CH. MUHAMMAD ISHAQ, MEMBER (JUDICIAL).- (1). The taxpayer has preferred this appeal against the Order-in- Original dated 16.11.2007 passed by the Collector, Sales Tax (A), Lahore. The order relates to the income year 2000-2001. The order upholds the levy of sales tax amounting to Rs.
13,559,984/- on the appellant. Aggrieved of this treatment, the order is impugned on the following grounds:-
1. That the impugned Order No. 244/ST/2007 dated November 16, 2007 passed by the Collector of Sales Tax & Central Excise (Appeals), Lahore is unjust and unfair.
2. That the order in original No. 63/2006 dated December, 2006 is framed after 2 and half years from the date oft issuance of show cause notice, hence the said is barred by the limitation as prescribed in section 11(4) of Sales Tax Act, 1990. Therefore, confirmation of said the barred order is unlawful and unjust.
Notwithstanding anything contained in the foregoing grounds:
3. That the Collector of Sales Tax & Central Excise (Appeals) was not justified to confirm the levy of sales tax on the sales amounting to Rs. 50,492,208/- relevant to the income year 2001-2002 as the taxpayer has already paid enlistment - city on the strength that they will pay the tax on future.
Taking the same premise, the denial of the waiver to the taxpayer is unjust and unfair.
4. That the levy of additional tax under section 34 of the Act is unjust and unfair.
5. That the additional tax and penalties confirmed by the Learned appellate authority are unjust and incorrect.
2. The appellant prays for the vacation of the impugned order and seeks the deletion of the levy against the firm.
3. We have heard the Learned representatives of the parties and examined the record.
4. The show cause notice in this case was issued on 10.04.2003 by the Deputy Collector, Lahore states that the figures of sales declared by the appellant with the Department of Income Tax show that the appellant was liable for registration but did not register itself under the Sales Tax Act, 1990.
Therefore, it infringed of Section 14 of the Sales Tax Act, 1990 read with the Retail Tax Rules, 1998.
Resultantly, the sales tax amount stated above was not paid by the appellant further violating Section 2(25), 3-A, 6, 22, 23 & 26 and the said Rules. The appellant filed reply to the show cause to the following effect:-
(i) They have paid enlistment tax during the period September 2000 to June 2001 by availing the benefit containing in the SRO 622(I)/2000. In this regard proof of filing of Sales Tax Returns of enlistment is enclosed.
(ii) They have discharged the due sales tax liability according to the law in the year 2000-2001.
(iii) As far as the issue of levy/payment of sales tax for the period 2001-2002 is concerned, the respondent has filed application for issuance of registration certificate in July 2001. However, the sales tax authorities have not issued the sales tax registration number to the firm despite different reminders. Copy of the reminder letter dated 10 August, 2006 is attached. In the absence of any sales tax registration number, how the firm can collect sales tax from the customers.
(iv) Under Section 7 of the Sales Tax Act, 1990, the department has to allow the input sales tax on the goods purchased for sale. Sales tax is indirect tax and the firm is liable to collect that tax from the customers on behalf of the sales Tax Department. In case, these sales are subject to tax, then the firm should be given the benefit of getting adjustment of input sales tax. Moreover, the firm should not be made liable for the Sales Tax which was recoverable from the customers.
(v) Maximum, levy of a penalty for non-collection of tax can be imposed.
(vi) Federal Government has given prescribed scheme for payment of sales tax on value addition and under that mechanism, a retailer is liable to pay sales tax @ 15% on the 10% value addition.
Thus, the maximum recoverable tax from the firm should not exceed above sales tax computed on the value addition specified by the Government.
5. During the course of arguments, the Learned AR stressed on the Government Scheme for value addition under which a retailer is liable to pay Sales Tax at 15% on the 10% value addition resulting in levy of Sales Tax not exceeding above sales tax computed on the value addition as specified by the government itself.
6. In its reply, the Department submitted parawise comments almost in line with the contents of the show cause notice. It is stated that the letter of special procedure was issued in 2004 and made applicable to all retailers. The department was of the view that the benefit of Government scheme was not available to the appellant as no material was provided to establish the claim.
7. The Additional Collector vide its order dated 30-12-2006 decided that the charges against the appellant stand established on account of its failure to pay the sales tax due on the sales. The appeal of the taxpayer against this order was dismissed by the Collector (A) vide his order herein impugned.
8. We have considered the submissions of the parties made at the bar in the light of the available record. It is noticed that the respondent has not uttered even a single word on the questions raised by the appellant regarding the competency of the order in original as well as the one impugned before us.
9. In appellant's grounds recorded above, the appellant states that Section 11(4) of the Sales Tax Act, 1990 provides a period of 45 days for the completion of assessment proceedings by the concerned officer of the sales tax empowered in this behalf. The provision is mandatory. Once limitation provided by law expires, the assessee acquires a vested right of escapement of assessm ent. This dictum has been laid down in the case of M/s. Super Asia Vs. Collector (PTCL 2008 CL 1). In this case the ratio is in all four. Similar observations have been made in yet another case reported as 2008 PTD 578 = PTCL 2010 CL. 1113 (M/s. Hani/Straw Board Vs. Additional Collector (Adjudication) Lahore. In 2009 PTD 762 = PTCL 2010 CL. 137 (M/s. Tanvir Weaving Mills Vs. Dy.
Collector, Sales Tax) observes that judgment passed after the stipulated period is void. The order in this case is beyond the period of limitation and in fact even beyond the period of extension - though there is none available on record. Even the President of Pakistan has declared void the judgment passed beyond the period provided for in law in the case reported in PTCL 2010 CL 121).
The Department's contention to press the amendment in subsection (4) of Section 11 is of no avail to the respondent. Once limitation expires no subsequent extension ;ould revive the period already over. In this case the period had already expired on 5-8- 2006 and 19-9-2006.
10. In this view of the matter, the order passed u/s 11 is without jurisdiction and therefore, of no legal effect as no proceedings were then pending on the lst July, 2006.
11. The AR has argued that the very notice is void as being without jurisdiction. It is submitted that the instant case involves Rs. 13,559,984/- whereas the Deputy Collector was competent to issue show cause only in case where u/s 11(2) and Section 36, the amount of tax involved does not exceed Rs. 2.5 million. Thus the Deputy Collector (Adjudication) was not competent to issue the show cause. The subsequent proceedings, therefore, are null and void.
12. This plea appears to have been accepted by the Department in as much as the appeal filed was transferred from the Deputy Collector Adjudication to the Additional Collector-I vide letter bearing C. No.IV-ST/Misc/Adj/GZ/05/1156 dated 1-6-2006 for the reason that the sales tax involved in this case was Rs. 13.559 million which falls in the competence of the Additional Collector Adjudication in line with Section 45 of the Sales Tax Act, 1990.
13. This very admission on the part of the Revenue is sufficient to dislodge the notice dated 10.04.2003 which was not issued by the competent authority. In this view of the matter all subsequent proceedings taken thereon shall be null and void in the eyes of law. It may be observed that this view is in line with the dictum of the superior courts wherein it is held that the notice issued by an incompetent person cannot be given a fresh life simply because the subsequent proceedings could not attain validity in view of ab initio inherent defect of jurisdiction.
Reliance is placed on 2003 CLC 1064. We, therefore, accept the plea of the appellant and declare the impugned order in original as being unjustified.
14. The appellant has sought support from the SRO 524(I)/2008 dated June 11, 2008 which provides amnesty to the taxpayer should fall with its domain. According to the Circular, which is issued under laws of sub-section (2) of Section 13 and Section 34(A) of the Sales Tax Act, 1990. The Federal Government is pleased to exempt the amount of sales tax, default surcharge and penalty payable in respect of the taxable supplies made prior to 11-6-2008 subject, of course, to the following conditions namely:-
(i) The supplies were made by an unregistered person who was otherwise liable to be registered but such person applies for registration during the period 1-6-2008 to 31-7-2008 arid thereafter files the sales tax returns and pays tax due regularly.
(ii) That this notification shall also not apply to the registered person against whom a case of tax fraud or evasion has been registered. A tax payer claims waiver of past liabilities before registration under the said SRO giving amnesty to retailers. However, the appellant has now been duly registered on 21-4-2008 claiming the waiving of all liabilities under the SRO.
15. In response the Department contends that the taxpayer, in no case, falls within the amnesty granted by the above SRO and therefore, does not apply to the present case period.
16. We have been informed that in the case reported in 2006 PTD 336 (Lahore H. C.) it has been observed as under:- "Delayed payment of sales tax, additional tax and penalty. In this case it has been decided that the person placed in similar factual situation, either before or after the issuance of the beneficial legislation, shall stand equally benefited from the amnesty provisions and under circumstances no additional tax and penalty could be imposed against the appellant".
17. In this case, however, the taxpayer had got registration shortly before the issuance of the SRO.
Therefore, the ratio in the above case is attracted and amnesty provisions are fully attracted in the instant case. In this view1 of the matter levy of sales tax and penalties in this case totally unwarranted and therefore, withdrawn. Ordered accordingly.
18. The contention of the appellant is that he has been paying tax and therefore, contention of adjustment of input tax carry weight. The same is allowed.
Consequently, the order in original No. 63/2006 and the orders resulting thereon are declared to be unlawful and of no legal effect as against the rights of the taxpayer.