CHAUDHRY MUNIR SADIQ, MEMBER (JUDICIAL).-(1). This sales tax appeal has been filed at the instance of the assessee/registered person calling in question the impugned order dated 28.02.2003 passed by the Additional Collector of Sales Tax, Lahore. A number of grounds were urged through the memo of appeal, however, at the the of hearing of the case, the Learned counsel has raised a preliminary objection that the order passed by the Assistant Collector is the barred in view of the provisions of section 36(3) of the Sales Tax Act, 1990.
2. Facts in brief are that during the audit of the registered person various discrepancies were noted the details whereof have been duly recorded in the impugned order. The Assistant Collector issued a show cause notice as to why sales tax amounting to Rs. 3,656,615 should not be recovered under section 36(1) alongwith additional tax and penalty under section 34 & 33 (to be calculated at the the of deposit) and why penal action should not be taken against the registered person u/s 33 of the Sales Tax Act, 1990. The reply submitted to show cause notice did not find favour and the Assistant Collector rejected the claim of refund.
3. At the very outset the Learned AR of the assessee raised a preliminary objection and contended that as per provisions of section 36(3) of the Sales Tax Act, 1990, the order passed by the Collector of Sales Tax is hit by limitation and is barred by the as the show cause notice was issued on 13.11.2002 and the order in original was passed on 28.02.2003. It was argued that initial limitation of 45 days expired on 28.12.2002 and no further extension was sought at all. He further argued that it has been settled by almost all forums that the limit u/s 36(3) is mandatory because a public functionary is empowered to create a liability against a citizen. He referred to the order of the President of Pakistan in re CBR/Sales Tax Department v. M/s. Pace International, Rawalpindi cited as PTCL 2005 CL 841 wherein it was held as below; "The department contends that the the limit under section 36(3) ibid was merely directory and not mandatory. The contention does not seem to be valid. Where inaction on the part of a public functionary within the prescribed the is likely to affect the rights of a citizen the prescription of the is deemed directory but where a public functionary is empowered to create liability against a citizen only within the prescribed the it is mandatory. The FTO's decision must be sustained."
Reference was also made to the reported judgment of the Honourable Lahore High Court cited as 2009 PTD 762 = PTCL 20I0 CL. 137. The Learned DR, on the other hand, opposed the arguments addressed at the Bar. He argued that the the limit' prescribed in section 36(3) is directory and not mandatory.
4. Arguments heard. Record perused.
5. It would be appropriate to quote the proviso to sub-section 3 of section 36 of the Sales Tax Act as it was during the period under consideration.
"Proviso to sub-section 3 of section 36. .... Provided that order under this section shall be made within forty-five days of issuance of show cause notice or within such extended period as an officer of Sales Tax may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed ninety days."
We have observed that in the present case show cause notice was issued on 13.11.2002 and the order was passed on 28.03.2003 while maximum the limit as per section 36(3) of the Sales Tax Act, 1990 stood expired on 11.02.2003. The reported judgment relied upon by Learned AR is also on all fours to the case of the registered person. The relevant extract from the reported judgement cited as 2009 PTD 762 = PTCL 2010 CL. 137 (H.C. Lhr.) is as follows;- "As is clear from the language of the above proviso, it has limited the scope of the exercising of the jurisdiction after issuance of notice to basically 90 days or such extended period as the Collector after duly recording proper reasons in writing has fixed. However, it is again subject to the limitation in the manner that the said extension also cannot be for more than 90 days. The period for deciding the order in original after issuance of a notice u/s 36(1) and (3) thus is maximum 180 days including earlier 90 and extended 90 days. Obviously if the extension has been given by the Collector before the expiry of earlier 90 days."
The claim of the revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 120 days by Finance Act, 2008 is merely directory cannot be accepted. It is settled law that where inaction on the part of a public functionary within the prescribed the is likely to affect the rights of a citizen the prescription of the is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed the, it is mandatory. The acceptance of contention of the revenue in that regard will make a provision of law redundant and nugatory.
Honourable Lahore High Court has held in re M/s. Super Asia Muhammad Din & Sons v. Collector of Sales Tax cited as PTCL 2008 CL. 1 = 2008 PTD 60 that redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the more so when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a tax payer thereby creating certainty that after its expiry even if there was a good case for creation of liability he will not be dragged in.
6. Admittedly the order in original in the present case was passed beyond the prescribed maximum time limit of 90 days moreover the adjudicating authority had neither fixed any extended period nor has in the instant case recorded any reasons for passing of order after 45 days. Even if the adjudicating authority had fixed any extended period the order in original being passed after lapse of 90 days would have become time barred.
7. In view of the above discussion and the case law cited supra the appeal is accepted and the order passed by the Collector of Sales Tax being made after the lapse of statutory period is declared to have been made without lawful authority and is hereby annulled.