 1990 whereby the word "Collector" was substituted by the word "Commissioner" and the words "Sales Tax Department or sales tax as the case may be" were substituted by the words "Inland Revenue"

Prior to inception of new tax service group namely 'Inland Revenue Service' a Notification No.S.R.O. 547(I)/2008 dated 11-6-2008 was duly issued and published in the official gazette for appointing sales tax authorities and assigning them jurisdiction and thereafter no such notification or statutory regulatory order on its pattern was neither issued nor obviously published in the official gazette for appointment of Inland Revenue Authorities to their jurisdiction which was mandatory for any proceedings carried out by an officer of Inland Revenue under S.30 of the Sales Tax Act, 1990

Order-in-original was passed by an "Additional Commissioner Inland Revenue, who was not duly appointed as "an officer of Inland Revenue" and was never assigned jurisdiction to the case of taxpayer through a notification published in official gazette under S.30 of the Sales Tax Act, 1990

Adjudication order passed by such officer was without lawful authority and of no legal effect.

Show cause notice was issued by the Deputy Commissioner Inland Revenue as to why amou=nt of tax refunded may not be recovered due to black-listing of suppliers along with hundred percent penalty and upheld the charges levelled against the registered person and passed sales tax order-in-original

Taxpayer contended that 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 S.30 of the Sales Tax Act, 1990; that proceedings initiated was without lawful authority and ab initio void; that imposition of hundred percent penalty was illegal because amount of penalty was not confronted in the show-cause notice; and that mere citation of S.33(13) of the Sales Tax Act, '1990 did not warrant hundred percent penalty

Revenue admitted that there was no such notification issued and published in the official gazette on the pattern of S.R.O. 547(1)/2008 dated 11-6-2008 but there was a Circular Order bearing C.No.l (19) IR-Jud/2007-Ot dated 11-11-2009 in lieu of a statutory regulatory order

Validity

Prior to amendments, the appointment and jurisdiction of "Sales Tax Officers" was made through a notification No. S.R.O. 547(1)/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 S.30 of the Sales Tax Act, 1990, and other amendments, 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, teither any notification was issued for appointment of Inland Revenue Officers nor the same was published in the official gazette, the show-cause notice and adjudication order passed by the Deputy Commissioner Inland Revenue was illegal and unlawful being without assigning the jurisdiction of the case under S.30 of the Sales Tax Act, 1990

Provision of S.30 of the Sales Tax Act, 1990 clearly revealed that Inland Revenue Officers should have been appointed by the Federal Board of Revenue through a notification published in the official Gazette but neither any notification appointing Inland Revenue Officers was issued nor the same was published in the official gazette; exercise of adjudication by the Deputy Commissioner Inland Revenue being non-existent at the relevant time was illegal and without jurisdiction

Show cause notice as well as subsequent adjudication order passed by the Deputy Commissioner Inland Revenue, who was non-existent authority at the relevant time, were declared to be illegal, void ab initio and without jurisdiction

Appeal was allowed by the Appellate Tribunal.

Taxpayer contended that order under S.11(5) of the Sales Tax Act, 1990 were to be passed by "an officer of Inland Revenue" who had been appointed through a notification in the official Gazette for the purpose of Sales Tax Act, 1990 in relation to case/area specified in the notification; and as per provisions of S.30 of the Sales Tax Act, 1990 as stood prior to amendment, the S.R.O. 547(1)/2008 dated 11-6-2008 had been issued appointing sales tax authorities and assigning them jurisdiction but after amendment of S.30 of the Sales Tax Act, 1990 and related amendments, no notification/S.R.O. was issued and published in the official Gazette appointing sales tax authorities and assigning them jurisdiction with regard to the case or area of the registered person which was a pre-requisite for any proceedings by an Officer of the Inland Revenue; and order passed against the taxpayer were without lawful authority and of no legal effect

Validity

First Appellate Authority impliedly admitted that there was no notification in the official Gazette on the pattern of earlier S.R.O. 547(1)/2008 dated 11-6-2008 yet he held that the spirit of law had been fulfilled as the orders of the Federal Board of Revenue appointing sales tax authorities and assigning them jurisdiction were issued; and reference to orders C.No.1(32)/2009-MIIA dated 24-11-2009 was made which in fact pertained to re-designation of posts made under S.4(1)(h) and S.5(1)(b) of the Federal Board of Revenue Act, 2007 and not in pursuance of S.30 of the Sales Tax Act, 1990

Reliance had also been placed upon another order No.1805-M-IIA/2009 dated 25-11-2009 which was in fact a transfer and posting order placing certain officers in the Regional Tax Office and not a statutory notification under S.30 of the Sales Tax Act, 1990

All such orders were administrative orders and there was no notification/S. R.O. published in the official Gazette on the pattern of earlier S.R.O. 547(1)/2008 dated 11-6-2008 issued in exercise of amended powers available under S.30 of the Sales Tax Act, 1990

Federal Board of Revenue's jurisdiction Order C.No.1(19)IR-Jud/ 2007-Pt dated 11-11-2009 assigning jurisdiction to Commissioners Inland Revenue was not a substitute for stipulated mandator notification published in the official Gazette appointing authorities for the purpose of Sales Tax Act, 1990 and assigning jurisdiction to them-. No notification/S. R. O. in order to amend earlier S.R.O. 547(1)/200, dated 11-6-2008 was issued and published in the official Gazette-Authority passing the order-in-original had not been appointed uncle, S.30(1) for the purposes of Sales Tax Act, 1990 and the case of the taxpayer was not assigned to him by express delegated legislation as per precedent and pattern of S.R.O. 547(1)/2008 dated 11-6-2008-Assumption of jurisdiction and passing of order-in-original was illegal, and void.

Prior to amendment through Finance (Amendment) Ordinance, 2009, requirement of notification under S.30 of the Sales Tax Act, 1990 published in the official gazette by issuing Notification No. S.R.O. 547(1)/2008 dated 11-6-2008 was fulfilled wherein Authorities were assigned the jurisdiction

Mandatory condition of appointment and jurisdiction of "Deputy Commissioner Inland Revenue" was not fulfilled, instead a Circular/Order C.No.1 (19) IR-Jud/2007-PT dated 11-11-2009 was issued which could neither be termed as a notification or a statutory regulatory order nor its publication was made in the official gazette under S.30 of the Sales Tax Act, 1990

Unless there was a fresh notification issued under S.30 of the Sales Tax Act, 1990 published in the official gazette, legal infirmity would prevail since the executive order dated 11-11-2009 could not be equated with the notification published in the official gazette.