' The miscellaneous application for additional ground and appeal has been filed by the registered person against the impugned Order-in-Appeal No,194 of 2007 dated 30-3-2007 passed by the learned Collector of Customs, Sales Tax and Federal Excise, Multan.
2. Firstly, we dispose of the miscellaneous application for additional ground. The learned AR appearing on behalf of the applicant has requested to allow the following additional ground which is hereby reproduced below:-- "Without prejudice to the factual position, adjudication on show-cause notice C.No,214- ST/Adj/DC/2004/942 dated 21-8-2004 is barred by limitation in light of provisions of section 11(4) of the Sales Tax Act, 1990, therefore, Order-in-Original No,17 of 2006 dated 26-9-2005 issued on 20-7- 2006 is ab-initio void, being without lawful jurisdiction, having no effect in the eyes of law."
3. The learned DR has opposed this application with the contention that above said ground should be taken at the time of filing of appeal. On the other hand the learned AR states that the ground is of purely legal nature which can be raised at any stage before any of the appellate forum. It is well settled law that such ground can be taken at any stage before finalization of the case at any forum.
4. Resultantly the instant application of the registered person is hereby accepted and additional ground sought to be raised is hereby allowed. The miscellaneous application stands accepted.
5. Brief facts of the case are that during the audit of the registered person for the period from July, 2002 to June, 2003 the following discrepancies/shortcomings were observed:--
(i) Supplies made to Suspected Unit.
(ii) Violation of section 73 on Purchases.
(iii) Inadmissible input tax claimed on gas bills/electricity bills.
(iv) Inadmissible input claimed on purchases.
(v) Suppressed purchased as compared to final accounts.
(vi) Suppression of Sales of Wastage.
(vii) Production Suppressed on Energy Consumption Analysis.
' On the basis of above mentioned discrepancies/omissions, the ' adjudicating authority observed that the appellant had evaded sales tax amounting to Rs,2,072,078 which was recoverable under sections 11(2) and 36(1) of the Sales Tax Act, 1990. The unit was charged with the violation the provisions of sections 3(1A), 6, 7, 8, 22, 23, 26 and 73 of the Sales Tax Act, 1990. Therefore, the appellant was called upon to show cause as to why sales tax amounting to Rs,2,072,078 should not be recovered under sections 11(2) and 36(1) of the Sales Tax Act, 1990 along with additional tax under section 34 (to be calculated at the time of deposit) and penalty under section 33(4) ibid may not be imposed for the contravention of above mentioned provisions of law. In pursuance of this show-cause notice the Authorized Representative on behalf of the counsel appeared and submitted his reply. The adjudicating authority had submitted comments on each objection. The adjudicating authority considered and found the reply unsatisfactory. The adjudication proceedings culminated in passing Order-in-Original No,17 of 2006 dated 20-7-2006.
6. Being aggrieved with the treatment meted out by the adjudicating officer, the registered person/respondent filed an appeal before the first appellate authority who partially allowed the appeal of the registered person. Being dissatisfied with the treatment by the first appellate authority treatment, hence this appeal before this Tribunal by the appellant.
7. Learned AR appearing on behalf of the appellant/registered person has contended that the treatment meted out by both the authorities below is erroneous and without application of judicial mind and it is liable to be annulled. He has further contended that the allegation of impugned order to charge further tax on supplies made to suspected unit is ab initio void and is not sustainable in the eyes of law because the appellant is a registered person and is filing sales tax return regularly. He has vehemently contended that taxable supplies are made to a person other than a registered person there shall be charged, levied and paid a further tax at the rate of three per cent. The AR contends that the all the payments were made through cross cheques. He has reiterated that the charges leveled against the registered person were to establish by producing evidence. He has insisted that the appellant is registered with the Sales Tax Department and is conducting its business only on the main premises till the acquisition of acquired premises.
Therefore, the appellant should not be penalized due to a decision based on some misreading of the facts/evidence. He has stated that the issued show-cause notice dated 21-8-2004 is barred by limitation in light of provisions of section 11(4) of the Sales Tax Act, 1990, therefore, Order-in-Original No,17/2006 dated 26-9-2005 issued on 20-7-2006 is ab initio void, being without lawful jurisdiction, having no effect in the eyes of law. He has prayed that the further tax amounting to Rs,326,662 may kindly be deleted. He has further prayed that input claimed on electricity/gas bills as well as input claimed on purchases may kindly be allowed as the appellant has duly discharged its liability and disallowance of input on ground of no-submission of details of stocks and fixed assets tantamount to deprive the appellant from its lawful right. On the contrary, the learned DR appearing on behalf of the department has supported the order-in-original passed by the adjudicating authority for the reasons recorded therein.
8. We have heard both the rival parties and have gone through the record of the case. Now, we would like to dilate upon the issue of time limitation provided in law in terms of section 11(4) of the Sales Tax Act, 1990 as the competent officer could decide a case within 90 days from the date of issuance of a notice and law had provided for extension of such time through a formal order for another 90 days meaning thereby that it had to be finalized within 180 days after obtaining extension from the higher competent authority duly mentioning reasons therein whereas the Show-Cause Notice No,214-ST/Ad/DC/2004/942 was issued on 21-8-2004 and the Order-in- Original No,17 of 2006 was passed on 26-9-2005 thus, the order-in-original has been passed beyond the prescribed period of limitation. Therefore, the order is ab initio, void, being without lawful jurisdiction and having no effect in the eyes of law. We are in respectful agreement with the principle laid down by the honorable High Court in a judgment reported as 2009 PTD 1978 titled as Messrs Leo Enterprises v. President of Pakistan wherein it has been laid down as under:-- ' Sales Tax Act, 1990---Sections 11(4), 33(4), 36(1)---Constitutional petition---Assessment of Tax--- Demand of Tax, Additional Tax and penalty---Show-cause Notice---Filing of written reply by assessee---Passing of assessm ent order beyond limitation period----Personal hearing declined-- -Validity---Status of Ombudsman---Constitutional petition---Question of---Whether under section 11(4) of the Sales Tax Act, Competent Officer could decide case within 90 days from date of issuance of notices--Held yes.
' Assessm ent order---Limitation----Competent Officer could decide a case within 90 days from the date of issuance of a notice---Law had provided for extension of such time through a formal order for another 90 days meaning thereby that it had to be finalized within 180 days after obtaining extension from the higher competent Authority duly mentioning reasons therein--- Order-in-Original having passed after delay over 19 months was barred by time-- ' The dictum laid down by the honourable High Court in a judgment reported as 2008 PTD 578 titled as Messrs Hanif Straw Board Factory v. Collector Sales Tax Gujranwala is also attracted in the instant case that:-- ' Sales Tax Act, 1990---Sections 11,36, 47---Department having made the order beyond a period of 45 days prescribed by law the entire proceedings had become time barred, which had to be set aside---Illegalities were so apparent that one could not agree with the counsel for department with respect to the status of show-cause notice---Decision being time-barred was set aside and reference application was disposed of accordingly--- ' In another judgment delivered by the honourable High Court reported as 2008 PTD 60 titled as Messrs Super Asia Muhammad Din Sons (Pvt.) Limited v. The Collector of Sales Tax Gujranwala wherein it has been laid down as under:-- "Recovery of tax not levied or short levied or erroneously refunded---Completion of adjudication proceedings-- Limitation---Provision of law prescribing limit to create against taxpayer--- Whether directory or mandatory---Question of---Whether claim of Revenue that prescribed limitation of 45 days foil completion of adjudicating proceedings as provided by Finance Ordinance, 2000 is merely directory cannot be accepted---Held, yes---Whether where inaction on part of public functionary in prescribed time is likely to affect rights of citizen, prescription time is deemed directory---Held, yes---Whether where public functionary is empowered to create liability against citizen only within prescribed time, it is mandatory---Held, yes---Whether all the more so, prescribed limit is beneficial for citizen and restricts executive power to touch pocket of taxpayer thereby creating, then after its expiry, even if there was good case for creation of liability, he will not be dragged in---Held, yes- Initiation of proceedings for recovery of tax not levied or short levied or erroneously refunded---Limitation---Period of 45 days prescribed for completion of adjudication proceedings by Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2006---Not directory, but mandatory---Principles--- ' Once limitation had started to run and had come to an end the assessee had acquired a vested right of escapement of assessm ent by lapse of time---Amendment in subsection (2) of Section 45A through Finance Act, 2006 is not retrospective--- ' When the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a taxpayer thereby creating certainly that after its expiry even if there was a good case for creation of liability he will not be dragged in--- ' The maxim laid down by the Tribunal in two judgments reported 2010 PTD 1636 (S.T.A. No,94/LB of 2008 decided on 5-9-2009) and 2010 PTD 1469 (S.T.A. No,1375/LB of 2009 decided on 16-4-2010); the relevant paras from the judgments are extracted that:- 2010 PTD 1636 "Recovery of tax not levied or short levied or erroneously refunded--Limitation---show cause notice was issued on 9-3-2006 and 13-3-2006 respectively and orders were passed on 30-12- 2006---Limitation period provided in section 36(3) of the Sales Tax Act, 1990 expired on 9-6-2006 and 13-6-2006 respectively, as such, the orders were passed after expiry of limitation period of 90 days - No evidence was available to show that said period was extended by the Collector or the Board and it remained to be answered as to why the Government was revising the limitation period from 45 days to 90 days and then from 90 days to 120 days, if this limitation had no legal consequences - Plea of the registered person that order in original had been passed after the limitation period of ninety days was liable to be set aside " was upheld by the Appellate Tribunal 2010 PTD 1469 ' S.T.A. No, 1375/LB of 2009 DECIDED ON 16-4-2010 Sales Tax Act, 1990 - Section 36 - Recovery of tax not levied or short-levied or erroneously refunded - Limitation - Order-in-original was passed beyond the period as prescribed under proviso to subsection (3) of section 36 of the Sales Tax Act, 1990 as the show-cause notice was issued on 11-6-2002 and order-in-original was passed on 9-10- 2002 which was beyond the period of 45 days and the period of 45 days was extendable by 90 days but no extension was sought - Department could not indicate that any such extension was sought and was unable to controvert the legal as well as factual position -- ' Appeal of the registered person was accepted by Appellate Tribunal and order-in-original was held to be barred by time and nullity in the eye of law--
9. Keeping in view the above discussion and the case-law cited supra, the order-in-original in this case thus suffers from procedural and legal impropriety, as a cause for which show-cause notice was issued by the department and the order in original was passed beyond limitation period provided in law which was adjudicated by the adjudicating authority in flagrant violation of the existing provisions of law. Thus, superstructure built upon the show-cause notice will be struck down. We are of the considered that order-in-original is illegal and without lawful authority hence, set aside and appeal filed by the registered person is accepted.
10. Both miscellaneous application and main appeal filed by the registered person are disposed of as above.