1. ' This appeal preferred by the registered person (hereinafter called the appellants) has assailed the Order-in-Appeal No,Ex.29/2007 passed by the Collector of Sales Tax (Appeals) Lahore recorded on 31-10-2007 whereby he has upheld the Order-in-Original No,23 of 2006 dated 15-11-2006.
2. ' Facts of the case in brief are that on having information that certain paper board manufacturing units were evading the central excise duty and sales tax, a drive against these units was launched.
3. On investigation it was revealed that the products of these units were being sold at a higher rate than declared in the excise record. In order to ascertain the factual position wholesale market of paper was visited and documentary evidence pertaining to selling of writing paper produced and declared by the appellants were obtained. On the basis of these evidence, it was observed that the appellants are declaring less rates as compared to the wholesale/retail market price, therefore, evaded the central excise duty as well as sales tax. It was alleged that during the period January, 2002 to January, 2003 the appellants had evaded the central excise duty, sales tax and further tax to the tune of Rs,5,73,953, Rs,18,07,953 and Rs,3,61,591 respectively. Therefore, a show-cause notice was issued calling upon as to why evaded amour of excise duty, sales tax and further tax along with additional tax may not be recovered from them. The reply tendered by the appellant was found unsatisfactory and the proceedings were culminated in the shape of order-in-original directing the appellants to pay the aforesaid amounts along with the additional tax. A penalty @ 100% of the Sales Tax involved under section 33(11)(c) of the Sales Tax Act, 1990 was also imposed.
4. ' Being dis-satisfied with this treatment appeal was preferred before the Collector appeal. However, the contentions put forth by the appellants did not find favour with the Collector (Appeals) which is now being impugned before us.
5. ' The AR challenged the action of the authorities below as unjustified both on legal as well as factual grounds. Before arguing the case on merit the AR raised a preliminary objection that the order in original as well as the order in appeal are time barred having been passed beyond the prescribed limitation under sections 36(3) and 45-B(2) of the Sales Tax Act, 1990. He pleaded that the show-cause notice in the instant case was issued on 9-10-2004 whereas the order in original was passed on 20-11-2006 after 681 days. He contended that even if the order was passed within extendable period of 180 days even then the order-in-original is barred by 501 days and not sustainable in the eyes of law. He continued that if the very show-cause notice is invalid all the super structure built upon it had no legal authority. According to him the period of limitation provided under section 36(3) is mandatory and should strictly be followed. In support of his contentions the AR has relied upon the following reported judgments:--
(i) 2006 PTD 271 (SC), (ii) 2009 PTD 762, (iii) 2008 PTD 2025, (iv) 2008 PTD 60 (H.C.), (v) 2008 PTD 578 (H.C.), (vi) 2010 PTD (Trib.) 81, (vii) 2010 PTD (Trib.) 251, (viii) and 2009 PTD (Trib.) 1263.
6. ' On merit, the AR termed the charges leveled against the appellant as baseless. He strongly agitated the self-made comparison between the rates of the paper. According to him, if there was any evidence that should be confronted to the appellants but all the exercise was made at the back of appellant which cannot be maintained by any stretch of law.
7. ' The D.R. On the other hand, defended the impugned orders for the reasons stated therein. He also argued that the appellant was charged on the basis documentary evidence gathered by the Sales Tax department, therefore, he prayed for the dismiss of the appeal.
8. ' We have heard the parties and also gone through the orders of the Officers below as well as the case-law cited at the bar and section 26(3) (as at the relevant time) is also perused. According to proviso to this section order-in-original should have been passed within 90 days of the issuance of show-cause notice or within such extended period as the Commissioner may, for the reasons to be recorder in writing, provided that such extended period shall in no case exceed 90 days. In the present case admittedly the show-cause notice was issued on 9-10-2004 and the order-in-original was passed on 15-11-2006, therefore, it is clearly time barred having not been passed within the prescribed time limit by law. In all the case-law cited supra, the superior courts have declared the orders as nullity in the eyes of law. In the case reported as 2006 PTD PTD 271 the honourable Supreme Court of Pakistan held as under:-- "Question of limitation being a matter of statute and the provision thereof being mandatory, same could not be waived and even if waived could be taken up again by the party waving it and even by the Court itself-Matter of limitation would not be left to pleadings of parties but a duty was imposed on the Court itself to decide wither the proceedings had been filed whether the period of limitation."
9. ' In the case 2008 PTD 60 the honourable High Court has held that:-- "The claim of Revenue that the prescribe limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2006 is merely directory cannot be accepted. Where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of citizen, the prescription on time is deem directory. However, where a public functionary to create liability against a citizen only within the prescribed time, it is mandatory."
10. ' In another case reported as 2009 PTD 2004 the High Court held as under:-- "....The order tinder section 36(3) must be passed within the period prescribed in proviso to the said provision. The learned counsel for the department has not been able to persuade us to had otherwise. Consequently, the question raised is answered in the negative in favour of the taxpayer."
11. Similarly in all the other cases relied upon by the learned AR the courts have almost affirmed that the limitation provided by law under section 36(3) is mandatory and the order under this section should have been passed within such time period.
12. ' Since in the case before us, the order-in-original was passed beyond the limitation provided in law, it is not sustainable and has to be struck down. Considering this legal position in view and taking guidance from the case-law cited supra, we have no alternate except to set aside the show-cause notice as well as the impugned orders. Consequently, the orders of the authorities below are vacated and the demand created therein is deleted.
13. ' Accordingly, the appeal is accepted.