MUHAMMAD SAIR ALI, J.---The short intriguing question of law raised in this Sales Tax Appeal is as to whether after paying the sales tax amount under the Amnesty Notification No. S.R.O. 461(1)/99, dated 9-4-1999 exempting additional tax and penalties, the appellant could seek determination qua the claim of such sales tax amount in the adjudication proceedings or the appeal.
2. On 2-6-1996 the Deputy Collector served a show-cause notice on the appellant-Company i.e. Sunrays Textile Mills Ltd., alleging short payment of the sales tax amounting to Rs.964,159 and the additional sales tax accruing thereupon. The appellant was charged with the violation of the provisions of sections_ 2(31), 3, 6, 22, 23, 26 and 34 of the Sales Tax Act, 1990 and was called upon the show-cause against the imposition of the sales tax of Rs.964,159 additional tax of Rs.126,3048, the surcharge and the penal action. Contesting reply was filed by the appellant. Adjudicating proceedings were commenced thereupon. During the pendency of these proceedings Amnesty Notification No. S.R.O. 461(1)/99, dated 9-4-1999 was issued granting exemption from payment of the additional tax and penalties if the principal amount of "the sales tax due" was paid uptill 30-4- 1999. The appellant to avail of the exemption paid the sales tax amount. The Adjudicating Authority passed Order-in-Original No.121 of 1999 on 15-10-1999 that the amount of sales tax i.e. Rs.964,159 had been paid under the Amnesty Scheme and the appellant's representative prayed for disposal of the case accordingly. The issue thus stood settled and no additional tax or penalty was imposable. No finding was made as to whether the amount of sales tax of Rs.964,159 demanded per the show-cause notice (paid by the appellant under the amnesty) was actually due or not. The appellant thus appealed . The Appellate Tribunal rejected the appeal through the impugned judgment, dated 2-5-2002 observing that as the appellant's representative had requested for disposal of the case "accordingly" upon payment of the sales tax amount under the Amnesty Scheme, no further inquiry in the matter was required. Hence, the present further appeal.
3. The learned counsel for the appellant referring to clause (2) of S.R.O. 461(1)99, dated 9-4-1999 submitted that even after payment of the.Sales tax under the S.R.O., the terms of the Amnesty Scheme entitled the appellant to seek decision on the amount of `tax due' and also get refund of the amount paid under the scheme per decision in appeal or adjudication. In the contrary arguments the learned counsel for the respondent contended that clause (2) had limited application. And that the amount due could only be determined in case of pendency of an appeal under section 45 or 46 of the Act. And it was on the appellate order that refund could become payable. From this the learned counsel for the respondent gathered that in the case of appellant the matter was before the Adjudicating Authority and not before the appellate forum wherefor the concession under clause (2) of the above notification was not available to the appellant. It was further contended that the appellant had made payment of the principal amount of the sales tax under the Amnesty Scheme and the Adjudicating Authority as well as the Appellate Tribunal disposed of the case as per the statement of the appellant's representative. Therefore, the appellant was estopped from challenging any order.
4. Heard.
5. The show-cause notice was served on the appellant on 2-6-1996. On reply, adjudication proceedings were initiated. During the pendency of these adjudication proceedings, Amnesty Scheme through S.R.O. No.461(I)/99, dated 9-4-1999 was introduced by the Federal Government. It was availed of by the appellant as sub-clause (xi) of Clause (i) of the notification which extended the benefit of the exemptions even to the registered person under a "Show-Cause Notice." The Adjudicating Authority ultimately passed Order-in-Original No.121 of 1999 on 15-10-1999 disposing of the matter on the payment of the sales tax by the appellant under the Scheme. The Adjudicating Authority did not decide the question as to whether the alleged sales tax was due from the appellant or not. The appeal against such non-decision was dismissed by the Appellate Tribunal.
6. Canvassing limited scope of clause (2) of the notification, the learned counsel for the respondent stated that the appellant cannot seek decision on the legality of the sales tax paid under the Amnesty Scheme because under clause (2) such decision could only be sought in the cases where appeals were pending and not otherwise. And that the scope of clause (2) cannot be expanded to include adjudication proceedings pending before the Adjudicating Authority as in the case of the appellant.
7. We deem it appropriate to reproduce the opening clause (1) with sub-clause (xi) of S.R.O.
461(1)/99, dated 9-4-1999 as well as clause (2) *thereof:-- "In exercise of the powers conferred by section 34A of the Sales Tax Act, 1990, the Federal Government is pleased to exempt additional tax under section 34 and penalties under section 33 of the said Act payable on such portion of the principal amount of tax due if the said principal amount (as accrued on or before the 31st March, 1999) is paid, during the period from the date of this notification up to the 30th April, 1999 by the following classes of registered persons, namely:--- (1)(x) ------------------------------------------------------------------------------- (xi) persons against whom arrears of tax are outstanding in terms of an audit report, demand notice, assessm ent order or adjudication order, show-cause notice, appellate order or for any other reason.
(xii) (2) This notification shall also apply to cases pending in appeal under sections 45 and 46 of the Act. However, if the dues are held to be not payable in view of the appellate' order, the amount so paid in terms of this notification shall be refunded within fifteen days of receipt order."
8. The above reproduced clause (1) of the notification reveals that exemption from payment of the additional tax under section 34 and penalties under section 33 of the Sales Tax Act, 1990 was allowed on payment of the principal amount of "the tax due" if paid upto 30-4-1999 by the registered persons named in sub-clauses 1(i) to 1(xii) thereof. The appellant was a registered person falling in sub-clause (xi) of clause (1) which included in the scope of the notification the registered persons against whom tax was shown as outstanding in terms of the:--- audit report; demand notice; assessm ent order; or adjudication order; show-cause notice; * appellate order; or * for any other reason.
9. Out of the above specified seven events, fifth situation applied to the appellant's case. The appellant was under a "show-cause notice" to explain the alleged short payment of the sales tax of Rs.964,159. The adjudication proceedings were initiated but, had not yet concluded. Therefore the alleged amount of short paid sales tax could only be termed as the departmental claim. It had not matured into the adjudicated amount of "the tax due" as a consequence of an adjudication order under the relevant provisions of the Sales Tax Act, 1990 or the appeal proceedings. Nor could it be termed as "the tax assessed"; either self-assessed by the registered person or by an order of assessm ent of an officer of the Sales Tax. It was not even "the tax demand" through an appropriate Notice of Demand.
10. The term "the tax due" as used in the notification also find mention in eections 33 and 34 ibid. Under section 33(2)(c) the penalty was payable upon failure of person to deposit the amount of "the tax due" and under section 34(1) additional tax at the rate of 5% of "the tax due" per month was payable by a registered person on default in payment of the "the tax due". The determination of the amount of "the tax due" involved the procedure of adjudication or at minimum the procedure of assessm ent. In the present case neither had the adjudication proceedings concluded into "an adjudication order" against the appellant nor was an "assessment order" passed. The amount of sales tax stated in the show-cause notice therefore did not consequent into "the tax due" to become outstanding against the appellant.
11. Furthermore upon payment of "the tax due" by the cut of date, Amnesty Notification allowed exemption from the additional tax and the penalties to twelve classes of the registered persons as the possible beneficiaries of the notification. The registered persons were specified in sub-clauses
(i) to (xii) of clause (1) of the notification. Under sub-clause (xi) reproduced above, such registered persons also included those against whom the arrears of tax were outstanding in terms of (i) an audit report (ii) demand notice (i.e) assessment order or (iv) adjudication order (v) show-cause notice (vi) appellate order or (vii) for any other reason. The events or situations or orders referred to in this sub-clause were all distinct and independent. All such orders, proceedings or events could arise or come into existence under separate provisions of the Sales Tax Act, 1990 involving separate process entailing distinguishable consequences. Claim under a show cause therefore could not be equated with demands for "the tax due" under a demand notice or an assessment order or an adjudication order or an appellate order. No demand notice or assessment order or adjudication order or appellate order against the appellant were passed to be enforced for recovery of "the tax due" from the appellant. As such there was nothing 'outstanding' against the appellant as "arrears of tax". Although the departmental claim had not yet matured into "the tax due" or its arrears to be outstanding in terms of the notification or the law yet by a fiction the benefit of the notification was extended to the persons under the show-cause notices as well. The seeming object thereto must be---
(i) to collect the revenue;
(ii) to solicit recovery which otherwise would be cumbersome or improbable; (i.e) to settle disputes; and
(iv) to give relief to the assessee against the additional tax and penalties either outstanding or to become outstanding in future in the pending cases.
12. On the faith of the promises and the representations contained in the notification, the appellant paid the amount of the sales tax claimed in the show-cause notice to avail of the exemptions granted in the notification. The appellant also had the option to contest the show-cause A notice.
Availing of the Amnesty Scheme by the appellant meant that on an adverse decision in the adjudication proceedings and/or the appeals arising therefrom, the appellant would not be subjected to the additional tax and penalties. The appellant also presumed that its defence against the show-cause notice, in the pending adjudication proceedings, would neither be compromised nor be given up on payment of the sales tax under the terms of the Amnesty and under clause (2) thereof adjudication on the claimed sales tax and the allegations of the short payment could still be obtained. The appellant was not wrong in so presuming and interpreting the notification. There was no condition in the notification prescribing that payment of the sales tax under the Amnesty Scheme would be:---
(a) an admission of the sales tax due or its liability;
(b) the final adjustment of such liability; and
(c) an admission of the allegations levelled by the department in the show-cause notice.
Furthermore the notification also did not debar the registered peison from seeking adjudication on the legality of the liability for such sales tax or a part thereof. In absence of any such condition in the notification, the bar could not be imported or be read therein to the disadvantage of those who were persuaded by the clear terms of the notification to make payment of the sales tax thereunder. Such interpretation would divest the registered person of a remedy against the claimed sales tax; regality of which was under question and adjudication or appeal thereagainst was underway. This interpretation therefore was obviously unreasonable, unfair and unlawful.
13. Contrarily, the Federal Government in clause (2) of the notification expressly provided that it shall apply to cases pending in appeal under sections 45 and 46 of the Act. And that if the dues were held not payable in the appellate order, the amount paid would be refunded. The notification thus guaranteed that despite payment under the Amnesty Scheme the registered person could:-- -
(i) invoke and continue with the remedy against the claimed/ imposed tax;
(ii) seek adjudication on the legality and payability of the sales tax; and (i.e) obtain refund on success.
14. The risk of loss of the paid amount was thus guaranteed against.
15. The respondents seek to restrict the scope of Clause (2) only to a pending appeal. We are afraid such restrictive interpretation cannot be placed upon clause (2) of the notification. If the benefit was extendable to the cases under the appeals, the same could not be withheld in the cases under adjudication proceedings. The claim of the department had to be determined and adjudicated upon through an "adjudication order" of the Adjudicating Authority as to whether the tax was due or not. And that "the adjudication order", of course, was open to appeal by an aggrieved person.
Any other meaning to clause (2) above referred would subject the appellant not only to discrimination but also to the handicap and hardship of loosing remedies of adjudication and appeals arising from the adjudication order.
16. The provisions of the notification have, of course, to be given a coherent and credible meaning to allow even handed and equal treatment to all those availing of the Amnesty Notification.
17. An appeal is admittedly continuation of the original proceedings or the suits. If the appeal is the upward continuation of the original proceedings or suits, by the same reason, the original proceeding is the base of the appeal. The two proceedings are inextricable. The chain cannot be severed, delinked, broken or discontinued.
18. The word "appeal" as used in clause (2) of the notification, in our opinion, included the proceedings of "adjudication" by the Adjudicating Authority. It is well-settled that an appeal included the suit or the original proceedings; the order/decree wherein merges into the ultimate appellate judgment or decree.
The term "Appeal" as used in Clause (2) of the Amnesty Notification therefore incorporated within it the adjudication proceedings pending to obtain verdict on the legality of the claimed tax.
19. We are thus of the opinion that despite payment of the amount of the claimed sales tax by the appellant under the Amnesty Scheme, it was entitled to a decision on legality, payability and validity of the claimed sales tax. The learned Tribunal and the Adjudicating Authority thus failed to exercise jurisdiction vesting in them. The questions should have been decided as to whether the amount of the sales tax of Rs.964,159 (Rupees nine lac sixty four thousand one hundred and fifty nine only) was due from and payable by the appellant or not and as to whether the appellant was entitled to the refund of the sales tax amount paid under the Amnesty Scheme.
20. We are conscious of the fact that representative of the appellant stated before the Adjudicating Authority that case be disposed of "accordingly". The word "accordingly" can only mean that the matter be decided in accordance with the provisions of the Amnesty Notification No. S.R.O.
461(I)/99, dated 9-4-1999. The Adjudicating Authority for the ease of disposal of the proceedings should not have abdicated its duty to 'decide' the case according to the terms of the Amnesty Notification and the law.
21. In view of.What has been held above, questions Nos.3 and 4 as framed in para. 6 of this appeal are 'answered in the Negative. The questions as framed at. Sr. Nos.1, 2 and 5 of para. 6 being on merits of the case do not arise for our decision. These questions relate to the determination of legality and validity of the claimed 'sale tax. The same had in fact been left practically undecided by the Tribunal. The matter is being remanded to the relevant Adjudicating Authority in terms of observations made hereinabove and the mandate specified hereinafter.
22. In these circumstances, the impugned judgment, dated 2-5-2002 of the learned Tribunal and the order, dated 15-10-1999 of the Additional Collector as Adjudicating Authority Multan are set aside. The matter is remitted to the learned Adjudicating Authority; Multan to re-decide the case on merits in accordance with the terms of the Notification, the law and the observations made in this judgment.
23. This appeal is accepted as above with no order as to the costs. .