NAZIR AHMAD (JUDICIAL MEMBER).---The above titled appeal has been filed at the instance of the department against the Order-in-Appeal bearing No,411 of 2007 dated 25-9-2007 recorded by Collector of Customs, Sales Tax and Federal Excise, Faisalabad whereby the setting aside of the order-in-original bearing No,690 of 2007 dated 22-1-2007 has agitated.
2. Brief facts emanating from record are that the registered person/ respondent is a manufacture- cum-exporter engaged in making zero rated supplies of textile goods. A refund of Rs,114,388 was claimed for the period November, 2004 out of which following two discrepancies were observed during processing of same:-- Claim No Supplier Reg No. Amount (Rs.) Objection T081104100096 0804520802546 9,088 De-Registered T081104100096 0801520300137 105,300 Scrutiny for verification of input tax
3. The above mentioned discrepancies were confronted to the registered person/respondent by way of issuance of show-cause notice dated 10-12-2006 and explanation tendered in response to that notice was treated unsatisfactory, which resulted deferment of an amount of Rs,105,300 out of the total refund claimed at Rs,114,388. Feeling aggrieved, the registered person/respondent preferred appeal before the Collector Sales Tax who set-aside order-in-original by observing that objection regarding "scrutiny for verification input tax" was not mentioned in the impugned show cause thereby never confronted to the registered person/respondent. He, therefore, treating the order-in-original to be passed beyond the scope of show-cause notice set aside the same. In this regard reliance was placed on a judgment of Apex Court of Pakistan. Being aggrieved by the relief allowed by the Collector (Appeals), the department has come up in appeal before this Tribunal.
4. The learned DR has vehemently argued that the relief allowed by the Collector Sales Tax (Appeals) is not only arbitrary but also contrary to facts of the case. He has elaborated his view point by maintaining that although the objection regarding scrutiny for verification input tax" was not mentioned in the show-cause notice but the same is the discrepancy on the basis of which the refund claimed by the registered person did not merit acceptance. He therefore prays for vacation of the order-in-appeal passed by the Collector (Appeals) and restoration of the treatment meted out by the Assistant Collector by way of order-in-original.
5. In rebuttal to the argument advance by learned DR, the learned counsel of the registered person/respondent has adopted the same line of argument as was adopted by him before the Collector of Sales Tax (Appeals). However, main thrust of his argument is that the objection regarding "scrutiny for verification input tax" was other than the objections which were confronted to the registered person/respondent by way of issuance of show-cause notice dated 10-12-2006, therefore, the order-in-original passed by the Assistant Collector was beyond the scope of show- cause notice and not sustainable under the law in the light of ratio settled in the reported judgment of honourable Apex Court of Pakistan cited as 1987 SCM R 1840 wherein it has been held in an unequivocal manner that order of adjudication being ultimately based on a ground which was not mentioned in the show-cause notice, was palpably illegal on the face of it. In order to lend credence, he has also furnished a copy of said judgment which fully supports the stance taken by learned counsel of the registered person/respondent.
6. I have heard the arguments advanced by rival parties and also carefully gone through the relevant record available on file as well as reported judgment of Apex Court of Pakistan referred before me. Admittedly, in the instant case the charge of "scrutiny for verification for input tax" was not leveled in the impugned show-cause notice dated 10-12-2006, on the basis of which the refund claimed by the registered person/respondent to the extent of Rs,105,300 has been rejected. The main objection of the learned counsel is that since the objection of scrutiny for verification for input tax" was not confronted to the registered person/respondent therefore, on the basis of the said allegation the rejection of refund has no legal sanctity. The stance taken by learned counsel of the registered/ respondent is fully supported by the ratio settled in the reported judgment of Apex Court of Pakistan cited as 1987 SCM R 1840 wherein it has been held as under:-- "However, we are of the opinion that it is not necessary to determine this question of law in the facts of the present case as this petition can be disposed of on the short ground that the order of adjudication being ultimately based on a ground which was not mentioned in the show-cause notice, the order was palpably illegal and void on the face of it. We have carefully examined the show-cause notice and find no reference whatsoever or necessary facts relating to the ground that the alleged contraband goods were imported into Pakistan from an unauthorized route. In view of this palpably legal infirmity, we do not consider it necessary to examine the other contentions raised by the learned counsel."
7. From bare perusal of the above extract, an inference can easily be drawn that if an order has been passed on the ground other than the grounds confronted to the taxpayer by way of issuance of show-cause notice has no legal sanctity. Since the issue under consideration already stands resolved by Apex court of Pakistan and the learned first appellate authority has rightly held the order-in-original to be illegal and void and set-aside the same by following the ratio settled therein. In view of the foregoing, the learned DR has not been able to make out a case for our interference in the order-in-appeal and the same is upheld, I order accordingly.