' RAJA LEHRASSAB KHAN (JUDICIAL MEMBER).---Through this combined order, I intend to dispose of above captioned six appeals pertaining to a single taxpayer, arise out of consolidated Order-in- Appeal Nos.2380-2385 of 2008, passed by the learned Collector (Appeals) dated 8-10-2008.
2. The relevant facts in brief are that the appellant in this case is a manufacturer-cum-exporter engaged in making zero-rated supplies of textile goods. The appellant against its zero-rated supplies, had claimed refunds amounting to Rs,6,210, Rs,12,753, Rs,24,114, Rs,123,682, Rs,100,968 and Rs,273,000 for the tax periods pertaining to December, 2005, January, February, March, April and September, 2006, respectively. The department issued notices dated 13-12-2007, calling upon the appellant to show cause as to why their refund claims may not be rejected in terms of section 11(2) read with Rule 37 of Sales Tax Rules, 2006 (Refund Rules) notified vide S.R.O. 555(I)/2006 dated 5-6- 2006. After affording opportunity of being heard, the Assistant Collector (FTC), vide orders-in- original dated 26-1-2008, had rejected the refund claims of the taxpayer. Being aggrieved, the taxpayer assailed the orders-in-original before the learned Collector (Appeals) who vide his consolidated orders had dismissed the appeals on the ground that the appeals filed by the appellant were time barred being preferred after the expiry of 30 days of the receipt of the impugned orders.
3. Heard both the sides at length and perused the record. The learned AR on behalf of taxpayer has strongly contested the dismissal of the appeals on technical grounds by the learned Collector (Appeals). It is submitted by the learned AR of the appellant that the taxpayer had preferred appeals before the learned Collector (Appeals) within time after receipt of orders-in-original, but the same were' dismissed without appreciating the fact that the computation of fact runs from the date of receipt of order instead of its issuance date, as provided under section 70 of the Sales Tax Act, 1990. It is further contended by the learned AR that, even otherwise, no limitation would run against the impugned order of the Assistant Collector which is not only illegal and void but also suffered from a lot of illegalities. In this behalf, it is submitted by the learned AR that the taxpayer claimed refund pertaining to the periods December 2005, January, February, March, April and September 2006, which was found in admissible due to STARR objection. It is contended by the learned AR that except refund claim for September 2006, all the other claims were much prior to introduction of this electric device known as STARR. It is asserted by the AR that the same device made applicable w,e,f, July 2006, so action of the Assistant Collector, by rejecting the claim on the basis of STARR objection was ab initio void and illegal. In this behalf, reliance, was placed by the learned AR on the reported judgments to substantiate his versions.
4. The learned DR failed to put-forth any explanation to justify any deviation from the judgments/arguments advanced by the Advocate for appellant. He has, however, simply supported the impugned orders.
5. In fact, maintainability of both orders of the authorities below i,e, order-in-original and order-in- appeal, were challenged on the following three grounds namely:--
(a) Rejection of refund claims pertaining to December, 2005, January, to April 2006 (except September, 2006), under STARR computer system was illegal, void ab initio being not applicable to the relevant periods/years.
(b) Impugned order is discriminatory one being violation of Article 25 of the Constitution of Islamic Republic of Pakistan, 1973.
(c) Refund cannot be rejected on the ground of time limitation.
6. I find myself to be in conformity with the arguments advanced by the Advocate, so also law in support thereof. Perusal of impugned orders in question vis-a-vis the grounds of appeals coupled with law referred to by the appellant Advocate, I do not find myself persuaded with the finding and its basis incorporated in both the impugned orders. Admittedly, except refund claim for the month of September 2006, all the other claims were not subject to scrutiny under STARR as the same was made applicable w,e,f, 1st July 2006 in term of S.R.O. 555(1)/2006 dated 5-6-2006. Thus, appellant's case with regard to refund claim for the period December, 2005, January to April 2006, should have been scrutinized under Sales Tax Refund Rules, 2002 being notified vide S.R.O. 575(1)/2002 dated 31- 8-2002 and not under STARR system which was introduced for the first time in Sales Tax Rules 2004, notified vide S.R.O. 485(1)/2004, dated. 12-6-2004. Recapitulated history of these facts further transpires that Sales Tax Rules 2004, were come into force on 1-7-2004 by excluding its Chapter-V (Refund Rules) (Rules 25-37) which was required to be come into force on such date as to be notified by the CBR through in official Gazette Notification. The same position was also with Sales Tax Rules 2005, but the same (both items) were never notified by the C.B.R. Till the Sales Tax Refund Rules 2002, were rescinded through S.R.O. 554(1)/2006 dated 5-6-2006 and Sales Tax Rules 2006 came into vogue. This situation leads to unambiguous inference that Sales Tax Rules 2004 and 2005 were intact and remained applicable till 1st July 2006, without giving retrospective effect.
Udder the present situation, I am inclined to share view of the AR that rejection of refund claims filed against invoices issued prior to 1st July, 2006 on the objections pointed out by the STARR computer system was illegal and void ab initio. In this regard, I feel advantage to refer a judgment of Division Bench of Customs, Excise and Sales Tax Appellate Tribunal, Lahore, reported as PTD 2010 (Trib.) 1636, in the case of Messrs A.T. Fabrics, Faisalabad v. Collector Sales Tax, Faisalabad. The operative para. Is being reproduced herein under:-- "Lastly the learned counsel for the appellant contended that the appellant filed refund claim for the period 12 of 2004 and 2 of 2005, which was rejected on the basis of STARR objections. The learned Counsel for the appellant vehemently contended that the "STARR System" was introduced in the Year-2006, it cannot be implemented retrospectively. After perusal of record, we find the plea of the appellant correct."
7. In another case like the present one, titled as Collector of Sales Tax v. Messrs Saleem Textile Company, Faisalabad, reported as S.T.A. No,191/LB/2008, dated 9-6-2008, in which Customs, Excise and Sales Tax Appellate Tribunal,. Lahore, has held as under:-- "The appeal has confounded the Sales Tax Refund Rules, 2002, notified by S.R.O. 575(1)/2002, dated 31-8-2002, and the Sales Tax Refund Rules, 2005, notified by S.R.O. 533(1)/2005, dated 6-6-2005.
There is no concept of STARR in the Sales Tax Refund Rules, 2002 and the Sales Tax Automated Refund Repository (STARR) Computer. System had been introduced in the Sales Tax Refund Rules, 2005. It is a controversial issue whether Sales Tax Refund Rules, 2005, Chapter-IV (Refund) had been enforced or not. It is provided under Rule 1 of the Sales Tax Refund Rules, 2005 that these rules shall come into force on 1-7-2005 and shall apply to such persons or class of persons as are specified in the respective Chapters. However, under Rule 26, Chapter-IV (Refund), it is provided that provisions of this Refund Chapter shall come into force with effect from such date as may be notified by the Board provided that in case of registered persons who have already been notified by the Board, the refund of such registered persons shall be dealt with under this Chapter. Keeping in view Rule 1, it is a non-obstante clause."
8. Under the foregoing reasons and circumstances, I am also of the considered view that the refund claims of the appellant in this case stand for the periods December 2005, January to April, 2006, while STARR system was introduced in 1st July 2006, which cannot be implied retrospectively.
9. The second ground with regard to discriminatory treatment of the Department with the appellant apparently stand proved, as Collector (Appeals) on the one hand rejected the appellant's claim on the ground of limitation but on the other hand, accepted the refund claim being demanded by another taxpayer namely Messrs Grip Mater International, Faisalabad, vide Sales Tax Order in Appeals Nos. 615-619 of 2008. For ready reference, para-12 of his order dated 21- 4-2008, is reproduced as under:-- "12. It is evident from the above judgments that the refund claim cannot be refused on account of time limitation. In all the above cited cases, though the applications were filed beyond the prescribed time limit yet the Courts had directed issuance of the refund. Therefore, taking guidance from the same analogy, I am of the view that the rejection/recovery of refund on account of limitation are not justified. If the refund is otherwise admissible then the recovery/rejection of refund merely on time limitation is against justice. I find that if the appellants have fulfilled the provisions of Sales Tax Act and relevant refund rules, the denial of refund of amount involved, would also be violation of the Constitution which lays down that 'no person shall be deprived of his property save in accordance with. Law'. In view of the above, the recovery of refund already sanctioned by the respondent department is not maintainable on merely time limitation alone in the eyes of law. This being the position, the plea of the appellants is accepted and impugned order is set aside accordingly."
10. I am in agreement with the contentions of the learned Advocate that in the similar situation and identical circumstances, two sets of different treatment cannot be given as enshrined under Article 25 of the Constitution of Islamic Republic of Pakistan. Reliance is placed on Hon'ble Supreme Court of Pakistan's reported judgment cited 2005 PTD 492 and 2002 PTD 976 Sindh High Court. The relevant para of the Apex Court's judgment is reproduced as under:-- "A facility allowed to some and denied to one is discrimination."
11. The Hon'ble Sindh High Court in the aforesaid judgment on the subject has held as under:-- "Vacating the show-cause notice in one case and taking action against another person in similar situation, amounts to discrimination which is hit by Article 25 of the Constitution of Islamic Republic of Pakistan."
12. This being the situation, I have no hesitation to hold that the appellant was treated discriminatorily which is against the spirits of judgments of the Hon'ble Supreme Court of Pakistan and Sindh High Court referred above.
13. Third ground taken by the appellant was about rejection of his refund claim on account of time limitation. It was the view of the AR that the orders of the authorities below was illegal and void, as question of limitation in this case does not arise. In support thereof, he placed reliance on judgment reported as PLD 1998 SC 64 in which it was held by the Full Bench as under:-- "Latest judicial trend is to deprecate and to discourage withholding of a citizen's money by a public functionary on the plea of limitation or on any other technical plea if it was not legally payable by him."
14. In the same situation, in another case reported as (2008) 97 Tax 116 (Trib.) (sic) it was held that:- - "It is evident from the above judgments that the claim of refund cannot be refused on account of limitation. In all the three cases cited above, though the applications were filed beyond the prescribed time limit yet the Courts had directed issuance of the refund. Therefore, taking guidance from the same analogy, we are of the view that the authorities below were not justified in rejecting the application of refund on account of limitation. It is, therefore, directed that the genuine refund, if any, due to the taxpayer should be allowed."
15. As proved above that both the orders of the authorities below I G were void ab initio, therefore, question of limitation does not arise. In this regard, I would like to refer Hon'ble Supreme Court of Pakistan judgment reported as 2007 SCM R 729, 2005 SCM R 69 and 1996 SCM R 856, wherein it was held that "no limitation runs against a void order".
16. It would also be not out of order to mention that, as discussed above, the issuance of show- cause notice was illegal, ab initio void on the grounds discussed here in above, as such whole proceedings from the very date was without lawful authority and as such the rejection of H refund claim pertaining to the month of September, 2006, would also fall within the aforesaid parameters of illegal orders. I am fortified in my view from the judgment of the Hon'ble Supreme Court of Pakistan as 2007 SCM R 729, where it was held that "when basic order is without lawful authority, then all superstructures built on it would fall on the ground automatically".
17. To what has been stated/discussed herein above, particularly in the light of law cited above, both the orders of the authorities below are suffering from grave legal infirmities which are accordingly set aside. Appeals of the taxpayer for the periods December, 2005, January, February, March, April and September, 2006, are succeeded and disposed of in the manner and to the extent as dilated supra.